Wendy’s Misses US Same-Store Sales Estimates on Stiff Competition

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Wendy’s Co missed Wall Street estimates for quarterly results as fierce storms and freezing temperatures across the United States earlier this year hit store traffic and cooled demand for the burger chain’s breakfast items.

Shares of the Dublin, Ohio-based fast-food chain fell as much as 13 percent to hit an over two-year low on Wednesday, after the company said it now expects breakfast sales for the full year to linger toward the lower end of the 10 percent to 20 percent growth range it had projected earlier.

Analysts have said Wendy’s breakfast menu—known for items including the Baconator burger and Frosty-ccino coffees—could face pressure from consumers turning to cheaper meals as rising inflation hit Americans’ pockets.

“I view the first quarter results really as a little bump,” said Wendy’s Chief Financial Officer Gunther Plosch.

Wendy’s company-operated restaurant margin fell to 11.6 percent in the quarter ended April 3 from 17 percent a year earlier due to higher costs of labor and commodities such as beef, chicken, coffee, and edible oils.

The company said there has been a slowdown in traffic from its lower-income consumers, but some of its more affluent customers were continuing to order its hamburgers and fries.

Larger rival McDonald’s also said last month some of its customers were buying cheaper or fewer items.

Wendy’s U.S. same-store sales rose 1.1 percent in the first quarter, but missed analysts’ average estimate for a 2.28 percent increase, according to Refinitiv IBES.

It said traffic at its outlets was also pressured in the quarter due to the Omicron variant of the coronavirus.

Total revenue rose 6.2 percent to $488.6 million, also below estimates of $496.9 million.

Adjusted profit of 17 cents per share fell short of expectations by 1 cent.

By Deborah Sophia 

Reuters

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