Layoffs to help Wendy’s cut costs

Wendy’s plans to cut expenses by $35 million in the next two years, a move that will include layoffs.

The Dublin-based burger chain will eliminate positions at its headquarters as part of the cost-cutting. The cuts should start in the second half of this year and end in 2019, according to CEO Todd Penegor, who announced the timing of the “restructuring” during an earnings call with analysts.

“As we make the necessary changes to reduce approximately $35 million in (general and administrative) expense, we will be looking at a variety of areas,” said Heidi Schauer, Wendy’s spokeswoman. “Unfortunately, we do anticipate that a number of positions will be affected in Dublin and elsewhere in the company.”

Wendy’s employs about 600 people at its Dublin office.

The job cuts will come with a severance package, the contents of which weren’t

disclosed. Gunther Plosch, chief financial officer, said the company will incur up to $27 million in costs related to the effort.

The cuts are part of a larger, long-term set of milestones the company intends to meet in 2020, such as remodeling most of its restaurants and opening hundreds of new stores.

Wall Street smiled upon Wendy’s shares Wednesday, lifting the stock by more than 5 percent. The costcutting timeline Penegor laid out is faster than analysts had anticipated, which raised expectations for future earnings.

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“This pace is likely quicker than consensus thinking on the Street,” said Mark Kalinowski, an analyst with Nomura.

The planned cuts also come as Wendy’s expects wage inflation at its restaurants to rise 4 percent this year because of some minimum-wage hikes and general tightness in the labor market. Though rising wages dented Wendy’s performance, the company still beat market expectations in revenue and earnings per share. Wendy’s also posted its 17th straight quarter of increased same-store sales, a key industry metric. Samestore sales rose 1.6 percent in the quarter.

To keep sales up, Wendy’s wants to drive more traffic to its stores and will use technology as one lever to achieve that. Wendy’s has a number of technology initiatives underway, Penegor said. The company hopes half of its 6,000 restaurants in the U.S. will be running on its mobile ordering platform by the end of the year. There should also be selfordering kiosks in 1,000 stores this year. Wendy’s will roll out a loyalty program later this year as well.

The company is testing delivery via DoorDash in Columbus and Dallas to gauge interest and consumer expectations around that service, Penegor said.

In other news, Wendy’s 18 percent stake in Arby’s, a product of the companies’ former marriage, is now worth $320 million.