MW Wendy's beats on same-store sales for the first time in seven quarters, but guidance is weak

By Ciara Linnane

New capital-allocation strategy means reduced quarterly dividend starting in second quarter

Wendy's Co.'s stock rose 1.3% early Thursday, after the fast-food chain posted better-than-expected fourth-quarter earnings and ended six quarters of same-restaurant sales shortfalls, offsetting soft guidance for 2025.

The company $(WEN)$ had net income of $47.5 million, or 23 cents a share, for the quarter, compared with $46.9 million, or 23 cents a share, in the year-earlier period. Adjusted for one-time items, its EPS of 25 cents beat of the 24-cent FactSet consensus.

Revenue rose 6.2% to $574.3 million, also ahead of the $563 million FactSet consensus.

Same-restaurant sales were up 4.3%, while FactSet was expecting a 3.2% rise. That metric was a positive, coming after six straight quarters of misses.

The stock has fallen 25.6% in the last 12 months amid the weakness, while the S&P 500 SPX has gained 22.2%.

Chief Executive Kirk Tanner said the company had outpaced the quick-service restaurant category, although he didn't specify details.

"We are well positioned to accelerate growth, and we have a clear roadmap for Wendy's future," Tanner said in prepared remarks.

Fast-food restaurants have been under pressure as high inflation has consumers wary of dining out - and they're watching their pennies when they do.

Margin expanded to 16.5% in the quarter from 13.5% a year ago, boosted by higher average check, customer count growth and labor efficiencies.

The company is now expecting 2025 adjusted EPS of 98 cents to $1.02 and for global systemwide sales to rise 2% to 3%. The FactSet consensus is for EPS of $1.04.

The company said it's updating its capital-allocation policy to enable it to invest more in growth. Its new target dividend payout is 50% to 60% of adjusted earnings.

That means starting in the second quarter, it will reduce its quarterly dividend to 14 cents a share from 25 cents currently. Wendy's plans to buy back up to $200 million of its shares this year, most of those in the next few months.

-Ciara Linnane

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February 13, 2025 07:42 ET (12:42 GMT)

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