Wendy's narrows Q3 loss
DUBLIN, Ohio – Wendy's Co. reported a net loss of $1.9 million for the third quarter ended Sept. 29, 2013, compared to a net loss of $31.2 million in the third quarter a year ago. Consolidate revenues for the quarter climbed to $640.8 million compared to $636.3 million in 2012.
The company attributed the improvements to same-store sales increases, technical assistance feed and higher rental income from its sale of restaurants. Same-store sales increased 3.2 percent at its North American company-owned restaurants, compared to 2.7 percent last year. Franchise same-store sales in North America climbed 3.1 percent, compared to 2.9 percent last year.
"We are contemporizing our consumer touch points and transforming our brand, with bold restaurant designs, new packaging and innovative menu introductions such as our Pretzel Bacon Cheeseburger," said Emil Brolick, president and CEO of Wendy's. "The most recent iterations of our transformation, including people activation and system optimization, are reinforcing our commitment to deliver 'A Cut Above' brand experience and continually increase operating efficiency.
"Our third-quarter two-year Company-operated same-store sales increase of 5.9 percent was our strongest comp growth since 2005, driven by the highly successful Pretzel Bacon Cheeseburger promotion," Brolick said. "We have also seen a solid response to our October Pretzel Pub Chicken sandwich promotion, and our third-quarter results give us the confidence to raise our 2013 Adjusted EBITDA outlook to approximately $365 million."
In July, Wendy's announced plans to sell about 425 company-owned restaurants to franchisees in order to reduce annualized general and administrative expense, improve company-operated restaurant operating margin, have a higher cash flow and a lower annualized depreciation expense. The company plans to complete these transactions by the second quarter of 2014.
"We are very happy with the strong interest in our system optimization strategy from our franchisee community," Brolick said. "We view this as an excellent opportunity to recognize existing and new franchisees who have demonstrated leadership in operational excellence, have a strong balance sheet and have an expressed commitment to growth and our Image Activation strategy.
"We expect to generate a higher operating margin and stronger free cash flow, while enhancing earnings quality through a more predictable revenue mix," Brolick added.
The company raised its outlook for 2013 to approximately $365 million and its adjusted earnings per share to approximately $.25.
Wendy's lowered its projected fourth quarter adjusted EBITDA 10 percent compared to the fourth quarter in 2012 because the company intends to make incremental fourth-quarter investments to drive future growth.