Wendy’s is tapping loyalty offers and late-night delivery hours to drive digital engagement and in turn to boost sales overall.
The quick-service restaurant (QSR) giant, which has more than 7,000 locations worldwide, shared in its third-quarter 2023 financial results reported Thursday (Nov. 2) that it has seen sales growth, boosted by its focus on digital initiatives and customer loyalty.
“We’ve got folks to get into the app with some compelling values … and we want to get folks into the app, because what we do see is more frequency and higher checks over time for those consumers,” Wendy’s President and Chief Executive Officer Todd Penegor said on a call with analysts.
He noted that loyalty is a long-term play, with new members yielding “maybe slightly lower check” as they redeem the offers meant to draw them in, but down the line, that dip is “more than made up” for in lifetime value, as those customers come in more frequently.
In the quarter, global digital sales accounted for 13% of total sales (12% in the U.S. and 18% abroad), marking a 30% year-over-year increase, according to a presentation shared with analysts. As such, the company expects global digital sales to reach $1.8 billion for the whole year.
The company’s loyalty program played a crucial role in this success, with over 35 million U.S. loyalty members and a 40% quarter-over-quarter growth in monthly active users.
Overall, a growing share of consumers is engaging with QSRs’ loyalty offerings, according to PYMNTS Intelligence’s March report, “Connected Dining: Consumers Like the Taste of Discount Meals.” The study, which drew from a survey of more than 1,800 U.S. consumers, found that 51% reported using at least one restaurant loyalty program, with a far greater share doing so at QSRs than full-service restaurants (FSRs), and revealed that adoption of QSR programs had grown 15% year over year.
One of the ways that Wendy’s is seizing on digital opportunities is by targeting consumers’ late-night delivery spending.
“Late night continues to be a fast-growing segment of the QSR business, and we’re outperforming the category at late night, and we continue to have a lot of opportunity to continue momentum,” Penegor said. “It’s a great business, a lot of incremental volume without adding any labor. We do see a big delivery business at late night with that nice average check.”
Indeed, delivery occasions present a significant chance to drive check size. Findings from PYMNTS Intelligence’s Connected Dining reveal that, as of the start of this year, consumers were spending $36.20 on average per delivery order. This figure is nearly twice the $18.20 that restaurant customers spend on their average pickup order.
Going forward, Penegor noted, the company aims to further drive that digital growth.
“Looking ahead, there is still significant digital growth to be captured,” Penegor said. “The large uptick in monthly active users last quarter and the increase in our digital sales expectation is just the taste of what’s in front of us. I am confident that continued execution of our plans alongside our key partners will drive our digital business in the years to come.”