Original title: inflation, price increases, customer loss, Yundisi fast food: "catering industry joker" is just the appearance, the return to shareholders is not ambiguous, and the 60% dividend rate is not enough
WallStreetBets上的一句流行语：“要么在股市赚一番，要么在云狄斯吃晚餐（Either we print tendies or eat at Wendy's）”。
Author | The death knell of Bourgeois
Edit | Xiaobai
Amy Brown, the administrator behind the official Twitter account of Vendis Fast Food, is bored at work and sometimes tweets jokes that mock her competitors.
However, as the official account of Yundis fast food has become more and more popular, many netizens will deliberately @Yundis and pretend to accidentally order takeaway from other fast food brands as a way to make fun of Yundis.
And the straightforward replies of the official account of Yundisi were also screenshotted and saved by many netizens and made into memes.
For example, a netizen asked, "What if I like to eat Vyndis fast food, but my girlfriend likes McDonald's?", and the official account of Vyndis fast food replied, "I suggest you change to a girlfriend".
（来源：boredpanda）
1. The joker of the catering industry
At a time when people are cautious about speaking on the internet for fear of being politically incorrect, the official account of Vyndis stands out for its straightforward and bold style of speech.
In June 2021, the meme of Yundis began to be heavily followed by WallStreetBets, a popular Reddit sub-forum, and account comments became a buzzword in the community. For example, "Wendy's chicken tenders" is used as a metaphor for the earnings from stock trading.
The company's stock was also included in the "Meme Stock" by netizens on the sub-forum and bought in a rush, and the stock price rose 25% in a week.
However, unlike other stocks that were hyped by WallStreetBets, the operating performance of Vendis Fast Food was not bad at the time, and it was not shorted by too many institutional investors, and the company was in a period of expansion and growth.
Just two months before the attention of these netizens, the company announced plans to add 250 new restaurants around the world by the end of 2021, with a goal of reaching 7,000 outlets, and officially enter the UK market.
At that time, the company had just announced its first-quarter earnings report, with a quarterly net profit of 41 million (+187.5% year-on-year), and same-store sales also increased by 13% year-on-year.
By the end of 2022, the annual revenue of Vendis Fast Food reached 2.096 billion (+10.46% year-on-year), with a gross profit margin of 34.4% and a net profit of 177 million (-11.49% year-on-year).
As of Q3 2023, the company's revenue is 1.641 billion (+5.26% year-on-year), gross profit margin is 33.14%, and net profit is 158 million (+15.73% year-on-year).
(Note: Unless otherwise specified, the amount in this article is in US dollars by default)
(Source: Market Cap App)
Revenue growth in 2022 was driven by three main factors:
1. In Q4 2021, the company acquired the original 93 franchised restaurants in Florida based on the consideration of business optimization and converted them to a direct sales model, and the revenue of these restaurants increased in 2022;
2. Same-store sales of directly operated stores increased;
3. Due to the increase in same-store sales, franchise revenue and advertising fund income also increased (Yundis Fast Food will collect a percentage of the revenue from the franchise stores and deposit it into the advertising fund, and the funds from the fund will be used for the company's brand promotion).
Despite the increase in revenue in 2022, the net profit declined:
1. The adjustment of the tax law has caused the company to lose some of the original tax incentives;
2. Since Q1 2022, the company's interest-bearing liabilities have increased, resulting in an increase in interest expenses;
3. Operating margins declined.
2. Increase profitability through price increases
The United States is the company's main source of revenue, and in 2022, inflation in North America is significant, and raw material and labor costs have increased, compressing operating margins. As of Q3 2023, the United States is still the company's largest source of revenue, reaching 1.367 billion, accounting for 82.84% of the company's total revenue.
(Source: Market Cap App)
Secondly, due to the re-opening of the British market, more costs have been incurred. This is the third time that Vyndis has tried to enter the UK market.
Back in 1980, the company entered the UK, but exited six years later. In 1992, the company made a second attempt to enter the UK, but again eight years later.
More recently, in 2019, Vyndis Fast Food announced its re-entry into the UK. And in 2021, the plan to enter the UK market was officially launched.
Under the influence of these two factors, the company's operating margin was 16.86% as of the end of 2022.
By Q3 2023, this figure has improved, increasing to 18.0%. The main reason for the rebound is that the company has increased the price of its meals, which has improved its profitability.
Overall, however, the operating margin of Vendis is still in the lower middle of its peers, only higher than Yum China.
(Note: The start and end dates of each company's fiscal year cycle are different, and the chart shows a horizontal comparison of the last 10 fiscal years.) ）
(Source: Market Cap App)
In the first half of 2023, Vendis Express has increased the price of some products by 6%. In fact, since the end of 2021, the company has continued to increase prices.
In 2022, the cumulative price increase of Vyndis fast food has reached 35%, which greatly exceeds the industry average of 13%.
The cumulative increase over the past two years has been significant, with some customers reporting that it is now difficult to find a set menu under $10 in restaurants. Previously, Vendis Fast Food was known for its affordability, with many set meals costing as little as $4.
Under the current inflationary pressure, price increases have become the main means for many companies in the United States to maintain their profits.
Here Feng Yunjun remembers that on November 30, 2023, President Biden tweeted on American companies not to continue to raise prices, but this call was like a stone sinking into the sea, and no response was received from any company.
Although inflation has slowed in 2023, most companies in the United States have not stopped raising prices.
