The Wendy’s Co. is in the process of evaluating its burger business and expects to disclose plans later in the year, executives said Thursday.
Executives of the Dublin, Ohio-based company spoke with analysts after released first-quarter earnings for the period ended March 31.
“We are reviewing every aspect of our business, and we'll come back to you later this year with our plans to deliver profitable growth over the short and long term,” said Kirk Tanner, Wendy’s president and CEO.
“Those plans will be centered on three things,” he said. “No. 1: driving strong same-restaurant sales growth in all our restaurants including continued momentum in our digital channel. No. 2: a significant acceleration of global net unit growth. No. 3: unlocking meaningful improvements in restaurant-level profitability progress against these focus areas will provide the oxygen we need to build the Wendy's flywheel enabling us to bring our ownable propositions of fresh high-quality favorites at affordable prices to more people and more places.”
Tanner said the company did anticipate unit growth would come 30% from the U.S. and 70% from international developments.
Gunter Plosch, Wendy’s chief financial officer, said the company had marked the United Kingdom as the beachhead of its efforts in Europe.
At the end of the first quarter, Wendy’s had 37 restaurants in the United Kingdom, with 12 of those company-operated. He said Wendy’s expected to have 45 to 50 restaurants there by the end of year.
“We absolutely expect that over time that market should yield 400 restaurants,” Plosch said. “We'll see how long that takes us, but we believe it's our fair share in that market.” Other European markets Wendy’s has targeted include Ireland and Spain, he said.
Tanner said the breakfast daypart continues to provide excitement in the U.S. market and the company. Wendy’s activated marketing spend of about $2.5 million in late March, executives said.
Plosch noted that customers in households under $75,000 annual income “are definitely under pressure.”
“They're reducing frequency,” Plosch said, "so visitation is down. We're maintaining share with that cohort. On the other side, there's more traffic and more frequency on the higher-income consumer. We again maintain share with that income cohort, so it's not a new trend.”
In the first quarter ended March 31, Wendy’s net income was $42 million, or 20 cents a share, up from $39.8 million, or 19 cents a share, in the same period last year. Revenues were $534.8 million up from $528.8 million in the prior-year period.
Wendy's same-store sales systemwide were up 0.9%, including an increase of 0.6% in the United States and an increase of 3.2% internationally.
As of March 31, Wendy’s, founded in 1969, had 7,248 restaurants systemwide, with 6,028 in the United States and 1,220 internationally.
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