Wendy's/Arby's Group Inc. has announced the formation of a new independent purchasing cooperative, Strategic Sourcing Group Co-op LLC, responsible for securing a range of goods and services for both Wendy's and Arby's restaurants.
Formation of the Strategic Sourcing Group cooperative (SSG) is the result of an initiative by Wendy's/Arby's Group, Quality Supply Chain Co-op (QSCC), which is Wendy's purchasing cooperative, and ARCOP Inc. (ARCOP), which is Arby's purchasing cooperative.
SSG will utilize the combined purchasing power of nearly 10,000 Wendy's and Arby's restaurants in North America for goods and services that are not within the purview of either QSCC or ARCOP, both of which arrange for the purchase of perishable food and certain disposable items for their respective brands. SSG will focus on securing competitive contracts for indirect supplies, such as equipment, kitchen smallwares, furnishings, menuboards and signs, as well as energy and restaurant-level contract services. This includes evaluating items or shared suppliers that are not proprietary to either brand.
The company has committed to fund approximately $5 million of start-up expense for the SSG cooperative, which is being recorded as a charge in the first quarter of 2010 and will be paid over a 24-month period. Wendy's/Arby's Group will benefit from lower G&A expenses by the transfer of strategic sourcing employees to the co-op and from the purchasing efficiencies realized by company-owned restaurants. These savings and efficiencies will be incremental to the three-year margin improvement and G&A savings target of $160 million established at the time of the merger.
"The creation of a third independent purchasing cooperative is an example of our aggressive efforts to generate cost savings for our systems," said Roland Smith, president and CEO of Wendy's/Arby's Group. "This action will also increase transparency and give our franchisees greater control over the supply chain process in the United States and Canada."
SSG is co-chaired by franchisees Don Haynes from Wendy's and Tom Browne from Arby's, and is governed by a nine-member board of directors representing franchisees and Wendy's/Arby's Group. Benefits of the new cooperative will automatically extend to all franchisees serviced by either QSCC or ARCOP.
Karel to head SSG
Separately, Haynes and Browne announced that Les Karel, vice president, strategic sourcing, Wendy's/Arby's Group, will move to a new role as president of SSG and lead the day-to-day activities of the cooperative. Prior to his most recent position at Wendy's/Arby's Group, Karel served as VP of capital equipment purchasing for Arby's Restaurant Group and held similar leadership roles at Darden Restaurants. His extensive business development, purchasing and supply chain experience also includes positions with Edward Don & Co., Boston Market and General Mills Restaurants.
