American fast food behemoth Wendy’s will officially start slinging its burgers again in Australia this week, with a promise to bring a “challenger mindset” to its ambitious plans to open hundreds of restaurants across the country.
And it will need that upstart energy if it wants to meaningfully compete with McDonald’s and Hungry Jacks, according to Australian fast food sector expert Tom Potter.
A new Wendy’s restaurant will open on Cavill Avenue in Surfer’s Paradise on the Gold Coast on Wednesday morning. It will be the first Wendy’s outlet to operate in Australia since the 1980s.
US franchise giant Flynn Restaurant Group will operate the store under an exclusive master franchise agreement, which it secured in August 2023.
Name-checking “kings, colonels and clowns” in its official announcement on Tuesday, Flynn Group said the Gold Coast store will be the first of around 200 Wendy’s restaurants planned for across the country.
Speaking to SmartCompany, Potter, who founded Eagle Boys Pizza and advises on franchising and quick service restaurant (QSR) businesses, said Wendy’s’ success is no sure thing.
New fast food businesses cannot compete in Australia without drive-through operations, he said, and there is a significant “race for space” and suitable real estate.
“Even when a drive-through site becomes available nowadays, there’s a third party in there,” he said.
“It’s not just the burger and chicken guys, it’s actually the coffee guys taking the drive-through sites as well.
“If Wendy’s is not building drive-throughs, they’re not in business.”
Australian-born QSR chain Guzman y Gomez also sees drive-throughs as part of its aggressive expansion plan, putting further pressure on suitable real estate.
The second hurdle, Potter said, is differentiation from the other burger options available in the Australian market today.
Carl’s Jr launched in Australia in recent years, and Five Guys has recently opened inner-city venues offering upmarket burger options, soaking up interest in ‘classic’ American burger brands.
But it is the virtual duopoly of McDonald’s and Hungry Jack’s that will be hardest to overcome, Potter said.
“Australia has an absolute habit of having two brands… Two chicken chains are the leaders, two burger chains,” he said.
“This country only has enough space, in most cases, for two players, which is a tragedy, but it’s true.”
Other players in the burger space — stretching from national brands like Grill’d and Betty’s Burgers down to smaller neighbourhood businesses — aren’t competing at the same level, he added.
“The cold, hard reality is Wendy’s are not in the same space,” Potter continued.
“Wendy’s are in direct competition with Pizza Hut, Domino’s, KFC, Hungry Jack’s, and McDonald’s, totally different brands and businesses.”
The incoming Wendy’s business is not to be confused with the existing ice-cream and hot dog-focussed Wendy’s Milk Bar brand, which is owned by Supatreats Australia, whereas the US brand is best known for the square shape of its burger patties and its Frosty dessert.
While there was some concern about the potential for the two brands to co-exist in Australia with the same name in 2023, trademark experts suggested there would likely be little confusion between the long-standing ice cream kiosks found in shopping centres and the US burger chain with its iconic logo featuring a red-headed girl modelled on the daughter of founder Dave Thomas.
Thomas originally founded Wendy’s in 1969 and the Ohio-based company and its franchisees now operate more than 7,000 venues globally.
Meanwhile, Flynn Group operates more than 2,900 venues across seven brands, including Wendy’s, Applebee’s, and Taco Bell.
It added 260 Australian Pizza Hut restaurants to its holdings in 2023, and says this puts it in good stead to become a major player in the Australian fast food sector.
Lauren Leahy, chief transformation officer at Flynn Group, said the master franchisee is “proud to bring a fresh approach to the Australian food scene”.
“The Wendy’s brand was built on doing things differently, from square hamburgers to being one of the most talked about brands on social media,” she said in a statement provided to SmartCompany on Tuesday.
“Wendy’s embraces a challenger mindset, and we think Australians do too. We’ve put our guests in the centre of every detail from a vibrant new restaurant design with a laser focus on delivering the best chicken and hamburger experience.”
The Surfer’s Paradise store will feature exclusive menu items tailored to the local market, including hand-breaded chicken tenders, and Wendy’s has committed to using 100% Australian-sourced beef and chicken in its local stores.
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