Wendy's/Arby's Group, Inc. (WEN)

Wendy's (WEN - Analyst Report) new management team, led by Arby's CEO, have outlined what we think is a viable, albeit multi-year turnaround plan that includes improving margins, reinvigorating the brand, revitalizing comps, and expanding internationally.

However, Wendy's turnaround efforts come at a difficult time for the industry, which faces rising input costs and a deepening recession. Arby's, which serves pricier food, is being particularly hard hit, with comps falling 8.7% in 1Q09.

While we think there is a lot of low-hanging fruit for initial margin improvement, management's $100 million annual incremental store-level operating profit target will in our opinion take at least two years and necessitate executing on many levels.