Wendy’s meal specials, humorous offers can’t boost visits

On By Littum

Daniela Sirtori
| Bloomberg

Wendy’s Co. narrowed its full-year sales outlook after quarterly same-store sales rose less than analysts expected, with value meals and a direct promotion sparking less interest than expected.

Total sales should rise about 3% this year, the low end of its previous forecast of as much as 5%, the company said in a statement Thursday. Same-store sales, a metric tracking stores open at least 15 months, rose 0.2% in the third quarter. Analysts called for much faster growth.

Wendy’s has tried to spur growth by boosting its breakfast and dinner businesses, including with deals and increased advertising, as it seeks to recruit more users to its digital app. The company has also launched humorous marketing campaigns, including the McBroken website, which shows where McDonald’s Corp. ice cream machines are down and redirects customers to the nearest Wendy’s.

Customer numbers fell in the quarter, Wendy’s said, highlighting that the burger chain needs to do more to lure high-inflation diners. Earnings per share was more or less in line, while revenue exceeded expectations.

Wendy’s said it expects improved sales trends between the third and fourth quarters. Initiatives driving sales include a $1 drink promotion and a limited-time offer around SpongeBob’s 25th anniversary, featuring a Krabby Patty burger and Pineapple Under the Sea Frosty.

The SpongeBob campaign is “generating a powerful response that is driving significant sales growth,” CEO Kirk Tanner said in a call with analysts.

Wendy’s shares were down 4.5% at 9:39 in New York. The company’s shares were up 4.3% this year through Wednesday’s close, compared with a 22% gain for the S&P 500 index.

Wall Street is looking for “tangible evidence” that the company can improve sales and outperform peers, Jim Salera of Stephens Inc. wrote. in a note to clients following the earnings announcement.

“We believe investors are in a wait-and-see mode,” Salera wrote.