Wendy’s International Inc. is putting emphasis on the second word in its name lately.

The Dublin, Ohio-based division of Wendy’s/Arby’s Group Inc. since its 2008 acquisition has secured deals calling for more than 400 overseas restaurants in the next decade, a blueprint to more than double its global reach.

“They’re playing catch-up, but they should be doing that,” said Jay Anand, a professor of corporate strategy and international business at Ohio State University’s Fisher College of Business. “The U.S. and Canada are saturated markets. You need to be in growing markets.”

The fast-food chain, which included about 300 restaurants outside North America as of April, disclosed two deals earlier this month—one calling for 180 dual-brand restaurants in Russia with Wenrus Restaurant Group Ltd., and another for 24 Wendy’s in Trinidad and Tobago and the eastern Caribbean.

The deals join other major overseas expansion accords, including plans for:

• 35 Wendy’s in Singapore, signed May 2009 with Kopitiam Group;
• 80 dual-brand Wendy’s and Arby’s restaurants in the Middle East and north Africa, signed in June 2009 with a subsidiary of Saudi conglomerate Al Jammaz Group, the first of which opened in May in Dubai; and
• 100 Arby’s in Turkey, signed in June with 430-restaurant Tab Gida Sanayi ve Ticaret.

Spokesman Bob Bertini said the company plans to expand in its existing international markets—Puerto Rico, at 66 restaurants, and Venezuela, at 40 locations, are the largest; the Philippines, Indonesia, Mexico, and Honduras each are home to more than 20 restaurants.

CEO Roland Smith, in an August 12 conversation with stock analysts, said restaurants in Puerto Rico and the Bahamas are among the chain’s top-grossing operations. The big targets, however, are new markets such as China and Brazil, observers say.

The company has said it sees the potential for 8,000 international restaurants. “We’re very underdeveloped around the world compared to competitors,” Bertini said.

That is an understatement.

Rivals McDonald’s Corp, Burger King Holdings Inc.,, and Yum Brands Inc. each count foreign restaurants by the thousands:

• McDonald’s at the end of 2009 ran 6,785 outlets in Europe; 8,488 in Asia, the Middle East, and Africa; and 3,225 restaurants in other countries, including Canada. It has 13,980 domestic outlets.
• Yum Brands counts more than 17,000 international units, primarily KFCs and Pizza Huts, more than 4,000 of which are in China. It also runs 20,000 restaurants in the U.S.
• Meanwhile, Burger King had 2,580 restaurants in Europe, the Middle East, and Africa, more than 1,000 in Latin America, and 733 in its Asia-Pacific division. The U.S. and Canada account for more than 7,500 outlets.

Ron Paul, CEO of restaurant researcher Technomic Inc. in Chicago, said Wendy’s hasn’t enjoyed much international success, noting its non-North America network shrunk from 351 restaurants in 2005 to 305 currently. Burger King, by comparison, has added 1,400 units in that time.

“They haven’t shown they can grow internationally,” he said. “Why is it going to be different this time?”

The international retreat was due mostly to last year’s decision to let a franchise agreement in Japan with Zensho Co. Ltd. expire, resulting in the shutdown of 71 restaurants. The company said at the time it hoped to re-enter Japan with a new operating partner.

All of Wendy’s/Arby’s foreign restaurants are franchised, which hasn’t taken much from the Atlanta company’s wallet, but that could change. Decisions over whether to license the brand to a partner or enter a region with company restaurants through an acquisition or joint venture will be made individually, Bertini said.

CFO Stephen Hare said China and Brazil may be company-store markets and could demand acquisitions or joint ventures rather than development accords.

The dual-brand approach also will vary by market. Bertini said the Singapore deal was for Wendy’s restaurants alone because the franchisee was familiar with the nameplate. Meanwhile, the deal in Turkey didn’t include Wendy’s because the franchisee is a Burger King partner.

Paul said it will be essential for Wendy’s to find the right partners—those that understand not only local tastes and customs, but the economy, real estate, and government.

Analyst Sara Senatore at Bernstein Research wrote in a February report that the Asia-Pacific region and Latin America give Wendy’s the strongest prospects for international expansion. “While the agreements are a positive signal about company acceptance, they represent only the first step on a long road to profitability,” she wrote.

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Dan Eaton writes for Columbus Business First.