Yahoo Finance Wendy’s CEO on new Google-powered drive-thru: You won’t know ‘it’s AI taking your order’
Here's what Wendy's AI drive-thru may mean for customers and its stock price.
You won't hear the friendly voice of Wendy's (WEN) CEO Todd Penegor booming through the burger chain's new AI-powered drive-thrus.
"You won’t even know that it’s AI taking your order, but you’ll be talking to the voice of Wendy’s," Penegor said on Yahoo Finance Live (video above), quipping: "It's not my voice, God help us."
But over time, you will likely hear a welcoming automated voice from a ginormous digital monitor at Wendy's drive-thru. And that may unlock some fatter profits — and a beefier stock price — for the square-burger seller.
Wendy's will officially roll out an automated drive-thru in June at a company-owned spot in its home market of Columbus, Ohio. The digital ordering screen will be powered by natural language software cooked up by Google (GOOG, GOOGL).
Google's software is designed to understand how consumers order from the menu, meaning it stands to make compelling suggestions to buy more. That's better known in restaurant land as "upselling" a customer.
The technology will also go a long way to improving food quality at Wendy's and drive-thru times, which may prove to be welcome news to hungry, hurried fast-food diners.
"Now we're really thinking about how do we take some of the friction and make the experience even more seamless at our restaurants," Penegor explained of the initiative. "How do we set our employees up to be in a position to succeed and make their lives a little bit easier in the restaurant? Get them positioned to work the grill station? Get them positioned to make hot and juicy hamburgers fast and accurate every time? That's what we're trying to do."
Wendy's will probably look to automate more of its drive-thrus to keep pace with technological changes in generative AI and an evolution in how diners are interacting with the Frosty King.
Penegor is bullish on the potential, of course. He said the company is thinking through how to make a smarter digital menu board, connect it to Wendy's loyalty program, create more personalized menus, and get consumers to trade up their purchases.
"Those are all opportunities," Penegor explained. "A little further off, obviously, but you got to start laying the pipework in the platforms today to really bring all of that to life."
For Wendy's, its AI initiatives add another good story to tell investors after a mixed year of performance in 2022.
Wendy's said on Wednesday its US same-store sales increased by 7.2% in the first quarter on the back of premium-priced burgers. Higher menu prices played an important role too.
Customer count grew each month of the quarter. Meanwhile, international same-store sales surged 13.9%.
Wendy's stock rose 1% on Thursday morning. The stock is up 1.6% year to date compared with a 7% gain for the S&P 500. McDonald's (MCD) has gained 11.7% on the year amid sizzling sales globally.
To keep growth going and jumpstart the stock price, Penegor told Yahoo Finance that Wendy's will expand its late-night hours this summer, promote breakfast items more, and introduce new premium-priced sandwiches.
The Street is on board with all of that as possible stock price catalysts.
"The 1-on-1 marketing deployment, digital and loyalty program expansion, increased staffing and speed of service, and late night day-part extensions are just too attractive to be yielding only a flat traffic in the next 2 years (guidance)," Wendy's bull and Bernstein analyst Danilo Gargiulo wrote. "With this outstanding potential, the stock trading at its 5-year low valuation and with a dividend yield of 4.4%, we can't possibly be neutral on the stock."
Penegor thinks near-term fundamentals are where investors should be focused on right now, with automated drive-thrus as more of a future earnings driver.
"We are not an AI stock," Penegor added. "I see us as an innovation company."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
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