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Wendy's Tweaks Logo, Revamps Brand

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In consistent with its aim to reinvigorate the brand, The Wendy’s Co. (WEN) recently revamped its logo. This new logo replaces the old with a change in backdrop, frames, as well as the words like ‘old-fashioned hamburgers.’ The mascot too has undergone a few changes. This refreshed logo will be put into effect on packaging, advertising, crew uniforms, menuboards and websites in March 2013.

This Dublin, Ohio-based fast food company has renewed its logo for the first time since 1983 in association with Tesser, an award-winning design firm based in San Francisco. A corporate logo signifies a company’s nature of business and thus, is an integral part of the brand image. Currently, Wendy’s is seeking to reposition its brand and the new logo depicts its attempts to step outside the territory of mere hamburgers and venture into a larger arena of various quick service offerings.

Wendy’s is not the only company to modify its logo in the restaurant sector. Another sector behemoth Starbucks Corp. (SBUX) also resorted to several logo modifications to underline its growth strategy. The latest took place in January 2011.

Since the year 2011, Wendy’s has been on a transition mode. The company generated positive transactions in 2011, for the first time since 2002. The measures facilitating the transition include the divesture of Arby’s restaurants, expansion in overseas markets, menu innovations, exploring high-quality coffee offering namely Redhead Roasters, stress on customer service by launching a mobile application, focus on overall marketing, and last but not the least massive remodeling of its existing stores.

Wendy’s does not seem to miss out on any opportunity to relate to customers. All its refurbished restaurants will get an upscale setting featuring fireplaces, flat-screen TVs, digital menu board and lounge. Wendy’s benefited substantially from the re-imaging program undertaken in 2011 with an average sales increase of 25%.

Wendy’s also strives to increase the late-night business in which the company holds a strong market share, in order to attain optimum restaurant utilization. The company also has plans to cater to the growing Hispanic market.

Although, the five successive quarters of positive same-store sales at company-operated restaurants suggest that Wendy’s repositioning efforts are on track, yet the entire turnover process still needs time before it fully pays off. Moreover, an uncertain economy, faltering consumer confidence, high commodity costs as well as heightened competition remain an overhang.

Wendy's which competes with the likes of McDonald’s Corporation (MCD) currently carries a Zacks #4 Rank, which translates into a short-term Sell rating. We maintain our long-term Neutral recommendation on the stock.

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