Wendy's rolling out upgrades to speed drive-thrus, boost sales

Nation's Restaurant News, May 8, 2000 by Amy Zuber

DUBLIN, OHIO -- Speedier drive-thru times and growth in same-store sales are two goals Wendy's seeks to achieve with this year's systemwide rollout of its "Service Excellence" operations program.

Company officials and franchisees of the nation's No. 3 hamburger chain described the initiative as an ongoing effort aimed at upgrading nearly every aspect of Wendy's restaurants, ranging from equipment to training.

"Basically, the whole program is about giving the customer friendly service and an overall great experience from quality food to clean restaurants," said John Willse, director of operations for the 10-unit Wendy's operator Franchise Management Inc. in Rocky River, Ohio.

Another cornerstone of Service Excellence is said to be the creation of labor efficiencies through such strategies as cross-training employees, providing adequate staffing levels in the restaurants and using timing mechanisms at the drive-thrus.

Same-store sales at Wendy's domestic franchised restaurants this February rose 4.1 percent, on top of a 12.4-percent growth during the same month last year, according to Wendy's International.

However, with competition as fierce as ever among the nation's largest fast feeders, Wendy's is looking to drive continued sales growth through Service Excellence. In some of the first restaurants that implemented the program more than two years ago, average sales have risen about 4 percent to 5 percent compared with the rest of the chain, according to John Barker, vice president of investor relations for Wendy's International. He said those restaurants have increased sales by speeding up service times, particularly at the drive-thru windows.

"The pick-up window generates 55 percent of the total sales for Wendy's, and takeout is another 15 percent, so almost two-thirds of our business today is eaten off-premises," Barker said. "If we can get more cars through the drive-thru during the peak rush, then obviously we can drive sales."

Franchisees said implementation of the program has allowed them to decrease drive-thru times substantially, with average time reductions varying from 10 seconds to more than one minute. Several operators said their goal is to limit service times to 100 seconds.

Barker said new equipment, particularly the timing mechanisms and drive-thru monitors, have the added benefit of providing unit managers with data for analyzing the causes of slowdowns and bottlenecks at the drive-thrus.

The average cost of implementing the program in each restaurant varies greatly depending on the age of the store. Franchisees said costs have ranged from $2,000 to $15,000 per unit.

Meritage Hospitality Group, a 30-unit Wendy's franchisee based in Grand Rapids, Mich., has installed drive-thin monitors in nearly all of its restaurants.

"It gives us the opportunity to monitor our customers as they are coming through the line," said Ray Quada, chief operating officer of Wendy's of Michigan, a division of Meritage. "At the end of the day, we are able to see where the slow spots are at the drive-thru."

Quada said the initial in-store upgrades have ranged the gamut from shelving changes that make cooking utensils more accessible to new sinks that reduce labor in the kitchen.

Since introducing Service Excellence on the West Coast in late 1997, Wendy's has been rolling out the program to the rest of the system. The chain, which is divided into five regions in the United States, has designated company outlets in each of its regions to help facilitate franchisee training.

Willse said his stores were among the first in his region to implement Service Excellence. He said he hopes not only to reduce service times as a result of the new initiative but also to increase same-store sales by 3 percent to 5 percent.

"Since we implemented the program in May 1999, we have shaved 35 seconds from our average drive-thru times," he said. "If we increase our throughput, that will have a positive impact on our sales."

Wendy's expects the program to be implemented systemwide by midyear. Franchisees said the rollout process typically can be completed in a few months in newer stores, but some operators are estimating that it could take more than a year in older restaurants that require more upgrades.

"We refer to it as a journey, not a destination," Willse said. "The scope of the program is truly ongoing, and there is always room for improvement. We have charted a course, and we will follow through on that course.

"We try to communicate to our managers that we all have good days and bad days, but the idea is to make continuous improvements so that when we look back six months from now, we can see how far we have come."