by InvestorPlace Staff | August 26, 2010 11:10 am
Wendy’s/Arby’s Group (NYSE: WEN) is taking the Wendy’s restaurant slogan “Quality is Our Recipe” to a new level – this time, with all-natural French fries in test markets.
And interestingly, the new recipe comes at a time when Wendy’s French fries are already popular. A recent Zagat survey ranked Wendy’s fries fourth best, behind McDonald’s (NYSE: MCD), Five Guys and In-N-Out Burger.
So why would Wendy’s make the change to an already successful snack? Simple: The move comes amid a flurry of other menu changes at fast-food restaurants that push for higher quality, healthful and natural ingredients.
Here are the details on the natural fries, and which Wendy’s test markets are offering them:
The snack consists of skin-on strips of real potato, cooked in special oil and are topped with sea salt. The oil is used specifically for cooking these new fries, and Wendy’s has even passed up table salt for the more natural evaporated sea salt. Wendy’s is currently testing the fries, in Florida, North Carolina and Louisiana,
The all natural French fries are just one tweak to Wendy’s menu, which seems poised for change. Currently, new hamburger patties and chicken items are being tested in other parts of the country. Almost all of the changes are intended to offset perceptions of processed, greasy foods and provide consumers with healthy and natural options.
This strategy is playing out across fast food franchises nationwide. Some of the push involves simply raising awareness of existing products — such as Wendy’s ads mentioning its “fresh, never-frozen beef” – and other moves like a healthy kids breakfast at Burger King (NYSE: BKC) are new creations meant to win the seal of approval from calorie-conscious consumers.
It helps that these offerings are mighty tasty, too. Reviews have been overwhelmingly positive for Wendy’s new French fries. Company spokesman Denny Lynch told reporters, “customers do perceive a difference.” The new combination of fresh potatoes, special oil and natural salt has officials cautiously optimistic. “The thickness, the natural cut, the sea salt … the skin on, we like; the oil, we like. We like what we see,” Lynch said.
Burger King has also made large strides this summer by with its healthy breakfast options for kids including muffin sandwiches with apple slices and calcium-fortified apple juice. They even began selling their new apple fries in supermarkets nationwide, after selling 29 million servings in the first year.
Fast-food giant McDonald’s has stepped up its game as well on the healthy breakfast front, offering fruit and maple oatmeal on its breakfast menu. The 260 calorie meal contains just four grams of fat and is sprinkled with sliced apples, raisins, golden raisins, craisins and a hint of maple. A nice option for those who may not be hungry for a greasy sausage biscuit first thing in the morning.
Lest you think this health-conscious approach is all about the consumer, it’s worth noting that the move at Wendy’s is driven by the bottom line. Wendy’s stock has not performed particularly well as of late, and is down -12.4% since January. The fast-food purveyor has missed earnings estimates for the past three quarters, including a -41% disappointment two quarters ago. A net profit margin of just 1.2% doesn’t exactly have company officials jumping for joy either.
A successful rebranding of a core product like French fries could revitalize sales – and thus prop up struggling WEN stock.
Wendy’s will find out in the next few months whether their push for all natural French fries affects their stock price. In a time when healthier fast-food options are becoming more prevalent, the move should only boost customer satisfaction.
If the fries are really as good as some are leading on, there may be a new name atop Zagat’s French fry survey in 2011, and Wendy’s shareholders might have more to brag about than just old fashioned hamburgers.
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