Wendy’s rolls back on UK growth targets

However, the US burger chain, which returned to the UK market last year​​, remains bullish about the market.

Speaking on an investor call following its second quarter results to 3 July 2022, Wendy’s president and chief executive Todd Penegor confirmed that the group has reduced its overall development plans for the opening of delivery kitchens through Reef Technology, although it is understood the majority of this impact will be felt in the US market.

“Even in the face of these industry wide pressures our development plans are on track and the long-term opportunity in the region remains vast,” he said. 

“We now have six traditional franchisees approved in the region who we expect will begin opening restaurants in early 2023.”

Penegor explained that as the second quarter progressed it re-evaluated its development commitment with Reef due to a change in its strategy to move to operating multiple brands from its locations, as well as some recent challenges with opening Wendy’s delivery kitchens in certain locations.

Penegor said it 'did not want multiple brands out of our kitchens, we wanted dedicated Wendy’s' kitchens.

In August 2021 plans were announced to open and operate 700 delivery kitchens with Reef over the next five years across the US, Canada and the UK.

“We now anticipate Reef will open approximately 100-150 Wendy’s delivery kitchen locations by the end of 2025… with the majority operating internationally in Canada and the UK where sales volumes have continued to meet our expectations,” he said.

The second quarter saw the one-year anniversary of its first UK opening, with the business now operating eight company owned sites and 14 franchise sites through Reef.

Penegor continued that sales in Wendy's company operated UK restaurants held steadily quarter over quarter despite macro-economic headwinds that continue to weigh on the overall market.

Chief financial officer Gunther Plosch added: “We are definitely happy with the UK […] But I have to say the UK consumer is clearly under a decent amount of pressure… very high inflation and that is definitely having an impact on the footfall that is happening in the UK”.

“Having said all that, we remain very bullish on the UK market… we expect to have 35 restaurants by the end of the year – 10 company and the remaining are going to be Reef units.”

Penegor said its momentum in the UK was also leading to a lot of interest to move over to Ireland.

Wendy’s achieved global growth of 5.6% in systemwide sales compared to Q2 in 2021, 3.5% of that growth was from the US and 22.7% in its international business.

Like-for-like sales were +2.3% in the US and 15.2% within International during the period.