Wendy’s reprise in Australia sparks fight talks among local fast-food heavyweights

Grill’d has grown to 160 stores and captures a modest 3-4 percent of the market with its premium “fresh, healthy” burgers. Betty’s Burgers currently has 54 stores but plans to open about 25 local stores per year. Then there are other homegrown outfits like Mary’s Burgers, Huxtaburger, and Milky Lane, which have amassed a $9.2 billion fanbase in the local burger market, according to research firm IBISWorld.

Wendy’s ambition to test the waters in Australia again follows a recent trend of American burger giants trying to crack the Australian market. Despite the hype, these invaders have had limited success so far.

Five Guys has 1425 stores in the US and three stores in Australia. Char-grilled burger chain Carl’s Jr. has more than 1,000 locations across the US but has limited visibility in Australian cities. However, it has achieved some success along Australian highways with 30 venues, mostly drive-throughs.

Wahlburgers, owned by actor Mark Wahlberg, which has 49 stores in the US has four in Australia; while In-N-Out, which has nearly 400 locations across the US, has only ever operated sporadic — albeit very popular — on-site pop-ups.

laying out the battlefield

The fast-food gold rush coincided with the rapid rise in the social status of the humble burger, repackaging it from a cheap, low-priced commodity into a more upscale offering well-suited to a social dining experience.

Food consultant and Titanium Foods chief executive Suzee Brain says while Australians and Americans share a common love for burgers, fried chicken and pizza, any US chain entering the Australian market in 2023 would face a struggle of at least two dimensions : commercial and cultural .

The operating costs of setting up a business in Australia are relatively higher compared to the US. A new chain would have to open almost 200 restaurants to even be a fifth the size of McDonald’s. “But it’s going to be several years before they hit the market before you start buying your potatoes cheaper and your buns cheaper,” Brain said.

Our transportation costs and house prices are high, she added, and that’s before you factor in wages. Australia’s minimum wage is $21.38 compared to America’s much lower rate of $11.03 ($7.25).

“There are many commercial implications until you reach a scale that allows you to compete on price. So this is a tough one for Wendy’s,” she said.

Then you have the changing tastes of a younger generation that’s embraced flexitarianism – with an emphasis on plant-based foods – and choosing to eat five smaller meals instead of three larger ones.

“The oversized burger and the increase in size aren’t necessarily things that will resonate well with the emerging demographics,” Brain said.

Cultivating social capital and cultural relevance is arguably the most difficult challenge Wendy’s faces. McDonald’s has firmly established itself in our fast food culture, while players like Five Guys, In-N-Out, Shake Shack and White Castle enjoy some street cred thanks to the globalization of American media.

Wendy’s needs to work to build brand awareness among Australian consumers, many of whom might confuse it with South Australian-born ice cream, milkshakes and hot dog franchise Wendy’s Milk Bar.

“I find [fast food] It’s part of pop culture,” said Stuart Cook, CEO of global burgeoning plant-based burger outfit Flave. “In-N-Out and Shake Shack have definitely become part of pop culture in the last 10 years. Younger people know about it because they see it in movies, they see superstars go there after the Oscars red carpet.”

Australian chains go global

The tide is now turning in the other direction. As Wendy’s scouts for master franchisors, the boss of every local burger joint this imprint spoke to wanted to expand into the US, with Flave’s Cook and Grill’d’s Crowe taking calls from New York or a Los Angeles airport. Regardless, Guzman y Gomez intends to venture deeper into the US and one day Mexico.

“It’s Australian concepts that should go to the US, because those that succeed here in Australia are almost born of fire,” said Cook, who argues that Australian companies operate on lower margins and have more robust, productive processes than theirs USA must have colleagues where wages are lower.

“[Wendy’s] Either they increase their selling price proportionately…really reinvent themselves from a productivity standpoint or work with an amazing Australian operator who can take this model and tweak it to do incredibly well here in Australia.”

The fight must also be fought on more traditional ground. Troy McDonagh, managing director of Betty’s Burgers, says companies that provide customer service always stand a chance.

“I think there’s always room for companies that deliver the key elements of hospitality and that provide an environment that your customers or your guests love,” he said.

“When you find the magic that a customer is ready to receive, they will come back again and again and again because the experience is the same… I’m sure at Betty’s you don’t worry about that [market] Saturation.”

Although Wendy’s is a 54-year-old brand, both Brain and Cook note that their legacy could offer a surprising advantage if executed well.

“Retro is back,” Cook explained. “This is where store design could play a really important role,” Brain added.

Despite skepticism from industry competitors, franchisee interest in Wendy’s has been high, according to Wendy’s franchise consultancy and local partner, DC Strategy.

“We have received the most applications for any franchise ever as a result of supporting Wendy’s entry into the Australian market,” said Barry Money, CEO of DC Strategy Group, who said it received “hundreds” of applications. “To be honest, we got swamped.”

“Wendy’s recognized that there was a niche for her brand in the market… She has a reputation for being a friendly and family-friendly brand.

“They are extremely franchisable.”

Abigail Pringle, Wendy’s Chief Development Officer and President of International, described Australia as a high priority market with great potential for long-term growth.

“We have been interested in this market for years and Australians are asking us to bring our fresh, quality and great tasting food to the country. We’re ready to take the call and we’re excited to have a new home in Australia,” she said.

The chain is seeking “qualified, well-established master franchisee candidates who share our drive for accelerated growth, have strong financial assets and a proven track record of building brands in Australia,” she added.

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When Wendy’s collapsed in 1985, its remaining 11 stores were swallowed up by Hungry Jack’s, which closed two stores and converted the other nine into Hungry Jacks stores.

“The burgers are better at Hungry Jack’s,” said a rep. “And we want it to stay that way.”

McDonald’s declined to comment.