Halting Arby's Sales Freefall May Take an Intervention

Arby's cowboy hat has been looking battered lately. Bleeding red ink, with sales shrinking steadily -- down $100 million last year -- the 45-year-old chain needs drastic action to get back on track.

Corporate parent Wendy's/Arby's Group (WEN) closed 38 Arby's last year, and has pledged to remodel 100 older Arby's outlets this year. But with more than 3,700 restaurants, that spruce-up won't even begin to make a dent in the chain's stock of dog-eared facilities.

The company has been slow to join in fast-food's current price wars, and still only has its $1 value menu rolled out to 2,500 stores. What are they waiting for?

Marketing seems stuck in neutral: the chain has put out exactly one press release so far this year, on a sweepstakes promotion. That's a shame, since Arby's could be the next Subway with the right positioning.

In a fast-food world of greasy fried everything, its menu revolves around lean roast beef. Stressing its menu's relative health benefits over other fast-food choices could corral new diners... if there were clean, new-looking restaurants to eat in.

But that kind of creativity doesn't seem to be forthcoming from the existing management team. Arby's president and CEO Tom Garrett, who took the role in 2008 after a merger, resigned in January without a succession plan in place.

The chain is now overseen by interim president Roland Smith, who also heads the corporate parent. Arby's needs its own chief executive, right quick, to implement a broader rejuvenation of its slow-pokin' brand. Wendy's/Arby's may need to round up some private-equity investors for the type of capital injection Carl's Jr. and Hardee's are getting from power player Thomas H. Lee Partners to execute the scope of revamping that's needed here.

Photo via Flickr user puroticorico