Wendy's Divests 23 Units - Analyst Blog
November 26 2013 - 5:07PM
Zacks
Dublin, Ohio-based The Wendy’s Co. (WEN),
completed the divestiture of 23 company-operated units in Oregon
and Washington to Group W Partners, LLC. The financial terms of the
deal were not disclosed.
These restaurants will be remodeled on the basis of Wendy’s’
contemporary Image Activation format. The first of these renovated
units is slated for a mid-December opening in Vancouver,
Washington. Group W Partners has associated with Steve Harris for
appointing him as the Director of Operations for these 23
units.
Wendy’s’ relationship with the owners of Group W Partners — Dan
O'Brien and Doug Rich — stretches for more than two decades. Apart
from Group W Partners, they also operate another firm — Bodan
Incorporated — which franchises 18 Wendy’s units across Colorado,
Wyoming and Nebraska. The franchisee’s adequate local market
knowledge makes it a perfect fit for franchising in greater
Portland, Oregon and Southwest Washington.
These divestments were in line with the System Optimization
Initiative started in July by Wendy’s. As per this initiative, the
company seeks to divest 425 company-operated restaurants in 13 U.S.
markets, mostly in the West, by the second quarter of 2014. Year to
date, the company has sold 233 restaurants.
Under this initiative, the company also plans to renovate some
of its existing units based on the Image Activation format.
Operators with a proven track record and conforming to the
company’s reimaging program are being chosen for this
transition.
Additionally, the brand transitioning initiative includes
expansion, closure of underperforming units and several other
growth initiatives. With these moves, the company intends to
improve its operations and operating margin.
Moreover, this will help the company to grow through franchising
thus driving earnings per share and top-line expansion in the form
of royalty and rental income. Alongside, free cash flow continues
to grow, allowing reinvestment for increasing brand recognition and
enhancing shareholders’ return.
Other Stocks to Consider
Wendy’s holds a Zacks Rank #2 (Buy). Investors interested in the
restaurant industry may consider stocks like Buffalo Wild
Wings Inc. (BWLD), DineEquity, Inc. (DIN)
and Darden Restaurants, Inc. (DRI). While Buffalo
Wild Wings carry a Zacks Rank #1 (Strong Buy), DineEquity and
Darden Restaurants hold a Zacks Rank #2.
BUFFALO WLD WNG (BWLD): Free Stock Analysis Report
DINEEQUITY INC (DIN): Free Stock Analysis Report
DARDEN RESTRNT (DRI): Free Stock Analysis Report
WENDYS CO/THE (WEN): Free Stock Analysis Report
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