New menu boosts sales

FORT LAUDERDALE, Fla. — The roast beef sandwich that has been Arby’s signature dish for 40 years was starting to get a little boring for some customers.

That’s what kept Sonia Beato away. She was getting tired of roast beef and “they didn’t have any salads I liked.”

That was a big problem for the country’s ninth-largest fast-food chain last year, when it slumped as competitors brought out new dishes like salads and wraps but Arby’s stuck by its old menu. Sales at Arby’s restaurants open at least a year fell 2.3 percent in 2003 after six straight years of growth. Parent group Triarc Cos. Inc. suffered a net loss of $10.8 million last year and lost $3.1 million in this year’s first quarter.

Arby’s president and CEO Doug Benham acknowledges that part of the Fort Lauderdale-based company’s problem was its failure to respond as quickly as rivals, including Subway and Panera Bread Co., to consumers’ evolving tastes and desire for healthier fare.

“We didn’t have a lot of new product news,” said Benham, who was named to his posts in December to help revamp the menu for the 3,400 Arby’s outlets. “I think our competitors were coming out with more and more — I’ll call it high-end products.”

McDonald’s Corp. brought out salads and healthier adult Happy Meals last year and other restaurants followed quickly. Arby’s didn’t add salads or low-carb wraps until this year.

“Our pipeline simply dried up and Arby’s for a short period of time really became irrelevant given the focus on health and nutrition,” said Tom Garrett, president of RTM Restaurant Group Inc., Arby’s biggest franchisee.

Arby’s share of the sandwich market shrank from 17.6 percent in 2001 to 15.6 percent last year, according to Technomic Inc. Subway, the biggest sandwich chain, boosted its share by 2 percentage points to 32.9 percent.

But Benham, a former senior executive at RTM, appears to be having some success with the introduction of new items to the menu. Arby’s sales at stores open at least a year were flat in the first quarter after declining during the same period of 2003, and he predicted further improvement.

Benham said his close ties to franchisees from years of working among them has helped him get new products into restaurants in a matter of months, not years as in the past. Among them are $3.99 Market Fresh salads with fresh-cut apples, dried cranberries, toasted almonds or mandarin oranges.

Customer Beato has been lured back by the new dishes.

“We saw the ads about new salads and they were so delicious that we’re going to come back,” said Beato, who went for lunch to an Arby’s in Miami.

Jim Tringas, portfolio manager of a Wachovia Corp. Evergreen Investments fund that owns Triarc stock, said Arby’s seemed to be appealing to new customers and people looking for healthier food with its more upscale menu.

More salads and other menu items are planned, Benham said.

“You’ve got to constantly have fresh and new products” to keep customers, said Michael Gallo, an analyst who follows Triarc for brokerage firm C.L. King & Associates Inc. “Arby’s was late, but better late than never. … Benham is doing what needs to be done.”