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Arby’s president: ‘The burger business is ripe for disruption’

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Arby's President Jim Taylor joins Yahoo Finance Live to discuss the fast food chain's limited-edition Wagyu beef burger and how customer demand hasn't disappointed, along with the impact of inflation.

Video Transcript

- Well, the fast food war is heating up, Arby's adding a burger to its menu for the first time in its nearly 60 year history. Now, the brand new Wagyu steakhouse burger is now available. But if you want to get your hands on it, you got to act fast because it's part of a limited-time offering through the end of July. So here to talk about that, some of the trends that he's seeing in the fast food space, we have Jim Taylor. He's the President of Arby's, along with Yahoo Finance anchor, Brian Sozzi. Jim, it's great to have you. Thanks so much for joining us today.

JIM TAYLOR: Thank you for having me, appreciate it.

- So, Jim, if I understand it correctly, you're joining us from Atlanta from the kitchen where this Wagyu burger was created. Talk to us now that it's been available for a few weeks. And I should mention that we have some of these delicious burgers on set with us. But talk to us just about the demand that you've been seeing over the last couple of weeks.

JIM TAYLOR: Yeah, well, we have just been blown away. You know, America has said, this is a product that we've been waiting for. We love burgers, it's a quintessential American sandwich. And we've come out with one that is a premium blend of Wagyu that-- look, I don't think you're gonna find a beefier, or juicier, or more well-put-together sandwich than this one. And you're right, it started about two and a half years ago in this test kitchen right behind me. And we've gone through over 20 formulations, ton of consumer testing to just nail it in. So it is-- I think it's the best burger in fast food. Of course, I'm biased, but you guys can tell me that too because you guys can sample it.

BRIAN SOZZI: Hey, Jim, Brian here. Look, full disclosure, this thing's like a brick. I mean, this is a heavy--

JIM TAYLOR: Right?

BRIAN SOZZI: This is a heavy burger.

JIM TAYLOR: It's heavy. Hey, use two hands.

BRIAN SOZZI: Like, how you making money on this thing?

JIM TAYLOR: Don't be embarrassed if you need to, Brian.

BRIAN SOZZI: No, I'm going to dig in for-- how do you make money on this? This is, what, 52% Wagyu. You're charging almost 6 bucks a pop. There's an inflationary environment.

JIM TAYLOR: Yep.

BRIAN SOZZI: Like, is this a profitable item for you guys?

JIM TAYLOR: It is. And I think it goes to show that, look, the burger business is ripe for disruption. I mean, we're happy with the food costs that we have on this. And it is a 6.4-ounce patty. It's over 50% bigger than other patties out there. And, look, we just wanted to bring love back to the burger category. We thought that America'd be interested in it. And, lo and behold, look, we're blowing away our sales projections, selling over three times the amount we thought. I wish we could have this in store through July. Unfortunately, you're going to have to get the Wagyu before its wag-gone over the next week, probably.

BRIAN SOZZI: Yeah, clearly you guys have the meat. So talk to me, Jim, how do you-- don't have grills in your restaurants, right? You guys make roast beef. How do you make this sandwich?

JIM TAYLOR: True. So, we love this French cooking technique, for proteins in particular, called sous vide. What that is, if you haven't heard of it, is you vacuum-seal the protein, and you cook it low and slow in a water bath. What that does is it keeps all those flavors and juiciness together there, and makes sure that you don't overcook it. So it comes in fully cooked, ready to eat to the restaurant. But what we know about a great burger is that it has to have a little bit of caramelization, as well, right? So we flash fry it before we melt the cheese and prepare it fresh for every guest. And it is-- it's dynamite, you know? And I think it's not just the quality of that patty. But it's that sweet, tangy, smoky burger sauce, the lettuce, tomato, onion, creamy American cheese, buttery brioche. I love it, can't stop eating it.

- Yeah, I have to say, I just took a bite myself, and it is very, very good. Jim, Brian, brought up the pricing, $5.99, obviously, a very attractive price here for burgers. Just talk to us just about leading a fast food giant in a time like this, trying to navigate higher prices, what you're going to be passing along to consumers. What has that been like, and what have you done?

JIM TAYLOR: Yeah, so, one of the things that we've been really focused on is to stay at the forefront on culinary innovation. It's a calling card of this brand, you know? I think, back when, 2013, we launched a smokehouse brisket, smoked for over 13 hours, right here. The burger, actually, was our most successful LTO after this one in '13. And we also have on our menu this fantastic, traditional Greek gyro, another premium, great sandwich you can't get anywhere.

And our philosophy is, look, if we provide these premium, craveable sandwiches in a QSR environment, you're gonna pay a lot less than if you go to a fast-casual chain, or an independent, or a sit-down place. So we think that is an opportunity for us to provide great value for premium products for guests that are looking to that and might give Arby's a shot.

We have over 25 sandwiches on our m and most of them aren't roast beef. Folks may not know that about 20% of our menu mix is new over the last couple years, because we've been innovating during the time of COVID with things like our award-winning crinkle fries. We also got awarded the best chicken nugget in QSR, believe it or not, a whole breast Nugget that we're super proud of, new market-fresh sandwiches. And, of course, we have the smokehouse brisket, the traditional gyro, and also a killer Reuben on our menu each and every day. So I'm excited for our sales results. We have grown over 150,000 average unit sales volume since COVID. And we're on track for our 12th consecutive year of same-store sales growth.

BRIAN SOZZI: Jim, how recession-proof is a sandwich like this? If I'm doing the numbers, after tax, it comes up to close to 7 bucks.

JIM TAYLOR: Yeah, you're right. And I think that, look, in these type of times, food is something that is a simple pleasure that people can access every day that makes them feel just a little bit better about whatever they're dealing with. And so, I think it is pretty recession-proof for the vast majority of guests.

BRIAN SOZZI: Hey, my life is feeling great. I'm feeling great about myself right Now. I have a couple of bites of this burger, hanging out with Shawna on set. Life can't get much better.

- I know.

BRIAN SOZZI: All my troubles have gone away.

[SHAWNA LAUGHS]

JIM TAYLOR: I'm telling you. Hey, I'm gonna join you, if you don't mind. Uh-huh.

- Yep, dig right in.

BRIAN SOZZI: Man, man, you got the gig, my man.

- [LAUGHS] It's helping us detach ourselves from the sell off that we're seeing here on Wall Street. But, Jim Taylor, always great to speak with you, President of Arby's. Thanks so much for joining us. Brian Sozzi--

JIM TAYLOR: Hey--

- --thanks for bringing the food.

JIM TAYLOR: --we made it, Shawna.

- We did. We made it.