updated 2/6/2006 6:50:40 PM ET 2006-02-06T23:50:40

Wendy’s International Inc. said Monday that it will focus more attention on younger consumers as it tries to turn around the trend at its hamburger restaurants where sales at stores open at least a year declined in 2005 for the first time in 18 years.

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The company will start selling breakfast food in 2007 after tests this year, plans to introduce a new chicken Caesar and other salads and deli sandwiches and test double-melt cheeseburgers, 99-cent chicken sandwiches and a vanilla Frosty, instead of the traditional chocolate, executives told analysts at a meeting in New York.

The company also plans to cut costs by $40 million to $60 million annually and wants to improve margins at restaurants through the use of new equipment, reducing food and paper costs and improving speed of service and accuracy of orders.

The partial stock offering of its Tim Hortons chain remains set for March with the rest of the coffee-and-doughnut chain to be spun off to shareholders in nine to 18 months, the company said. The offering cannot be completed sooner, as one major shareholder has asked, for tax reasons, it said.

Sales at Wendy’s locations open at least one year, a key indicator of a retailer’s strength, fell 3.7 percent in 2005. The company blamed part of the decline on a hoax by a woman who said she found part of a finger in a bowl of chili, a claim that took several weeks to discredit.

Chief marketing officer Ian Rowden said the marketing emphasis will focus on people between 16 and 28 who are finishing school, going to work and raising families, as the company looks to improve same-store sales 3 percent a year.

People in the target group “are in a stage in life when they solidify in their minds the brands they prefer,” he said. “They’re also greatly influencing their children’s buying decisions and their future eating habits.”

Jack Russo, an analyst with A.G. Edwards & Sons Inc. in St. Louis, said he is impressed with the new products, which he thinks will help Wendy’s get back on track.

“McDonald’s is clearly the beneficiary of the market share they’ve lost,” he said.

Despite the sluggish sales and increased competition, Wendy’s stock is trading near an all-time high. Last summer, the company began a program to turn company-owned burger restaurants into franchises, close underperforming stores and announced the spinoff of Tim Hortons.

The company, based in suburban Dublin, operates about 9,900 stores under brands including Wendy’s, Baja Fresh and Tim Hortons. Total revenue for the 2005 rose 4 percent to $3.78 billion from $3.64 billion in 2004.

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