Wendy’s/Arby’s Group Inc. plans to slice away the Arby’s sandwich chain by putting it up for sale, people familiar with the matter said.

The move represents a concession by activist investor Nelson Peltz that Arby’s, known for its roast beef sandwiches, is having trouble competing in an industry where the only viable ways to grow are to steal market share from rivals or expand overseas-two things Wendy’s is better positioned than Arby’s to accomplish.

Peltz is chairman of Wendy’s/Arby’s Group and his hedge fund, Trian Fund Management LP, owns a 24.3 percent stake in the fast-food holding company, which was created through the 2008 merger of the Arby’s and Wendy’s chains.

Wendy’s/Arby’ s Group is expected Thursday to say it is considering “strategic alternatives” for Arby’s, including a sale, the people familiar with the matter said.

“It became clear that by removing Arby’s, the true growth story of Wendy’s can be represented,” said one person familiar with the matter.

Other fast-food companies as well are seeking to reposition themselves in a market only now beginning to emerge from the U.S. economic downturn.

Yum Brands Inc. this week said it is seeking a buyer for its Long John Silver’s and A&W All-American Food Restaurants in order to focus on Pizza Hut, Taco Bell and KFC. Burger King Holdings Inc. and CKE Restaurants Inc., owner of the Carl’s Jr. and Hardee’s burger chains, recently were snapped up by private-equity firms hoping to turn them around.

The industry took a drubbing during the downturn and now, as consumers start to reopen their wallets, chains are trying to keep costs down and make their menus and restaurants as appealing as possible.

Burger giant McDonald’s Corp. has led the pack in remodeling restaurants and expanding its menu with new coffee drinks, oatmeal and fruit smoothies.

Arby’s has lagged behind Wendy’s performance, with steeper same-store sales declines. Arby’s posted third-quarter revenue of $260.5 million, a decrease of $29.1 million versus the prior-year quarter, due to a drop in same-store sales, or sales at outlets open at least a year.

Arby’s suffered partly because it was late to offer “value” meals when recession-wracked consumers were aggressively seeking deals. By the end of 2009, Arby’s had the highest average check in the industry.

The value menu finally launched last April, while Roland Smith, president and chief executive of Wendy’s/Arby’s Group, was serving as interim president of Arby’s, before a new management team was installed.

The chain is now testing new Angus roast beef sandwiches in select restaurants and has hired a new advertising agency to relaunch the brand.

Peltz has a history of pushing food companies he invests in to jettison underperforming brands and focus on the best assets. He urged Cadbury Schweppes PLC to separate its chocolate business from a beverage business that included 7UP and Dr Pepper. He pressed Kraft Foods Inc. to spin off its Post cereals unit.

When he first acquired a minority stake in Wendy’s, he pushed executives to sell the Baja Fresh, Cafe Express and Tim Hortons chains.

Peltz acquired Arby’s-his first restaurant chain-as part of a purchase in the 1990s of a conglomerate that included RC Cola, a textile company and a propane company.

People familiar with the matter say potential buyers have expressed interest in Arby’s over the last few years, but declined to provide specifics or provide an estimate of what price Arby’s might fetch.

UBS Investment Bank is handling the potential sale.

Arby’s expects to report that same-store sales at company-owned restaurants increased by 3.1 percent in the fourth quarter, according to people familiar with the matter, the first positive quarter since the fourth quarter of 2006.

With little room to grow by opening new stores in the mature U.S. market, chains must try to grab customers from rivals or expand abroad.

Because of its wide brand recognition, Wendy’s is better positioned to expand internationally than Arby’s.

Wendy’s also plans to have revamped most of its core products by the end of this year, according to the people familiar with the matter.

The chain is testing new cheeseburgers with larger beef patties and plans to improve its chicken offerings and introduce new breakfast beverages.

Wendy’s also plans to remodel restaurants and begin pegging its menu prices to specific markets to be more competitive.

The chain in the past year changed its salad line-up, introduced French fries seasoned with sea salt and rolled out breakfast items.

-By Julie Jargon, The Wall Street Journal