By Evie Liu

Wendy's board and management are unhappy with the stock's current valuation, and they are trying to change that.

On Thursday, the burger chain announced Project Fresh, a comprehensive plan to "revitalize the brand, reignite growth, and accelerate profitability."

The stock declined 1.7% in Thursday trading. Investors will need to see more proof of actual improvement before they get excited.

Since the beginning of 2024, weight-management drugs, inflation pressure, and weaker consumer spending -- especially among low-income households -- have led to sluggish sales at fast-food chains such as McDonald's, Burger King and Wendy's.

Wendy's same-store sales growth has underperformed its two competitors by 60 basis points over that span, and the gap has widened to 560 basis points in the second quarter of 2025, wrote Oppenheimer analyst Brian Bittner in a note to investors last week.

In the latest week ended Oct. 5, Wendy's foot traffic was 10% below levels a year ago, according to Gordon Haskett analyst Jeff Farmer. Traffic at Chick-fil-A, Burger King, Taco Bell, and McDonald's were down 2%, 2.3%, 2.7%, and 5.8%, respectively.

Bittner expects the divergence to widen further in the second half of the year thanks to intensified competition. The analyst cut his 2025 same-store-sales forecasts for Wendy's, noting its advertising spending is down while management pushed some sales-driving initiatives to 2026.

The current valuation of Wendy's stock -- about 10 times forward earnings -- is much cheaper than McDonald's, at 24 times, and Burger King owner Restaurant Brands International, at 18 times, reflecting subdued market sentiment.

Wendy's management wants to boost investor confidence and get the stock to higher ground again. To start with, it aims to refresh its image and reconnect with younger customers.

The company hired consulting firm Creed UnCo, led by former Taco Bell CEO Greg Creed, to revamp its marketing strategy. It will use data-driven insight on customers to make the campaigns more relevant and distinctive.

The company also plans to reallocate more resources to drive growth in the U.S. This includes optimizing labor and operating hours, improving unit-level profitability, and using insight from company-owned stores to guide franchise operations. Internationally, it will continue its unit growth in new and existing markets.

Wendy's will reduce spending on the Build-to-Suit program, an initiative that helps franchisees open new restaurants, especially in underdeveloped areas, and save on initial costs. Spending on the program will be cut by $20 million in 2025 and more in 2026, according to the firm.

Those funds will be redirected to improve in-restaurant experience and drive sales through upgraded technology, better-trained staff, and simplified operations. The company is working with a financial advisor to find more ways to optimize spending while maintaining its dividend and shareholder returns.

"We are confident that Project Fresh will position Wendy's as the industry leader -- one that guests love, franchisees are proud to operate, teams are excited to be a part of, and creates significant value for our shareholders," said board chairman Art Winkleblack.

Wendy's former CEO, Kirk Tanner, stepped down in July after taking the CEO job at Hershey. CFO Ken Cook has been serving as the interim CEO while the company looks for a permanent replacement. The board expects to complete the process by year-end, the company said on Thursday.

More details on Project Fresh will be shared as Wendy's post third-quarter earnings on Nov. 7, the company said.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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October 09, 2025 16:48 ET (20:48 GMT)

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