(Source: X)
In the United States, the restaurant industry is also a highly competitive industry. In order to survive, companies must find their own unique competitive advantage, otherwise they will only be eliminated by the market. Data shows that about 60% of restaurants opened in the U.S. will close in the first year of opening, and 80% will close within five years of opening.
In the fast food industry, McDonald's is almost the dominant one. As of the end of 2022, McDonald's is still the world's largest fast food brand, with a market share of 43.8%, while Vyndis fast food has only 2.8% of the market share, despite successfully squeezing into the top five.
（来源：Enterprise Apps Today）
Therefore, how to find its own characteristics and foothold in the highly competitive fast food industry has become the core issue throughout the development history of fast food in Vandis.
Before founding Vyndis, Dave Thomas ran a KFC franchise and was personally trained by KFC founder Colonel Harlan Sanders himself. Therefore, I have an intuitive feeling of the cruel competitive nature of the fast food industry.
In order to gain a foothold in the industry, Thomas decided to use his own children as a brand image, creating a nostalgic and family-oriented corporate image, which is different from the current mainstream fast food brands to attract customers.
Thomas, who has five children, found his daughter Melinda's nickname "Wendy" to sound the best, so he chose it as the name of the restaurant. Melinda's headshot has also become the company's trademark.
（来源：Business Insider）
In fact, the company's original name was "Wendy's Old Fashioned Hamburgers", which was also a reference to the image of a family business.
Another thing where Yundis tries to stand out is in the production of its burgers.
Founder Thomas came up with a recipe for using fresh beef to make hamburger patties. At that time, in order to reduce costs and extend the shelf life, fast-food restaurants on the market generally used quick-frozen beef. Thomas wants to attract customers with his commitment to using only fresh beef.
In its advertising, the company repeatedly uses "Where's the beef?" as a slogan to brainwash viewers into trying to convert customers from competitors like McDonald's or Burger King, which use frozen beef.
That's why today's Windis signature product, the square beef patty burger, has appeared. Founder Thomas thought at the time that since the company was already emphasizing the use of fresh beef, it should make a fuss about the shape of the burger to highlight this feature.
（来源：foodsided）
3. Rely on jokes to attract potential customers, and now customers are constantly losing
However, the most recognizable feature of Vendis Fast Food today is not its logo or food, but the joke from its official Twitter account.
This is because nearly half of the customers (48.23% of customers under the age of 34) belong to the post-90s or younger group. Windis realized that one of the most effective ways to reach this segment of the user segment was through the Internet.
（来源：Enterprise Apps Today）
They realized that these younger groups were tired of the overly cautious and unauthentic way of speaking on traditional corporate social media, and they were eager to see an image that reflected the brand's personality.
Windis is catering to this demand, allowing admin Amy Brown to tease competitors on Twitter in an effort to attract attention. In addition, in order to adapt to the online Xi of contemporary American youth, Yundis Fast Food has established an official community on Discord, which is currently the world's largest online chat platform.
Within two weeks of its launch, the community attracted 50,000 people to join, making it the largest official community for brands on Discord at the time.
When announcing the official opening of the Discord community, the official Twitter of Wendys did not forget to quote the classic line of the American drama "Office" to play meme: "Sir, this is Wendy's".
However, jokes aside, the core question that Yundis is currently facing is: what is the current state of business?
In recent years, Vantis has come under pressure from activist investor Nelson Peltz to make a series of changes to its business direction and to improve shareholder returns.
As of Q3 2023, Peltz's company, Trian Fund Management, remains the largest shareholder of Vandis Fast Food, with a stake of 19.35%.
One of the adjustments is to increase the dividend rate. As of the end of 2022, the dividend payout ratio of Vyndis has reached 60.2%. In Q3 of 2023, the data will be further increased to 89.85%, which is at a high level in the industry.
(Source: Market Cap App)
At present, the company's operating profit margin and net profit margin in 2023 will increase due to the increase in food prices. However, it is worth noting that in the results conference for three consecutive quarters this year, the company mentioned an important signal: the number of customers in 2023 has decreased year-on-year.
Inflation and unemployment, which put significant economic pressure on low-income consumers, have led to a decrease in their discretionary income, and they are beginning to prefer to cook at home rather than eat out.
In Q3 2023, CEO Todd Penegor mentioned at the earnings conference that the number of consumers with an annual household income of more than $75,000 has increased. However, he also acknowledged that consumers with an annual household income of less than US$75,000 have come to Windis to eat less often due to greater economic pressure in recent years.
This is a matter of concern. While the company doesn't directly disclose data on the age distribution of its customers, Todd Penego has revealed that about 40 percent of its customers are now from low-income groups with annual household incomes of $45,000 or less.
Another survey from The Business of Business also confirms this. The survey, which counted data from 5,586 restaurants, showed that the average household income of a Vendis fast food customer was $69,100.
So the current price increase of Vendis fast food is significantly affecting their core user base.
At present, Vyndis Fast Food is trying to solve an optimization problem: how to increase the price to maximize revenue and profit levels without losing a large number of customers.
However, there is a limit to this price optimization approach – all other things being equal, there will be a tipping point where continuing to raise prices will result in a large loss of customers, resulting in a decline in total revenue.
A popular phrase on WallStreetBets is "Either we print tendies or eat at Wendy's", which is similar to the Chinese retail joke "Either make money in the stock market or turn off the lights and eat noodles".
However, as the price of fried chicken strips in Yundisi fast food continues to rise, I don't know if these netizens will also sigh that they may not even be able to afford Yundis's fast food in the future.
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