Burger King Worldwide Inc (BKW), The Wendy’s Co (WEN), Brinker International, Inc. (EAT): Will Restaurant “Re-imaging” Increase Revenue?

The global restaurant industry is expected to witness a annualized growth rate of 7.2% over the next three years. Consequently, global restaurant revenue can increase from almost $2.5 trillion in 2011 to $3.5 trillion in 2016. Therefore, the companies in this sector are adopting various strategies to attract customers. Three companies are adopting a strategy to re-image their restaurants to enhance customer experience, which should drive sales. Let’s discuss them in detail.

Entering South African market with booming opportunities

Burger King Worldwide Inc (NYSE:BKW) has been re-imaging its restaurants since 2011. It has observed a 15% surge in sales of re-imaged restaurants, because of its improved ambiance. The company’s goal is re-imaging 40% of its restaurants by the end of 2015. In 2012, it remodeled 600 restaurants in the U.S. and Canada, which comprises 19% of the company’s restaurants. Additionally, the company is re-imaging approximately 520 restaurants this year. With the new look, Canada and the U.S sales are expected to increase by 10%-15%.

With a growing middle class and large fast food market in South Africa, worth $1.9 billion, the company opened its first restaurant in Cape Town in May 2013. Sales we so encouraging that the company plans to open 12 new restaurants by the end of 2014 in South Africa. Therefore, the company expects unit growth of 5% from 2013 to 2015.

Due to the above strategies, analysts expect Burger King Worldwide Inc (NYSE:BKW)’s EPS to grow from $0.33 in 2012 to $0.69 in 2013, followed by $0.84 in 2014.

International expansion for further revenue

Over the past two years, The Wendy’s Co (NASDAQ:WEN) has been investing in its image activation strategy to re-image its restaurants globally. Re-imaged restaurants witnessed 20% more revenue, as compared to previous revenue with their traditional outlook. It will continue to re-image its 200 restaurants in 2013, followed by 800 restaurants in 2014. For this, it will invest $500 million over the next three years, out of which it will invest $145 million in 2013.

The company’s strong ongoing cash flows will finance this ongoing program. Its new re-imaged restaurants should derive incremental sales. Its total revenue is expected to increase from $2.5 billion in 2012 to $2.58 billion in 2013, followed by $2.68 billion next year.

The company’s international restaurants consist of barely 7% of its total units. The Wendy’s Co (NASDAQ:WEN) is continuously looking to expand its footprint internationally. It opened 24 restaurants in 2012, and it plans to open more than 700 restaurants outside the U.S. by the end of 2016. In accordance with this plan, it will open 45 new restaurants internationally by the end of this year.