Wendy's reports Q1 income of $2.1M

by Meat&Poultry Staff
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DUBLIN, Ohio – For the first quarter ended March 31, 2013, Wendy's reported net income of $2.1 million compared to $12.4 million in the comparable year-ago quarter. Revenues climbed 1.8 percent to $603.7 million, compared to $593.2 million a year ago.

Same-store sales in North America gained 1 percent at company-owned locations and 0.6 percent at franchise restaurants.

"Our solid first-quarter profitability increase was in line with our expectations," said Emil Brolick, president and CEO. "The momentum from our 'Recipe to Win' brand transformation, Image Activation progress and results from our new 'Right Price, Right Size Menu' translated into strong earnings growth in the first quarter.

"We generated positive same-store sales and overcame the negative impact from the New Year and Easter holiday shifts, as well as adverse weather conditions,” he added. “We have also seen a solid consumer response to the April introduction of our new Flatbread Grilled Chicken sandwiches, although the price-value component of our business continues to represent a challenge."

Company-owned North American restaurant margin grew 12.8 percent in the first quarter compared to 11.8 percent in the first quarter of 2012. The company attributed the margin improvement to higher same-store sales, including rollover pricing and favorable product mix, along with reductions in beverage costs and breakfast advertising expense, partly offset by an increase in commodity costs of 90 basis points.

The company is accelerating its brand transformation, which includes redesigned restaurants, a new logo and uniforms, updated menu boards and product innovations, the company said. In March, Wendy's also introduced new packaging prominently featuring the new logo.

As of April 30, 2013, the Wendy's system had opened a total of 86 new and re-imaged restaurants since the program began, and the company expects to redesign 50 percent of its company-operated restaurants by the end of 2015.

"We are making excellent progress with Image Activation, one of the most critical elements of our 'Recipe to Win' strategy," Brolick said. "Consumer reaction to our Tier One reimages that we started in 2011 and accelerated in 2012 has produced very positive traffic and sales growth. Early response to our Tier Two and Tier Three reimages, which have lower investment costs, is also positive, and we expect to see an increase in these openings throughout 2013."
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