DUBLIN, OHIO — Wendy’s Inc. in the third quarter ended Oct. 2 remained focused on its three long-term growth initiatives: building the breakfast daypart, accelerating the digital business and expanding the global footprint.
Dublin-based Wendy’s recently added french toast sticks to its breakfast menu.
“This sweet, craveable morning treat has quickly become our No. 1 selling breakfast item,” said Todd Allan Penegor, chief executive officer, in a Nov. 9 earnings call. “The launch helped us maintain our morning meal dollar share in the QSR burger category and drove a meaningful acceleration in US breakfast sales over the course of the quarter, with average weekly sales approaching $3,000 as we exited Q3.
“This success, alongside our recently launched $3 croissant promotion, gives us confidence in reaching our goal of $3,000 average weekly breakfast sales by year-end. We remain committed to our $16 million global investment in breakfast advertising this year just as we remain committed to fighting for our fair share of the QSR breakfast business.”
Global digital sales mix in the quarter came in at about 10%. Wendy’s expects the percentage to grow through a heightened focus on digital and delivery marketing over the rest of the fiscal year, Mr. Penegor said.
“Our international digital sales mix was approximately 15%, bolstered by exceptional results across all of our regions,” he said. “We expect these results to accelerate even further in the coming quarters as we launched our loyalty program in Canada just days ago, which we are incredibly excited about. In the US, digital sales mix accelerated throughout the quarter, exiting at almost 9.5% of our overall sales.”
Wendy’s in the quarter had same-store sales growth of 6.9% globally, which included 6.4% in the United States and nearly 11% internationally. Wendy’s added nine company-operated restaurants in the United Kingdom, increasing its number of restaurants in the country to 25 by the quarter’s end, Mr. Penegor said.
Wendy’s in the United Kingdom faces several cost pressures, including energy costs increasing 50% to 60%, but the cost pressures should be temporary and growth potential is still there, said Gunther Plosch, chief financial officer.
“The structural economics around this are compelling,” Mr. Plosch said of the UK market. “It's evidenced by UK entrepreneurs, signing up as franchisees since they believe in the potential of those markets. So it's a speed bump and not more.”
Wendy’s companywide had net income of $50.5 million, or 24¢ per share on the common stock, in the quarter, which was up 23% from $41.2 million, or 19¢ per share, in the previous year’s third quarter. Revenues increased 13% to $532.6 million from $470.3 million. A favorable impact from acquiring 93 franchise-operated restaurants in Florida in the fourth quarter of 2021 and higher same-store sales drove higher sales at company-operated restaurants.
“Our total company restaurant margin held flat year-over-year despite persistent commodity and labor inflation of almost 15% and over 6%, respectively, customer count declines, and ongoing investments to support our UK expansion,” Mr. Plosch said. “These decreases were almost entirely offset by the benefit of a higher average check driven by cumulative pricing of almost 10%.”
Over the first nine months of the fiscal year Wendy’s had net income of $130.1 million, or 64¢ per share on the common stock, which was down 8% from $148.3 million, or 67¢ per share, in the same time of the previous year. Nine-month revenues increased 9% to $1.56 billion from $1.42 billion.