During its Q3 earnings call on Thursday, Wendy’s executives announced plans to close around 140 poorly performing restaurants this year while focusing on opening a similar number of new locations in more profitable areas. This move underscores Wendy’s commitment to restructuring and optimizing its system with a long-term focus on efficiency and profitability.
Here's ads banner inside a post
International Expansion Growth
Wendy’s President and CEO, Kirk Tanner, shared that the company opened 64 new restaurants in the third quarter and is well on track to meet its goal of opening between 250 to 300 new locations globally this year. With more than 7,000 locations worldwide, including approximately 6,000 in the U.S., Wendy’s continues to cement its position in the fast-food industry.
“Our new U.S. incentive programs launched in July have attracted significant franchisee interest,” Tanner stated. “Additionally, the development incentives rolled out in September have spurred several development and renewal negotiations in Canada and Latin American countries.” The increased number of new restaurants has also been supported by data-driven insights that help Wendy’s select locations with high potential for success.
Focusing on Closing Underperforming Locations
Wendy’s CFO, Gunther Plosch, further explained that the decision to close 140 underperforming restaurants is not based on geographic location but on individual performance. These locations have an average unit volume of $1.1 million, significantly lower than the system average. “When you look at the long-term growth of the system, many of our locations are 55 years old and no longer meet current needs,” Tanner added.
Here's ads banner inside a post
Focusing on closing lower-performing restaurants not only reduces cost pressure but also allows the company to allocate resources toward higher-performing new locations. These new restaurants achieve average unit volumes of over $2 million, providing superior customer experiences through advanced technology and optimized drive-thru and delivery services.
Digital Sales Growth and Loyal Customers
One of Wendy’s highlights this past quarter was the significant growth in digital sales. Wendy’s global digital sales grew nearly 40% year-over-year, boosted by improvements to the Wendy’s app. The number of members in its loyalty program also grew by 2 million in Q3, bringing the total to 45 million worldwide. These improvements have helped Wendy’s attract and retain customers, particularly in today’s highly competitive landscape.
“Overall, the Wendy’s system is incredibly healthy,” Tanner noted. However, he admitted that the current economic climate remains a major challenge for the fast-food chain.
Here's ads banner inside a post
Success from Special Promotions and Menu Expansion
Recently, Wendy’s introduced a SpongeBob SquarePants-themed menu to celebrate the iconic cartoon character’s 25th anniversary. Tanner shared, “We are very pleased that the initial performance has exceeded our expectations,” hinting that this limited-time menu may remain available for an extended period.
Additionally, Wendy’s has an exciting lineup of upcoming campaigns over the next few weeks, featuring popular items such as the Spicy Chicken Sandwich, the new Salted Caramel Frosty flavor, and the return of the Mushroom Bacon Cheeseburger, all complemented by the slogan, “It’s gotta be Wendy’s.”
New Coca-Cola Partnership and Breakfast Expansion Strategy
Another major highlight for Wendy’s is its expanded partnership with Coca-Cola, which now includes the Coca-Cola Freestyle platform, offering over 100 drink choices. According to Tanner, this is a highly profitable agreement that opens up new opportunities in the beverage category.
Additionally, Wendy’s is focusing on expanding breakfast sales—a segment with some of the fastest-growing demand throughout the day. Tanner mentioned that the company plans to introduce more beverage options during breakfast hours to attract additional customers during this time slot.
Positive Financial Performance and Growth Projections
Financially, Wendy’s net income for Q3 was $50.2 million, or 25 cents per share, down from $58 million, or 28 cents per share, in the same period last year. Revenue rose to $566.7 million, compared to $550.6 million last year. Wendy’s expects 2% growth this year and aims for 3-4% in the coming years.
With strategies to optimize its system and enhance customer service, Wendy’s demonstrates a strong commitment to overcoming current economic challenges, continuing growth, and strengthening its brand worldwide.
