DUBLIN, Ohio – The Wendy’s Co. posted better-than-expected same-store sales for the third quarter.
Same-store sales for the quarter ended Sept. 27 advanced 3.1 percent at North American system restaurants, while franchise-operated restaurants reported same-store sales increase of 3.3 percent. Company owned restaurants posted a 1.7 percent gain in same-store sales for the quarter.
Emil Brolick, president and CEO, said the company’s transition to a predominantly franchised model is taking hold with royalties and rental income contributing more earnings.
|Emil Brolick, president and CEO of Wendy's.|
“Our year-over-year restaurant operating margin increased 330-basis points from 15.5 to 18.8 percent, which is indicative of the improvements we have made in our restaurant-level economic model,” Brolick said in a statement. “We have been able to increase the year-over-year earnings contribution from company-operated restaurants by 11 percent, even with the ownership of 153 fewer restaurants relative to last year. Our average unit volumes also increased more than our same-restaurant sales growth would indicate, due to the number of reimaged restaurants that were out of our comparable sales base during the quarter.”
Revenues for the quarter declined 6.5 percent to $464.6 million, which the company attributed to its ownership of 153 fewer restaurants. Net income dropped 67 percent to $7.6 million reflecting the impact of discontinued operations.
Adjusted earnings per share were 9 cents for the quarter compared to 7 cents in the year-ago period.
Wendy’s plans to sell 225 restaurants in 2015 and 315 restaurants during 2016 to reach its goal of reducing its company owned stores to approximately 5 percent of the total system. The company already has sold 600 restaurants since 2013.
|Todd Penegor, CFO of Wendy's|
Todd Penegor, CFO, said interest in the restaurants Wendy’s intends to sell is high from existing and prospective franchisees. He said the sale will improve the efficiency and effectiveness of the chain.
“Going forward, we intend to buy and sell restaurants to act as a catalyst for growth by further strengthening our franchisee base, driving new restaurant development and accelerating Image Activation adoption,” Penegor said. “We are also helping to facilitate franchisee-to-franchisee restaurant transfers to get restaurants into the hands of strong operators who have demonstrated a commitment to growth.”