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Wendy's expects strong ROI from salad investment

July 8, 2010

Wendy's is confident that its new premium salad line will pay off for the brand. The company has invested in new equipment, sourcing of fresh ingredients and creating compelling messaging — all on a menu item that one would think a minor player in the mix.

Stuart Morris, owner and operator of QSR Consulting Group Inc., estimates salads to be about 5 percent of sales for quick-service restaurants.

But Ken Calwell, Wendy's CMO, said Wendy's sees salads as important as its burgers and chicken to its bottom line. The company's founder introduced the salad bar to the QSR industry in 1979. In 2002, the company again innovated by adding entrée salads.

"In the past, Wendy's had always been the No. 1 market share leader for salads," he said.

But in the eight years since Wendy's Garden Sensation salads launch, little changed with the product, even as consumer tastes and expectations evolved. Also during that period, Wendy's research and development fell behind in the wake of founder Dave Thomas' death.

Enter Roland Smith with the merger of Wendy's and Arby's, and Wendy's R&D has been on the upswing as it focuses to convey the brand's new "You Know When It's Real" positioning.

"Our goal is once again to be the market share leader," Calwell said.

Morris said he expects Wendy's salads to benefit from their initial promotion, but the chain's focus on fresh ingredients is likely to provide a greater return for the company in the long term.

Calwell says the chain's salads are equally important as its burgers and chicken offerings, emphasizing that the three categories are the corners of the brand's menu: "We want a balance between the big core pieces of our menu."

Marketing strategy

The company's marketing plan will reflect that balance. Wendy's current promotion features its three bacon-topped choices: Baconator, Bacon Deluxe and Bacon & Bleu. Next up, a television campaign will support the new salad line starting July 19. Going forward, marketing support for the salads will be part of the regular rotation between its beef, chicken and salad offerings.

After Wendy's launched of its Garden Sensations line, the company kept salads in its marketing rotation for a few years beyond the rollout. But that attention waned in recent years.

With the new marketing plan, Calwell said the company expects more than a sales lift from the salad push. Past experience from its Garden Sensations promotions shows that the Wendy's brand benefits from that exposure, with consumer perception scores going up as consumers see the brand as more nutritious and offering more balanced options. Wendy's anticipates the same results from its new line, which have 14 fresh ingredients between the four salads such as a mix of 11 salad greens and other items like grape tomatoes and guacamole.

The salad line also is a transparent example of its You Know When It's Real positioning. It's one thing to say its burgers are made from fresh ground beef — other chains make that claim too, including Whataburger — so sharing the story of its fresh ingredients, most grown in the United States, is an important component.

Calwell said Wendy's is working on its new commercial, which features two Wendy's employees driving a tractor through a field and harvesting the ingredients. The company also is sharing the story in its stores, devoting a wall to the description of its sourcing, which includes foods from regions known for their top-quality produce: cranberries from the Northeast, apples from Washington and Michigan, Hass avocados from California. The Wendy's website offers an even deeper look for those more interested.

Taking a gamble?

That marketing needs to pay off: First there's the investment. Wendy's added salad spinners in all its stores to make sure the mixed greens appear fresh and crisp. It also added extra labor to cover the two hours of prep the salads require each day, including hand washing the greens.

"It is an investment, but we think it's worth it," Calwell said.

Then there's the price point: $5.99, a dollar more than Carl's Jr.'s new premium salads that launched in January. Calwell says the company is confident the salads will succeed, based on 1 ½ years of testing in four different markets.

Still, with the threat of a double-dip recession looming, the higher price point could be a risk.

"We don't see it as a gamble because it's based on a lot of consumer research," he said, adding that the products met all expectations from consumer, financial and operations standpoints. "We know exactly how they will sell."

Wendy's isn't going after the bottom feeders with this offering  anyway. The salads rest at the higher end of its barbell strategy and target a consumer looking for high quality salads at a value price. "There's a consumer out there for these salads," he said, especially the label readers looking for fresh, quality ingredients.

Calwell also dismisses the competition, including Carl's Jr.'s premium salads with a mix of 10 salad greens and other similar ingredients such as apples and dried cranberries. (Carl's Jr. also claims to have introduced the salad bar to the QSR industry.)

Calwell says that while he observes the competition, he's more interested in looking higher up in the restaurant industry for inspiration: His goal is to recreate high quality salads from specialty cafes.

"We think that's a place that nobody is at right now," he said.

New salad line features

Each of the four new salads begin with a bed of 11 types of greens, including a spring mix, and come with Marzetti’s all natural and preservative-free dressings, made especially for Wendy’s. The offerings include:

• Apple Pecan Chicken Salad, featuring blue cheese crumbles, Granny Smith and red apple pieces, whole pecans seasoned with sea salt, dried Ocean Spray cranberries and warm grilled chicken. Contains 580 calories, including two packets of Pomegranate Vinaigrette dressing.
• BLT Cobb Salad, featuring Applewood Smoked Bacon, chopped tomatoes, blue cheese crumbles, chopped hard-boiled eggs and warm grilled chicken. Contains 670 calories, including two packets of Avocado Ranch dressing.
• Baja Salad, featuring cheddar and pepper jack cheese, guacamole, fresh pico de gallo, tortilla strips, and Wendy's chili. Contains 740 calories, including one packet of Creamy Red Jalapeño dressing.
• Spicy Chicken Caesar, featuring vine-ripened grape tomatoes, shaved Asiago cheese, French bread croutons seasoned with sea salt, Wendy's Spicy Chicken. Contains 740 calories, including two packets of Lemon Garlic Caesar dressing.

To view a slideshow of the new salads, click here.

Read also, Why QSRs aren't winning with premium salads.