Wendy's, best known for its square burgers, is aiming to put digital technologies at the core of its customer experience and ultimately redefine the brand.
The fast-food chain, which delivered 2016 revenue of $1.43 billion with net income of $129.6 million, highlights how every company is becoming a digital one. Whether it's a company like Campbell Soup or General Electric, digital transformation is everywhere.
At the center of Wendy's digital efforts are self-service kiosks. Wendy's was among the first to use kiosks as a way to control labor costs and the restaurant chain garnered a decent amount of attention. Why? Wendy's was seen as a good example of what happens when the minimum wage rate is raised. Sure, labor costs are one reason for the digital transformation effort for Wendy's, but if you zoom out you see a much broader plan.
"Technology can play a great role in creating a better customer experience, unlocking productivity, driving throughput and ultimately saving some labor to help us to continue to have a strong economic model," said Todd Penegor, CEO of Wendy's.
On February 16, Wendy's held its investor day and outlined its 2020 goals, which are aiming for global restaurant sales of about $12 billion. To hit that revenue target in 2020, Wendy's executives said they have mapped and prioritized markets globally and identified a more than 50 percent growth opportunity in the top 20 markets. Wendy's has also used to complement local partnerships with franchisees.
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So what's the plan? David Trimm, chief information officer at Wendy's, outlined how the company will become digital. Trimm said Wendy's has to be a digital brand to stay relevant. "Everybody, whether you are a millennial or not, is now expecting to interact with brands via digital channels," he said. "And they are also expecting a response to that at digital speed. So we are absolutely going to be judged on the basis of our digital experience in terms of our brand's relevance, if you don't have it you are not going to be relevant."
Meanwhile, to be relevant Wendy's has to cultivate a loyal base of customers. If digital transformation is done right, it "can create real stickiness for the customer experience," said Trimm. Toss in the efficiencies and cost savings that information technology can bring and Trimm and Bob Wright, operating chief at Wendy's, believe they can change the financial profile of the company.
Here's a look at how Wendy's is approaching its digital transformation.
Bring multiple disciplines together. Wendy's has created a lab, called 90 Degree Labs. The lab has been around for a bit more than 18 months and is outside of Ohio State University. Trimm noted:
"It is staffed with engineers and experience -- customer experience and user experience experts as well. And it produces three products for us: our website Wendys.com; apps for Apple iOS and also Google's Android; and those customer self order kiosks. We believe that bringing together the expertise that we have there -- the built environment, and the processes that we have -- is creating a technological source of competitive advantage for us."
The ultimate goal is to build the Wendy's of the future.
Use an agile development process. Wendy's has adopted agile to rapidly prototype processes and approaches. The general idea is to iterate on technologies and launch new versions of the front-end software that will improve the experience.
Be customer-centric. At 90 Degree Labs, problem solving has to be at the forefront. "We spend a lot of time talking with customers about what it is that they need, what problems they are trying to solve and then attempting to meet those needs through the things that we are doing as part of our agile process," said Trimm, who noted that Wendy's brings in customers regularly. Wendy's will go out in the field to randomly have customers try out new ideas.
Remember the food. Technology can also be an enabler in the kitchen via automation and processes that can make food more fresh and made-to-order. Via mobile ordering and kiosks, Trimm said customers can get customized food at the right place and time. "We were always going to make that sandwich fresh for you, including any customizations that you might have ordered. We weren't going to ever make a standard built sandwich and leave it on the side hoping that a customer was going to come along and order just that thing. So, customization is absolutely built into our operations process," said Trimm.
Don't forget the foundation. Wendy's has spent the last year investing in one point-of-sale system across its network to bolster efficiency. That standardization, which can be tricky when working with franchisees, allowed Wendy's to develop once and iterate. In addition, process, product changes, technology and the operating model all have to align. If the foundation isn't in place it's difficult to deliver a consistent experience across all physical and digital channels. Wendy's also consolidated apps for easier management. The trick for Wendy's is to roll out that foundation across its network.
For instance, kiosks will be rolled out aggressively in 2017. And there's a good reason for that rollout: a trio of kiosks will run a franchise $15,000 and deliver a payback within two years.
Collect data. With kiosks, apps and its point-of-sale systems Wendy's can manage lines, plan kitchen capacity and use front-end analytics to improve the experience. One insight: kiosks are a gateway drug to more mobile ordering. Trimm elaborated:
"I think eventually everything will be mobile, right. I think everybody sees that as being written in the future. However, kiosks do give us a stepping stone to that. Because I don't need to persuade anybody to download anything to be able to use a kiosk, they can just go in and use it. Gets customers used to self ordering, gets them used to navigating our menus and so on. So we think that is a really important -- a really important direction. Kiosks first, leading to mobile certainly over time."
Continuous innovation is also key, said Timm: "Physically having the kiosks does give us a tremendous opportunity to innovate on the software. We can keep deploying new versions of the software as we come up with new ideas, and you will see some of that certainly over the next few months as we start to bring some of those things into the market."
By using data, Wendy's can continually tweak the experience.