DUBLIN, OHIO — More customers are visiting Wendy’s restaurants more often, a sign the hamburger chain’s recent initiatives are working in a highly competitive market, said Todd Allan Penegor, president and chief executive officer of The Wendy’s Co.
“We expect the restaurant space to remain competitive for 2018, but we continue to believe that Q.S.R. is the place to be, built upon three core principles: speed, convenience and affordability,” Mr. Penegor said during a May 9 earnings call. “Q.S.R.’s share of total restaurant traffic continues to pick up and represents over 80% of the entire industry. We don’t see this trend changing anytime soon as the consumer will respond on to quality food offerings that are served quickly, that are convenient and are affordable. These are things that Wendy’s continues to focus and deliver on.”
In the recent quarter, Wendy’s achieved positive same-restaurant sales growth driven by the success of limited-time offers, including the Smoky Mushroom Bacon Cheeseburger, an expanded 4 for $4 menu and the debut of a $1 Double Stack burger deal.
“We have now grown same-restaurant sales in North America for 21 consecutive quarters,” Mr. Penegor said. “We are clearly resonating with consumers as we continue to bring in more customers more often. According to the NPD Group, we gained traffic share in the Q.S.R. burger category in the first quarter, which is our 10th straight quarter of holding or gaining traffic share. We also outperformed the Q.S.R. sandwich category for each of the 13 weeks in the first quarter.”
Wendy’s also is expanding delivery to more restaurants as part of a partnership with DoorDash and similar services, Mr. Penegor said.
“At the end of the first quarter, more than 25% of our North America restaurants are on a delivery platform, which is an increase of approximately 5% since the end of 2017,” he said. “We continue to see incrementality, especially in the evening daypart and higher-average check sizes. We have also seen encouraging customer repeat, which speaks to the favorable customer experience along with the appetite for convenience. All of this has led to a franchisee base that is a very excited and one that continues to push us to expand as quickly as possible with delivery.”
The nationwide roll-out of Quarter Pounder sandwiches featuring fresh beef at McDonald’s Corp. during the quarter may benefit Wendy’s performance, Mr. Penegor said.
“It does give us a platform to continue to tell our story, right, that we’ve been fresh, never-frozen North American beef in every restaurant across all of our hamburger line, every single day for almost 50 years,” Mr. Penegor said. “Time will tell on how it plays out, but it does bring a big spotlight back, and we’ve seen that time and again in media and social media dialogue, that it comes back to, ‘Well, Wendy’s are the folks that really own fresh across their entire lineup.’ And we’ll keep screaming that from the rooftops and making sure that we hold others in check on what’s really happening in the restaurant. Do they provide fresh on everything, every day, in every restaurant?”
In the first quarter ended April 1, Wendy’s had net income of $20,159,000, equal to 8c per share on the common stock, down 10% from $22,341,000, or 9c, in the year-ago period. Revenues totaled $380,564,000, up 33% from $285,819,000. On an adjusted basis, revenues increased by nearly 7%, driven by North America same-restaurant sales growth of 1.6% and increased rental revenue from franchise flips completed in 2017, said Gunther Plosch, chief financial officer.
For the full year, Mr. Plosch said, “We remain confident in our marketing calendar and positively growing our same-restaurant sales by approximately 2% to 2.5% in 2018. We continue to expect to achieve our restaurant margin guidance of 17% to 18%. Positive same-restaurant sales growth, commodity pressure easing in the second half and the expected benefits from our investments in restaurant efficiencies and our design to value initiatives give us confidence to be able to achieve our full-year guidance.”