Thu, Dec 29, 2011 - Page 10 News List

Wendy’s adds foie gras burger in bid to fill Japan’s ‘high-end’ fast food niche

Bloomberg

Customers line up outside a Wendy’s restaurant in the Omotesando area of Tokyo, Japan, yesterday.

Photo: Bloomberg

Wendy’s Co, the third-biggest US fast-food chain, added goose-liver pate and truffles to burgers as it invests as much as US$200 million on a return to Japan two years after leaving the country.

The Japan Premium sandwich sells for ¥1,280 (US$16) at Wendy’s in Tokyo’s Omotesando luxury shopping area, the first of a targeted 100 shops. “We think the fast-food market here is ready for something different,” Ernest Higa, chief executive officer of Wendy’s Japan LLC, said in an interview at the restaurant’s opening on Tuesday.

Wendy’s is re-entering Japan under a plan to expand outside the US, where it got 92 percent of revenue last year, after posting losses in six of the past eight quarters. The Dublin, Ohio-based chain is focusing on the world’s second-biggest fast-food market first as it looks for operating partners in China and Brazil.

“Japan is the most important of the three to me, because we are actually selling burgers here today,” Darrell van Ligten, international division president, said in an interview in Omotesando.

The company expects to eventually expand to about 700 restaurants in Japan, compared with about 3,300 for McDonald’s Corp’s local unit, the nation’s biggest fast-food burger chain.

Wendy’s ended a 30-year run in Japan in 2009 after its partner Zensho Holdings Co declined to renew the agreement, saying it would focus on building its main Sukiya chain of beef-bowl restaurants.

“Our partner had a pretty significant business which was their primary focus,” van Ligten said. “Given the size of the different businesses, Wendy’s wasn’t as much of a focus area as we would have liked it to be.”

In coming back to Japan, the burger chain is counting on its premium menu to lure customers in a “very, very competitive” environment, Higa said.

Wendy’s menu pits it against Japanese rivals, including Mos Food Services Inc’s Mos Burger in terms of taste and Lotteria Co, which has a ¥1,800 Matsuzaka beef burger, for premium items.

However, Japan’s outlook for slow economic growth adds to the pressure on Wendy’s to find a new niche in the industry.

The Bank of Japan last week said the economy’s rebound from the March 11 earthquake has come to a pause, lowering its evaluation for a second straight month because of the local currency’s strength and a cooler global expansion.

McDonald’s Holdings Co Japan forecasts sales of ¥304.5 billion this year, a third straight annual decline and 25 percent less than 2008 revenue.

“With the economic situation, you need to bring something that is unique and exciting,” Higa said.

The “new fashion” of high-end fast food will give the chain what it needs to thrive, he said.

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