Will Arby's Buying Wendy's Equal Cheaper Burgers?

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In a merger cooked up in fast food heaven, Wendy’s International (WEN) agreed to be acquired by Triarc Companies (TRY) the owner of roast beef chain Arby’s on April 24.

The deal came a little less than a year after Nelson Peltz, billionaire and CEO of TRIARC, wrote a letter to Wendy’s chairman stating his group was a “natural, strategic buyer” for the home of the Junior Bacon Cheeseburger. “It’s a very interesting and perhaps savvy acquisition,” says Drew Coburn, branding and marketing strategist at Cubism Branding, in Harrison, N.Y. “Both Wendy’s and Arby’s in the realm of fast food have this authenticity and distinctness that separate them from the crowd.” Arby’s, and its iconic cowboy hat logo, has “more of an older audience,” while Wendy’s, whose billboards include a pigtailed little redhead, is more for the “youthful audience or family oriented,” says Dan Schawbel, a Generation-Y personal branding expert.

So what does this merger mean for you? MainStreet went looking for answers.

In Your Belly
Are the American fast food staples going to get a makeover? The Wendy’s Junior Bacon Cheeseburger and Arby’s Roast Beef sandwich are flagship sandwiches, but they may be joined by new offerings soon. “The menu at Wendy’s is really good,” but it needs to be reinvigorated,” says Coburn. As for Arby’s, the roast beef specialist may be getting a menu makeover, too. While a recent Morningstar analyst report is optimistic about Wendy's Baconator and the Fix ‘n Mix frosty, “the Arby’s brand is a piece of Americana that has gotten a little dusty and [the Wendy’s merger] might teach it how to restore the luster,” says Coburn. “There’s a lack of excitement around the menu,’ says Coburn. We can only imagine what will happen to the menu after the merger is complete.

In Your Wallet
The buyout is expected to cost Triarc about $2.34 billion, but that doesn’t mean that Wendy's investors should be expecting a check with nine zeros. Investors will receive a fixed ratio of 4.25 shares of the TRY Class A class common stock for each share they own, according to CL King & Associates. Will the merger bring prices down for consumers? Let's put it this way, don't expect a $0.50 cent value menu.

In Your Head
A new jingle or two may be on the way, and if the advertising writers do a good job, you'll be humming their tune. Don’t expect an “I’m Loving It” ad, that’s already been done. Justin Timberlake and Paul Newman are just two celebrities that helped to revive McDonald’s (MCD) in advertisements. So, who could be the face of Arby’s? “Maybe a Kid Rock," says Schawbel. "Or, someone that has the cool look, but can still relate to the truck drivers.”

Whoever the spokesperson, Schawbel has faith in Peltz, the deal maker. Citing Snapple as an example where Peltz successfully reenergized an older brand, Schawbel says that Peltz “has shown previous results and he can unify the brand.” We'll soon see if he can beef up the bottom line here as well.


If you enjoyed this story, you may like the Mars and Wrigley Merger, Budget Cooking Tips from Nikki from the Top Chef, or Upscale Your Grilled Cheese.

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