Remodels and general operational improvements contributed to The Wendy’s Co.’s increase in same-store sales by 4.8 percent at North American locations for the fourth quarter of 2015 ended Jan. 3, the company said.
The quick-service burger chain also continued refranchising in 2015, with the ultimate goal of reducing company-owned restaurants to about 5 percent of the system. It closed the fiscal year with 363 fewer company-operated restaurants than it had at the beginning of the fourth quarter 2014.
Same-store sales for franchised units increased 4.9 percent in the fourth quarter. At company-owned restaurants, same-store sales grew 3.7 percent.
“We believe our system optimization initiative will drive future growth by providing opportunities for expanded restaurant ownership to strong operators who have demonstrated a commitment to Image Activation [remodeling program] and opening new restaurants,” Wendy's president and chief financial officer Todd Penegor said in a statement detailing the company’s financial performance for the year.
“Interest in the remaining markets that we intend to sell during 2016 remains high from existing and prospective franchisees and we are confident we will strengthen the Wendy’s brand as a result of these transactions.”
CFO Penegor took on the additional role of president in January, when CEO Emil Brolick announced plans to retire in May.
“Going forward, we intend to buy and sell restaurants to act as a catalyst for growth by further strengthening our franchisee base, driving new restaurant development and accelerating Image Activation adoption,” Penegor said. “We are also helping to facilitate franchisee-to-franchisee restaurant transfers to get restaurant into the hands of strong operators.”
A total of 450 restaurants were remodeled over the course of the year and 70 new units were built, resulting in about 22 percent of the total North American system featuring the new design. Wendy’s said it was on track to increase that percentage to “at least 60” by 2020.
Early in the quarter, in mid-October, Wendy’s also introduced a “4 for $4” meal bundle, which Nomura Securities International analyst Mark Kalinowski said contributed to the chain’s strong performance.
Revenue for the quarter fell 4.7 percent, to $464.4 million, from 487.3 million a year earlier, mostly due to refranchising. Net income was $85.9 million, or 31 cents per share, rising from $23.3 million, or 6 cents per share.
For all of fiscal 2015, revenue was $1.9 billion, compared with $2 billion for fiscal 2014. Net income was $161.1 million, or 50 cents per share, compared with $121.4 million, or 33 cents per share.