The Wendy’s Company continued to see declines in both sales and profit as it entered the new fiscal year, but management said the business is making progress in its turnaround plans.
The chain’s global systemwide sales slid 5.5 per cent to $3.2 billion in the first quarter, which ended on March 29. A 6 per cent growth in international markets was more than offset by a 7.3 per cent drop in the US.
Same-restaurant sales were down 6.8 per cent, with the US down 7.8 per cent and international sales down 0.4 per cent.
US company-operated restaurant margin fell from 14.8 per cent to 11.4 per cent, primarily due to a decline in traffic, commodity inflation, and labor rate inflation, partially offset by higher average check.
Interim CEO Ken Cook said the results reflect a business in the early stages of a turnaround. He added that the company is making progress to improve its US business and is confident in the direction it is heading.
“We are taking decisive action to strengthen the Wendy’s system and improve performance,” Cook said.
“We introduced a new Biggie platform, upgraded our premium hamburgers, and launched new chicken sandwiches. Additionally, our focus on operational excellence is driving improvement in order accuracy and key customer satisfaction metrics.”
Cook noted that the international business continues to deliver strong results, supported by further expansion in key growth markets.
The company has also signed a new franchise agreement with an experienced restaurant operator to build up to 1000 restaurants across China over the next 10 years.
During the quarter, Wendy’s bottom line remained under pressure, with operating profit down 21.9 per cent and net income down 42 per cent due to the weakness of the US business.
For the full year, the company expects global systemwide sales to be approximately flat.
Last year, Wendy’s systemwide sales decreased 3.5 per cent, including a 5.2 per cent drop in the US and an 8.1 per cent increase in international markets. Net income was down 15 per cent.
