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New Wendy’s logo can’t fix ‘old fashioned’ stock

In the words of a Wendy’s press release announcing the changes, has a design that is “contemporary and iconic, as it further emphasizes the Wendy’s cameo while retaining the familiar Wendy’s ‘wave’ design.” The smiling, freckle-faced Wendy stays, but the famous red pigtails have broken out of the black circle that has surrounded her for decades

Mary Wykoff/The Wendy’s Company

Wendy's pigtails are getting their first makeover in 30 years. Enough to inspire you to take a mad dash to your nearest restaurant for a square burger and frosty dessert? Didn't think so.

It certainly didn't get investors hungry for the stock. As the fast food chain, founded by Dave Thomas in 1969, revealed plans last week to beautify its image, shares got uglier, skidding to two-year lows.

Its new pared-down logo, in the words of a Wendy's press release announcing the changes, has a design that is "contemporary and iconic, as it further emphasizes the Wendy's cameo while retaining the familiar Wendy's 'wave' design." The smiling, freckle-faced Wendy stays, but the famous red pigtails have broken out of the black circle that has surrounded her for decades (see the logo through the years here).

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The problem is that The Wendy's Co. isn't exactly breaking new ground with its revitalization plans, which also include modernizing and adding some upscale sizzle to its 6,000 locations across North America.

Many of its competitors are already undergoing a chic facelift. McDonald's Corp. long ago identified the desire among consumers for a more refined fast-food eating experience, with many of its restaurants remodelled with such modern touches as leather chairs or couches and even flat-screen TVs.

Even Tim Hortons, which has had no problems convincing Canadians to drop by for a visit, announced last year it would spruce up certain locations with such "comforting" changes as soft lights and a more attractive floor layout.

Embracing modern trends while scaling back its message of "old-fashioned" burgers is probably a good move for Wendy's. But it also has to differentiate itself from the growing ranks of competitors who also now emphasize food freshness and higher-brow surroundings.

I dropped by for a burger last weekend. It was tasty enough, but the bun was soggy and there was nothing special about a beef patty that's accompanied with the standard mayo, tomato and head lettuce.

I don't know anyone who mentions Wendy's as their fast-food favourite, and a tweaked logo isn't going to make the chain any more cool in the eyes of the younger demographic that the industry craves.

That said, as an investment, value hunters may already be finding Wendy's more attractive; its beaten-down shares have left them trading for less than book value, at a ratio of 0.83. But analysts certainly aren't jumping to that conclusion, with 15 out of 20 of them recommending the stock as a hold and three downgrading the stock since late September.

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There are signs the chain is losing momentum after managing five consecutive quarters of positive same-store sales growth. Jamney Capital Markets analyst Mark Kalinowsi, for instance, said recently his channel checks suggested same-store sales could be flat to down 2 per cent in September, likely leading to a disappointing quarter overall.

If the chain doesn't start resonating better with consumers soon, Wendy's freckles may soon be mistaken for tears.

Readers: What do you think of Wendy's new logo design? Will a fresh face help to grow its burger chain? And do you think its stock makes for a good investment? Trade your shots in the comments.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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