The Wendy's Company (WEN) recently announced that it has inked a long-term development agreement with The Eljuri Group to enter Ecuador. Per the deal, The Eljuri Group will develop and franchise 20 Wendy’s restaurants in the country.
The terms of the deal were not disclosed. The first two units are slated to be opened in 2013 in Guayaquil, a coastal city.
The Eljuri Group, being the largest business group in Ecuador, manages more than 160 companies across different industries. Given its familiarity with local food habits and a strong presence in the real estate and hotel food service industry, The Eljuri Group is deemed a strategic fit for Wendy’s Ecuadorian expansion plan.
Wendy’s is on an expansion spree in the overseas market. The latest alliance indicates its sustained momentum in the Latin American and Caribbean region. In this region, Wendy’s already has a presence in 17 countries and U.S. territories.
Wendy’s also has long-term development agreements with franchisees in the Middle East, North Africa, Singapore, Turkey, Russia and the Eastern Caribbean region. We believe the company’s extended global reach bodes well for its financials.
Although the company has signed many franchise development agreements for international growth, Wendy’s lags behind McDonald’s Inc. (MCD) and Yum! Brands Inc. (YUM) in its scale of operations. A wider scale provides the company’s peers with greater operational strength. Moreover, all these companies seek to ramp up their operations in Latin America and the Asia-Pacific region that, in turn, would lead to heightened competition.
Wendy’s currently retains a Zacks Rank #3 (Hold). Red Robin Gourmet Burgers Inc. (RRGB), another restaurant industry stock, is currently performing well with a Zacks Rank #1 (Strong Buy).
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