Earlier this week, I was running a little early to pick up my son from the gym, so I thought: “Why not stop for a little treat?”
A Wendy’s (WEN) was right there, and I figured “haven’t been to one of these for a bit… so it’ll be a nice change.”
As I pulled into the drive-thru, I thought about all the times my grandma had treated me to one of those tall, frozen delicacies Wendy’s is known for: The Frosty.
I had to have one now.
“Small nuggets and a small Frosty,” I said.
“Strawberry or chocolate,” the disembodied speaker voice asked.
Wait… what? Everyone knows that a Frosty comes in one flavor.
Chocolate. Period. That’s it.
That’s when I realized my last trip to Wendy’s was longer ago than I remembered.
It’s also when I got those first inklings that “something” was wrong. Even very wrong.
With Wendy’s.
But I pulled up to the pickup window, paid my tab, and grabbed the bag… Found a quiet parking spot, readied myself for snack heaven, and bit hungrily into my first nugget.
That dry (and ice-cold) blob of processed “mystery meat” turned those dreams of Heaven into Hades on Earth.
Disgusting.
I spat it out, crunched up the bag, and moved on to the real reason for my lunch stop.
Popping the lid off my Frosty, I didn’t find the masterpiece of frozen dairy delight I remembered. With lumpy crystals forming, it didn’t look the same. And one spoonful was all I needed to know it didn’t taste the same either.
That was it. It was over.
The Wendy’s I’d fallen in love with as a kid was no more.
And I was left to wonder… Hey Dave, “Where’s the beef?”
Trouble Ahead?
Wendy’s has come a long way from that Clara Peller “Where’s the Beef?” ad campaign, from its sunroom dining areas – and even from its fun joyride at the top of the Twitter charts for its infamous roasts and customer engagement.
But money never sleeps, rivals don’t run in place, and market leaders can wake up one day and realize they’ve actually fallen behind.
Even leaders like Wendy’s.
In fact, Wendy’s now finds itself in last place behind other major “fast food” players when it comes to consumer mentions on social media…
As well as market share…
At a mere 1.7%, the volume of social media mentions our database is logging for Wendy’s pales in comparison to peers like McDonald’s (MCD).
But Wendy’s isn’t standing pat.
It’s making moves of its own…
Into artificial intelligence (AI).
Could this hot new AI strategy be the secret ingredient Wendy’s needs for a comeback special?
I’ll answer that question for you here today…
A Frosty Future
Even a new strategy that includes the use of artificial intelligence may fail to defrost Wendy’s problems.
The company grabbed some headlines recently with its food delivery automation plan. Wendy’s wants to use an old-school underground banking tube to send your order from the restaurant to your car, no human needed.
This streamlined future includes an AI integration partnership with Google (GOOGL), where an efficient chatbot would process your drive-thru order.
It’s a tech-embracing storyline that’s helped drive Wendy’s shares higher. The stock is trading 41% above its year-ago price, as of this writing.
However, the data says that Wendy’s shares may be entering overbought territory.
We’re tracking an increasing bearish divergence between Wendy’s consumer demand and the company’s stock price.
Wendy’s Purchase Intent mentions are currently trending 27% lower on a year-over-year basis even as WEN shares run higher.
While automation and AI integration is a move in the right direction, Wendy’s still has a long way to come in from the cold – and shift its score into bullish territory.
For a sweeter opportunity in fast food, check this out. 🍩
Until next time,
Andy Swan
Co-Founder