The Wendy’s Co (NASDAQ:WEN) recently announced that it would be launching a new burger sometime in 2013 that could be a major winner for the company. The new burger is a bacon cheeseburger served on a pretzel bun, aptly named the Pretzel Bacon Cheeseburger. The new sandwich has received rave reviews in a limited release. On a personal note, I have gone out of my way to try sandwiches served on pretzel rolls, and I highly doubt I am the only person that enjoys the roll.
According to sources, when the burger was in testing, it performed among the best of any The Wendy’s Co (NASDAQ:WEN) item tested in the last 20 years. While the timing of the roll out remains unclear, one analyst expects the release to be in the third quarter. The analyst went on to state that the when the burger launches, he expects a “meaningful acceleration” in same-store sales. The new burger is not the only change at The Wendy’s Co (NASDAQ:WEN), as last year, the company had altered its decades-old logo to freshen the design.
The company also launched new ad campaigns. On the food side, The Wendy’s Co (NASDAQ:WEN) revamped the value menu to offer customers the opportunity at a full meal of value items. Recently, the company announced the release of a waffle cone paired with its signature Frosty ice cream dessert. Clearly, The Wendy’s Co (NASDAQ:WEN) has been making big strides to drive business.
Can one product really make a difference?
If you doubt the impact that one product can have on a quick-service restaurant, one just needs to look at Yum! Brands, Inc. (NYSE:YUM) and the success of the Doritos Locos Tacos offered at its Taco Bell restaurants. The Doritos Locos Tacos was merely a taco that utilized Nacho Cheese Doritos as the shell; however, the success of the product can not be understated.
Seven months after launch, Taco Bell had sold 200 million Doritos Locos Tacos. Same-store sales increased 6% in the first quarter, 13% in the second quarter, and 7% in the third quarter after the launch of the product. Same-store sales had been down 2% in the prior year. Nine months after the launch, the product accounted for about 7% of the menu mix. Taco Bell recently launched a new version of the product using a Cool Ranch Doritos shell and a third version is in the works.
The Doritos Locos Tacos had a huge impact on Taco Bell’s results and the popularity of the items remains. The Doritos Locos Tacos should continue to be a key driver for Yum! Brands, Inc. (NYSE:YUM).
Not the only new menu
Burger King Worldwide Inc (NYSE:BKW) recently announced its new summer menu. Hoping to build on the success of last year’s menu, the company announced 13 new summer menu items. The new items include a variety of barbecue-themed items and frozen treats. The company feels that the barbecue items work well with the “flame broiled” approach to cooking. The company needs the menu to perform strongly as first-quarter revenue dropped by over $200 million to $327.7 million and EPS missed analysts expectations.
Buy the bun?
It is clear from Yum! Brands, Inc. (NYSE:YUM) that one product, a simple twist on a classic, can have a huge impact on a restaurant’s financials. Wendy’s pretzel burger is something not readily available in the quick-service restaurant market, and if the testing at Wendy’s is accurate, it could be a huge hit with customers.
In a market where same-store sales growth has been largely flat, success similar to Yum! Brands could mean a boom for The Wendy’s Co (NASDAQ:WEN) shareholders and to a greater extent than Yum! Brands. Yum! has a large portfolio of restaurants, so the success of Taco Bell could only do so much for the stock. Wendy’s only operates Wendy’s franchises, so the success of the products could drive the stock. On the other hand, while Burger King Worldwide Inc (NYSE:BKW)’s summer menu is appealing, it is a seasonal menu and the benefits, if any, will only be reaped for a quarter or two.
I would avoid Burger King Worldwide Inc (NYSE:BKW) stock and take a close look at The Wendy’s Co (NASDAQ:WEN) and the bun that could juice up the business.
The article Should You Buy This Stock? originally appeared on Fool.com and is written by John Timmes.
John Timmes has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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