At Wendy's, create-your-own-burger gets a test

Yahoo Finance
This March 17, 2014 photo shows a Wendy's single hamburger with cheese combo meal at a Wendy's restaurant in Pittsburgh. Wendy's reports quarterly earnings on Thursday, May 8, 2014. (AP Photo/Gene J. Puskar)
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This March 17, 2014 photo shows a Wendy's single hamburger with cheese combo meal at a Wendy's restaurant in Pittsburgh. Wendy's reports quarterly earnings on Thursday, May 8, 2014. (AP Photo/Gene J. Puskar)

Wendy's (WEN) is taking another step toward trying to stand out from the fast-food burger pack, this time by testing an option that allows patrons to create their own sandwich from the ground up.

According to a report in QSR, a publication that closely tracks chain restaurants, Wendy's is conducting the tests at two Columbus, Ohio, stores. Customers can choose beef or chicken, the type of bun -- or no bun -- and various cheeses, sauces and other toppings, the report said.

With every chain looking for a differentiator, customization has become one of the industry's main topics. Along with online-ordering apps and other technological upgrades, it might all end up as more hype than substance, but restaurants not installing operational changes are perceived by analysts and the press as failing to adapt to modern times and the demands of Generation Y. Traffic has been flat or declining at many restaurants for some time, with the exception of fast casuals, a segment Chipotle (CMG) represents, so there is at least some rationale for these new approaches.

Inspired by fast casual

Even before the tests, Wendy's had taken on certain fast-casual characteristics, regularly discussing the "quality" of its ingredients, changing its fries and introducing pretzel and brioche rolls, which, for a large chain were unusual, limited-time sandwich breads.

"It's an early [operational] test," the QSR article quoted Wendy's Bob Bertini as saying. "We're always looking at a variety of things, from menu offerings to equipment to technology to customer enhancement."

This isn't an entirely new concept, as many chains allow at least a level of choice upon request. Among Wendy's main rivals, the "have it your way" idea has been around for years at Burger King (BKW), and category leader McDonald's (MCD) is hoping new kitchens that encourage custom meals will restore its declining guest counts.

All three also have been remodeling many of their locations, most of which are owned by franchisees, in an effort to produce a higher-end atmosphere that competes with fast-casual decor.

From 2008 to 2012, Wendy's stock fell in four of the five years, but in 2013, it surged 85.5%. Restaurants in general had a strong year, though Wendy's specifically made strides with a refranchising plan, dividend increases and interesting menu additions, such as the Pretzel Bacon Cheeseburger. Yahoo Finance named it the restaurant stock of the year.

This year, however, the group has slowed. Through the first half of 2014, a broad set of restaurants trailed the S&P 500 by a considerable margin. Wendy's is down 5%. On Friday, it was up 1 cent to $8.29.

Most of the items Wendy's will offer in the tests are on the menu today, QSR said. If the tests expand, or even one day are fully implemented, that's an advantage for store owners, as they won't have to worry about purchasing a great number of new ingredients. Even so, service times will always be important for visitors at Wendy's and similar restaurants, ensuring that many customers will pass on the customization and just order from the regular menu.

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