Positive results for Wendy's/Arby's Group in 2Q

by FoodBusinessNews.net Staff
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ATLANTA — The Wendy’s/Arby’s Group Inc., which was created this past September in a merger between Wendy’s International, Inc., and Triarc Companies, Inc., turned a profit during the second quarter of fiscal 2009, ended June 28. For the quarter, the company’s net income was $14,892,000, equal to 3c per share on the common stock. Revenue for the quarter was $816,195,000.

"We were pleased with our strong adjusted EBITDA growth for the quarter of 13.2%," said Roland Smith, president and chief executive officer. "We produced significant margin improvement of 370 basis points at Wendy’s and Arby’s continued to show improvement despite aggressive competitive discounting."

Mr. Smith added that the introduction of the Wendy’s Boneless Wing menu item led to a record sales week at the end of June for Wendy’s-owned stores, and July same-store sales were up 2%.

"Our product pipeline at Wendy’s is the strongest it has been in years," Mr. Smith said. "In October, we will introduce a premium cheeseburger that we believe will further enhance Wendy’s brand positioning as the best-tasting and highest quality hamburger in the quick-service restaurant industry."

Sales within the Arby’s business segment were $297.5 million. Mr. Smith noted that for July, company-owned Arby’s same-store sales declined 4.7%.

"Arby’s continued to be impacted by competitive value promotions and aggressive discounting in the sandwich category," he said.

He added that in October the company will introduce a value menu that will include a choice from five sandwich options, small fries and a beverage for $5.

"We expect the combination of our premium products and more affordable options will further improve Arby’s sales trends in the third and fourth quarters," Mr. Smith said.

By the end of 2009, the company expects Wendy’s and Arby’s net system restaurant units will decline by approximately 15 to 20 units and 50 to 60 units, respectively. The decline is primarily a result of fewer franchise openings than anticipated and more franchise closings due to weak economic conditions and difficult credit markets, according to the company.

For the first six months of fiscal of 2009, the Wendy’s/Arby’s Group Inc. earned an income of $3,968,000, or 1c per share. Sales for the period were $1,589,438,000.

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