Wendy’s revamped restaurants drive sales

the No. 3 U.S. burger chain, reported betterthan-expected quarterly samerestaurant sales as more customers visited its “re-imaged” outlets and the company said it planned to sell its bakery operations this month.

The bakery business, which produces buns for Wendy’s, is expected to be sold by the second quarter, the Dublin, Ohio-based chain said in a statement. That will give the company the freedom to work with more suppliers, Wendy’s said.

“This divestiture will provide us with greater sourcing flexibility, focus resources on our core restaurant business and eliminate future bakery capital expenditures,” chief executive Emil Brolick said in the statement.

The step is part of a broader push to remake Wendy’s image and streamline operations. The company also has been remodelling restaurants, an effort that it said is helping draw more customers. The plan to off-load more companyowned locations, meanwhile, is moving forward, Brolick said. Wendy’s has re-engaged the investment firm Cypress Group to help sell 540 domestic restaurants to franchisees, he said.

Wendy ’s stock was up 76 cents on Wednesday to US$11.19, or 7.2 per cent. The stock was up 16 per cent this year through Tuesday’s close.

The company’s same-restaurant sales increased 3.2 per cent in the first quarter. Analysts on average had expected a 2.5 per cent rise, according to Consensus Metrix.

Wendy’s launched a program in 2012 to revamp its image, creating a new logo, renovating restaurants and sprucing up its menu to attract customers away from rivals including Chipotle Mexican Grill and Panera Bread Co.

Wendy’s has been focusing on offering more items perceived as healthier, including salads and beverages such as Honest Tea, a flavoured organic tea range made by the CocaCola Co.

Wendy’s net income fell 40.6 per cent to US$27.5 million, or seven cents per share, as it sold 240 restaurants to franchisees in the quarter. Excluding items, Wendy’s earned six cents per share. Total sales fell about 11 per cent to US$466.2 million.

“Margins in company-owned restaurants were better than expected and the company also took down its food inflation costs,” RBC Capital Markets analyst David Palmer said.