US fastfood group Wendy’s has announced plans to close a raft of Baja Fresh outlets in response to declining sales. Increased competition from fastfood restaurants and consumer demand for healthier, more convenient foods have left the chain struggling to adapt to rapidly changing tastes. As Wendy’s seeks to get back on track, it needs to focus more on meeting consumers’ demands.
Wendy’s acquired fast-casual Mexican-style chain Baja Fresh in 2002 for US$275m, and has been plagued by troubles ever since. The decision to axe 15-18 underperforming Baja Fresh restaurants comes on the heels of a recent announcement to close five other Baja Fresh locations, and will result in a charge of $17-$20m for the company.
Baja Fresh, which grew in size by 35% in 2003 with the addition of 74 new branches, is only planning to open 40 new restaurants in 2004. Additionally, Baja Fresh has struggled with declining same-store sales, announcing a 7.5% decrease for its third quarter against Q2, while Baja Fresh sales saw a 5.3% decrease overall last year.
While Wendy’s points to poor real estate selection as the culprit for flagging sales, other factors may also be at work. Growth of fast-casual dining in general is slowing down. Fastfood restaurants such as McDonald’s are offering new healthy and gourmet-style options at lower prices, a family-friendly atmosphere and a faster preparation time. These additions are cutting into the market niche created by fast-casual restaurants, which also provide convenient, gourmet-style meals, but with more expensive prices and slower service.
Wendy’s is planning an 18-month long overhaul of the Mexican-style chain, focusing on changing the restaurant to meet consumer trends towards health, faster and more convenient service, and family-style dining. With consumers working longer hours than ever before and spending less time with their children, meals have become increasingly informal. The demand for convenient food that can be enjoyed by the whole family is growing.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIn response, Baja Fresh will improve service times and redecorate to make stores more comfortable for families. The restaurant is also adding four new kids’ meals to their menus, increasing the appeal to busy families with small children, and is making the menu healthier with two new salad entree options. By addressing its shortcomings with real solutions that will appeal to its core audience, Wendy’s is making real strides to put Baja Fresh back on track.
(c) 2004 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.