Wendy's eyes significant expansion as it opens 400th location in Canada

Wendy's has opened its 400th location in Canada, the latest move in an aggressive growth strategy that includes adding more outlets in Quebec and the Maritimes.

The company opened the new restaurant in Ottawa, featuring a unique design that includes a smaller in-store footprint as well as separate pick-up windows for drive-thru customers and delivery drivers. Wendy's says the new design, which was first launched in Canada, is more energy-efficient, costs less to build and is ideal for urban locations, food courts and drive thru-only stores.

The company plans on opening more of these locations as it launches expansion plans across the country.

"Canada is the largest of our international markets and we've been here for 40 years now, but our growth was not at an accelerated pace," Abigail Pringle, Wendy's international president and chief development officer, said in an interview with Yahoo Finance Canada.

"We've now been ramping up our growth over the last few years, and have opened up more than 50 new restaurants in Canada. We've been building up our momentum... we are definitely on a different trajectory."

Pringle says there is "a big effort" at Wendy's to increase new franchise recruitment, as well as engaging with existing owners to address potential growth opportunities. Quebec is a particular focus for the company, where just 3 per cent of its total restaurants are located. Wendy's recently signed a franchise deal that will see the Compass Restaurant Group take over 13 Wendy's locations, as well as build 13 more in the province by the end of 2025.

"In addition to that deal, we're now actively recruiting new franchisees for Quebec. The Maritimes is another area where we have a great set of restaurants that do very well, but we need more franchisees," Pringle said.

"There's a lot of opportunity all across Canada, but those were the biggest ones where we think we are under-penetrated."

The store expansion comes amid a growth period in Canada. Wendy's has seen its share of the hamburger market grow since the pandemic began, surpassing Dairy Queen to become the third most popular brand in Canada. Pringle credits the increase in sales and traffic in part to the fact that 95 per cent of Wendy's locations in Canada include a drive-thru, something that was critical for fast-food chains through the pandemic. She also says digital engagement grew through the pandemic, with more customers turning to Wendy's through online channels.

"A big part of that increase was our engagement with delivery, in digital and with our drive-thru's, so we were able to navigate that challenge through the pandemic," Pringle said.

Challenges remain

At the same time, many fast-food chains around the world are facing cost inflation and labour market challenges. Last week, Wendy's Co. projected its annual profit would be below market estimates due to the widespread labour shortage and rising costs of raw materials.

While Wendy's is facing these challenges in Canada as well, Pringle says the situation is "manageable."

"I would say compared to the U.S., I think the U.S. is a far more challenging environment," she said, adding that the company is working on managing possible rising costs associated with labour, including Ontario's move to increase the minimum wage to $15 an hour starting Jan. 1.

"Many of our restaurants are already paying that," Pringle said.

"The important thing is that we have a really collaborative work with our franchisees and a franchise advisory board that helps engage and problem-solve together."

Still, Pringle says Wendy's digital push, drive-thru focus and future growth plans have left the company in a good position coming out of the COVID-19 pandemic and for the subsequent recovery.

"There's no question that definitely had an impact on us just like everyone, but I think we'd been able to be agile to make sure we can still engage with customers," she said.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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