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Retailers, consumers and prices

Check Out Line: Frugal fast food eaters taking toll on Arby’s

March 2, 2009

Check out the quarterly loss at Wendy’s/Arby’s Group. The third largest U.S. fast food chain posted a loss of $393.2 million, dragged down by a $417.9 million after-tax charge related, in part, to writing down the value of Arby’s company-owned stores.WENDYS/

While that loss looks like peanuts compared with the $61.7 billion fourth-quarter loss reported by American International Group (the biggest quarterly loss in corporate history), it comes as the restaurant chain is feeling the heat from competitors who are touting their value menus to lure cash-strapped consumers.

Wendy’s/Arby’s said North America same-store sales at its Wendy’s chain rose 3.7 in the quarter, but they fell 8.5 percent at Arby’s.

“Arby’s experienced a difficult quarter as fast-food consumers shifted spending to value meals and deeply discounted sandwiches. Our sandwich category competitors continued to focus on $5 price points, which are below Arby’s average check of about $7.50,” said Roland Smith, President and Chief Executive Officer.

To try to win back business, Arby’s said it is launching a strategy this week to “reconnect with our core customers” with a line of Roastburger sandwiches that combine its oven-roasted, thinly sliced roast beef with a variety of fresh toppings.

This year, it will also introduce roasted chicken, swirl shakes and iced fruit teas and said it plans to test value-priced products.

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(Photo: Reuters)

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