Wendy’s reported a quarterly profit that came in above Wall Street expectations and said it’s selling 425 of its restaurants to franchisees. Fast-food companies often own only a small percentage of their restaurants. This fattens their profit margins by reducing operating costs and lets them instead rely on fees paid by franchisees. Wendy’s Co says the sale of its restaurants will reduce its ownership to 15 per cent of its locations, from 22 per cent. It now expects long-term a
adjusted earnings-per-share growth in the mid-teens percentage range starting next year.
Previously, it had forecast single-digit to double-digit growth.
The company, based in Dublin, Ohio, also raised its dividend by 25 per cent to five cents per share.
Its stock shot up eight per cent to $US7.21 in pre-market trading.
CEO Emil Brolick said in a statement that the restaurants sale is intended to help expand the adoption of new restaurant designs among franchisees.
That renovation, which features a more modern, inviting look, is part of the company’s push to recast itself as a higher-end fast-food chain.
For the quarter, Wendy’s Co says sales edged up 0.4 per cent at restaurants open at least a year.
McDonald’s on Monday said its sales rose one per cent in the US, noting that people were being careful about eating out.
Wendy’s says it earned $US12.2 million, or three cents per share.
That compares with a loss of $US5.5 million, or one cent per share, a year ago.
Not including one-time items, it earned eight cents per share, more than the six cents per share Wall Street expected.
Revenue rose to $US650.5 million, short of the $US659.5 million analysts expected.
AP
