Key Takeaways
- Wendy’s now expects this year’s sales to range from flat to down 2% from 2024, a downgrade from its earlier forecast of 2% to 3% growth for the year.
- The company lowered its outlook Friday while announcing quarterly results that largely missed analyst expectations.
- Wendy’s executives said traffic in the latest quarter fell, while the cost of supplies and labor rose.
Wendy’s (WEN) is the latest fast-food chain to express wariness about the months ahead, trimming its earnings outlook for the year and saying sales in 2025 may fall year-over-year.
The burger chain known for square patties anticipates finishing 2025 with sales that are flat or down as much as 2% from the year prior, Wendy’s said Friday. The company previously had forecast a 2% to 3% increase for the year.
Wendy’s sales and profit for the first quarter, which ended March 30, missed expectations. The company reported $39.2 million in net income, just under the $39.8 million analysts expected, according to consensus estimates from Visible Alpha. Wendy’s $523.5 million in revenue came in below the $524.9 million consensus estimate.
“We saw broad-based pressure in the quarter,” CFO Ken Cook said, according to a transcript made available by AlphaSense. That pressure, he said, was particularly acute with households that make under $75,000.
Wendy’s report comes after McDonald’s (MCD) told investors the day before that economic stress already seen by the fast-food giant among low-income consumers appears to have spread to middle-income households.
Domestic Same-Store Sales Sagged in Quarter
Although sales improved 8.9% year-over-year in international markets, domestic same-restaurant sales dropped 2.8% in the first quarter—more than the 1.7% Wall Street expected, according to the consensus estimates.
Wendy’s said inflation pushed up the cost of supplies and labor, while traffic declined at company-operated U.S. locations.
Consumer pullback was most evident during breakfast hours and in the month of March, Cook said. During parts of that month, the broader industry experienced a low-double-digit drop in traffic among households making less than $75,000 annually, Cook said on an earnings conference call Friday.
In response to waning demand, Wendy’s plans to run a “100 Days of Summer” promotion with innovative items and a focus on value when “our customers need it most,” CEO Kirk Tanner said in the call.
Wendy’s shares were up less than 1% in recent trading Friday. However, the stock has lost more than a fifth of its value this year.
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