Wendy’s Reinvented & Solving Microsoft’s Copilot-palooza Problem

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**Ann Berry** (0:32)
Microsoft, looking to streamline workflows with AI agents. I speak with the Executive Vice President leading the charge. Klarna, the Buy Now Pay Later platform has investors rattled after not one, but two executive level departures. We have the latest. Wendy's, can a fresh CEO get the burger chain sizzling again? We break it all down. For Tuesday, August 18th, it's Brew Markets Daily and I'm Ann Berry.
More market details to come. But first, Wendy's, where CEO Bob Wright soon hits his 90-day mark in the big seat, and he's on the clock to articulate a clear, quantified turnaround plan with a fast food chain, which by the way, I fondly associate with ice cream treats after dentist visits of all things as a kid, has been in desperate need of transformation. I was on Bloomberg this morning explaining why Wendy's has caught my eye at this particular moment. The 56-year-old brand enjoys strong recognition, but stock performance has been frankly dreadful. Trading under the ticker WEN on the NASDAQ, three years ago, the share price was $20 to $22. Today, it's below $10.
Now, Wendy's has just posted six consecutive quarters of declining same-store sales, cycled through leadership, struggled to mitigate elevated beef and labour costs, and failed to turn promotions into sustained traffic, which is a sign that the consumer doesn't really understand its value proposition. All of this happening while Wendy's competition has been getting its act together. Burger King has gained ground through restaurant renovations and improved burgers. And over at the Golden Arches, McDonald's has been busy revamping its value menu. Well, since taking over in May, Wright hasn't wasted any time he's been getting down to work, bringing to Wendy's its CFO and Chief Strategy Officer, Steve Cirulis, a former colleague, I'll come back to that in a moment, and taking a hard look at the roughly 7,000 Wendy's locations worldwide. And recently, laying out a five-part plan, improve food quality and value, sharpen marketing, raise operational standards, increase digital frequency, and make restaurants an engine of growth. Sounds simple, very hard to do in practice. He's also cut the dividend to preserve cash for the turnaround while closing hundreds of underperforming locations already. Well, Wright has done at least some of this lift before. He became CEO of Potbelly in July 2020, the depths of the pandemic, back when the stock was trading at roughly two to three bucks a share. He went on to rebuild the business around digital sales, operations and unit growth, ultimately positioning Potbelly for expansion. And so five years later, Racetrack, which is a huge privately owned convenience store company, agreed to take the sandwich chain private for over $17 a share in cash. Nearly seven times the stock's approximate level when Wright arrived, a home run return.
And just as Wendy's needs right now, the hallmark of Wright's tenure at Potbelly was execution. The discipline of everyday attention to detail and consistency across the team, using metrics to drive accountability and shaking up dinosaur-like operating practices, bringing in house loyalty features, who would have thought it, analytics and digital marketing, bringing these into the arena. By the way, he did that at Potbelly with Wendy's new CFO by his side. Well, last year, I was lucky to have a conversation with Bob Wright on how he was running Potbelly, and I congratulated him actually then on his success, operating any company as hard, operating a geographically disperse one even harder, operating one that is just hugely dependent on human customer service, perhaps the hardest of all, and he did it successfully and then some.
That being said, Wright's arrival is not the only shake up to Wendy's right now because of course, there's the matter of Nelson Peltz. Yes, the activist whose hedge fund Triane is reportedly assembling an investor group to bid to take Wendy's private potentially within weeks. Now, Triane has argued before that Wendy's is undervalued and previously explored a transaction in 2022
So back to Wright's first 90 days at the helm, they may ultimately be remembered not just for the start of a turnaround, but for whether that turnaround continues while a public company at all. We're going to keep on watching. We're coming up in a moment. I sit down with Charles Lamanna, Executive Vice President at Microsoft, to nerd out on all things Copilot and some of its competitors. But first, this episode is brought to you by Charles Schwab. Timing the market, fighting inflation, balancing risk. No one says financial decisions are easy. In fact, it's the exact opposite. Financial decisions can be really tricky, and it's often your own thinking that can lead you astray.