Wendy's Success With Credit

Wendy's (NYSE: WEN  ) reported same-store sales for the month of July, and the results represent a better performance than the previous month, when the fast-food chain might have been waning.

Comps for the square-burger concern increased 3.9% for U.S. company sales, compared with an increase of 2.3% in June; last year at this time, sales actually contracted 2.1%. Wendy's Tim Hortons unit saw comps increase in the double digits in the U.S., at 11%, a great jump for the seller of coffee and baked products.

Here's the big news to me out of this release, a point that was made in a recent Fool article: credit/debit card usage tends to increase the typical transaction cost by 35%. As time goes on, I honestly believe that the use of cashless protocols to acquire quick meals will lead to enhanced shareholder returns for investors in companies such as McDonald's (NYSE: MCD  ) , Yum! Brands (NYSE: YUM  ) , and Jack in the Box (NYSE: JBX  ) . It's not only because consumers feel a compulsion to spend more when they whip out the plastic. It's also because the concept is an excellent fit with the overall experience: doling out cash tends to slow the entire process, one that is meant to be as efficient as conceivable. I think the use of plastic as a payment vehicle will transform the image and culture of this industry.

But hold on a second; this is the Motley Fool, right? We don't necessarily want to use credit to pay for stuff. Debit's not so bad, but I'll tell you what can't come soon enough for me: the day when stored-value cards reach a critical mass at these concerns.

Like the notable Starbucks (Nasdaq: SBUX  ) reloadable card, I think such a tool at McDonald's or Wendy's will be emphatically embraced. I love the idea of a cashless society, but pretty much any stored-value card that you can acquire at a bank or a mall (think of those Visa/MasterCard gift cards) possess various fee amounts. If you acquire them at the issuing store itself, there usually isn't any sort of extra cost, presenting a powerful way of separating monies and budgeting them for specific purposes. Sure, it can lead to higher spending, but if one is careful and disciplined, then the cashless payment option will lead to a frictionless trip for that burger and fries.

Want more burger news? Let me serve some up for you:

Fool contributor Steven Mallas owns none of the companies mentioned.


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