Wendy's Co. is betting that a sleek new look for its restaurants, coupled with a revamped menu featuring its new premium Dave's Hot 'N Juicy burger, will rejuvenate its image as a higher-end fast food chain.
The Dublin, Ohio-based company plans to make its airy new designs with metallic highlights a key part of its efforts to reinvent itself and move on from a failed combination with the Arby's chain.
Wendy's said Thursday that it has started targeting key markets where its company-operated stores would benefit most from a remodeling.
"The next three years are going to be most intense period of change in the history of the Wendy's brand," CEO Emil Brolick said.
The company had already said in January that it plans to remodel 50 restaurants and build 20 new ones this year to feature light wood, more natural lighting and flat-screen TVs.
Ten stores were remodeled in 2011. Brolick said customers are giving the new look "rave reviews."
The plans were discussed in a conference call with analysts after Wendy's released its fourth-quarter results, which it had issued on a preliminary basis in January. As part of its broader growth efforts, the company said it plans to increase its capital expenditures this year to $225 million, a $78 million increase from last year.
Wendy's said it will invest $750,000 and $850,000 in a remodeled restaurant, but that costs should be lower after this year.
Although that would be a significant investment, Brolick said franchisees are already showing interest in participating in the program. He said the company has starting talking with banks to develop a remodeling financing program for franchisees.
The efforts to revamp the Wendy's image began in earnest after Wendy's sold Arby's to a private equity firm last summer to focus on improving its namesake restaurants.
Brolick, who was hired in September, has said he wants to refashion Wendy's as a higher-end fast food chain by focusing on quality. Last fall, for example, Wendy's introduced its new "W" cheeseburger line and Dave's Hot 'N Juicy burger.
In part, the menu additions are intended to compete with a new breed of fast-food chains like Five Guys Burgers and Fries, which feature more expensive, higher-quality food than traditional fast-food restaurants.
Brolick has called the company's results of the past few years "self-inflicted wounds" and said the company was suffering from an identity crisis. Earlier this year, he also laid out plans to clean up stores and raise standards for employees.
For the fourth quarter, the company turned a profit of $3.9 million, or 1 cent per share, compared with a net loss of $10.8 million, or 3 cents per share, last year, when it was still married with the Arby's roast beef chain.
After stripping out the effect of Arby's, Wendy's said its revenue rose 6 percent to $615 million from a year ago. Revenue at Wendy's restaurants open at least a year climbed 4 percent in North America, the highest in nearly eight years.
The metric is a key performance measure for retailers because it strips out the effect of newly opened and closed stores. Wendy's says higher prices and new menu items helped drive sales and traffic in the quarter.
Net income from continuing operations was flat as a result of charges associated with the Arby's breakup.