In an effort to capitalize on the surge in demand for food deliveries amid the COVID-19 pandemic, The Wendy’s Company announced plans to open 700 delivery-only kitchens across the United States, Canada, and the United Kingdom by partnering with ghost kitchen startup REEF. However, it seems the fast food giant has had a change of heart. During an earnings call, The Wendy’s Company CEO Todd Penegor revealed the company is pulling out of the expansion plan with REEF, stating that delivery-only kitchens will not be a significant part of the company’s growth trajectory going forward. The Wendy’s Company had already scaled down the expansion plan in 2022 and anticipated opening only 100-150 delivery kitchens in Canada and the UK by the end of 2025.Penegor attributed the change in plans to “a change in REEF‘s growth strategy, which includes a shift to operating multiple brands from its locations.” Additionally, the difficulties in obtaining permits have caused some challenges with opening delivery kitchens in some locations in the US.
Despite the change of plans, Penegor emphasized that trying out less traditional concepts is an important learning experience for The Wendy’s Company, so that “we continue to move the brand forward and have more access to our brand.” Nevertheless, the chain’s immediate focus will be on developing and opening traditional stores.
While the exact number of delivery kitchens The Wendy’s Company will open over the next few years remains unclear, the total is unlikely to approach the 700 called for in the original expansion plan. The chain expects to open a “small volume” of REEF locations in Canada and the UK this year. CFO Gunther Plosch noted that “it’s really less REEF units than even previously contemplated as we reduced our outlook with REEF.”
The Wendy’s Company already established 16 REEF locations in the UK by the end of 2022, and it seems the company will continue to explore alternative concepts to drive its growth trajectory forward. However, for now, the focus will be on traditional restaurant growth across the US and the established international markets while continuing to expand in the UK and broader Europe.