MHGU is small but represents the current trends at WEN.
Meritage Hospitality Group operates 73 quick service and casual dining restaurants, including 69 Wendy’s restaurants in Michigan and Florida. The company, which is the only publicly traded Wendy’s restaurant franchisee (MHGU – currently up 12% today), reported 3Q09 earnings for the period ended August 30 and attributed part of its earnings improvement to a successful new Wendy’s product launch.
Specifically, Meritage’s CEO Robert E. Schermer, Jr. Stated, “We continue to experience improved margins and profit flow-through from our Wendy’s operations…. The new management team at Wendy’s International is delivering on its initial promises to the Wendy’s franchise system beginning with a successful new product launch of boneless chicken wings in June 2009. Looking ahead, we believe that Wendy’s has a strong new product pipe line and is focused on margin growth at the Wendy’s unit level.”
When WEN reported its 2Q results, management stated that it had started off the third quarter with great results on both of its wings products, helping to drive comparable sales growth at Wendy’s up 2% in July (from -1.2% in 2Q09). Although Meritage only represents a small percentage of Wendy’s total U.S. restaurant base, the company’s improved performance could signal that the management changes and new products at Wendy’s are working to grow market share.