Wendy’s spruces up restaurants, and consumers notice
Sometimes it pays to spruce the place up, even if you’re just a hamburger maker.
That’s what Wendy’s discovered in citing restaurant renovations as a key reason for delivering a sales boost at its established locations during the second quarter — even though overall revenue and profit were way down as the company shifts more company-owned restaurants to franchisees.
Wendy’s sales beat S&P Global Market Intelligence analyst expectations, marking a sign that the company’s investment strategy is paying off.
The strong performance comes as fast-food companies, including Wendy’s archrival McDonald’s, are frying their fast-casual competition in a fierce battle for customers. Competitors such as Chipotle and Shake Shack are ailing amid various challenges, including market saturation.
Sales at North American Wendy’s locations open more than a year, including company-owned spots and franchises — a critical measure that takes growth in units out of the picture — rose 3.2% for the period ended July 2.
Wendy’s second-quarter revenue of $320 million was down 16.3%, but that was primarily due to the company’s effort to turn more company-owned locations into franchises, which are viewed as a better long-term strategy. The sales easily beat S&P projections of $301 million. The company swung from net income of $26.5 million a year earlier to a net loss of $1.8 million due to “reorganization and realignment costs” and expenses associated with transferring struggling restaurants to new franchisees.
“We are pleased with our progress and remain confident in our long-term targets,” CEO Todd Penegor said in a statement.
Wendy’s said 36% of its locations have been overhauled, with a goal of 42% by the end of the year.