The Wendy's Company Q2 FY2025 earnings call

Key Points

• Net Unit Growth: Opened 118 new restaurants in the first half, on track for 2-3% net new unit growth for the year.
• International Performance: Continued strong growth with 8.7% systemwide sales growth in Q2.
• Operational Excellence: U.S. customer satisfaction scores improved, with confidence in increased customer frequency.
• U.S. Actions: Three key actions: 1) Leveraging new data analytics to better know customers and target marketing. 2) Reducing programming complexity by simplifying the second half calendar. 3) Strengthening franchisee partnership, with Pete Sirkin joining to integrate franchisee perspectives.
• Strategic Priorities:
  • Fresh Famous Food: Frosty Swirls/Fusions performed well; focus on chicken innovation (Netflix collaboration, new tenders/sauces) and beverage innovation (new cold brew, hot coffee blend, sparkling energy drinks).
  • Customer Experience: Expanded U.S. field teams, improved digital customer experience (loyalty sales up 25%, digital mix 20.5%), FreshAI enhancing drive-thru.
  • Net Unit Growth: Focus on global expansion, with new agreements for 190 restaurants outside the U.S.

Global systemwide sales declined 1.8% in the second quarter, driven by a decrease in U.S. same-restaurant sales (down 3.6%). The U.S. company-owned restaurants outperformed the U.S. system, with a 0.7% decline, boosted by strong third-party delivery growth and digital menu boards/FreshAI. The International segment delivered systemwide sales growth of 8.7% and 1.8% same-restaurant sales growth, with regions like Japan (27% systemwide sales growth) and Mexico (16% systemwide sales growth) showing strong momentum. Total adjusted revenue was $449.6 million, with adjusted EBITDA at $146.6 million, a 2.5% increase.

Forward-Looking Statements

• Full year 2025 global systemwide sales expected to decline 3-5%.
• Adjusted EBITDA expected between $505 million and $525 million.
• Adjusted EPS expected $0.82 to $0.89.
• Net unit growth still expected 2-3%.
• U.S. company-operated restaurant margin expected 14% ±50 basis points.
• Investments between $165 million and $175 million in capital expenditures and Build-to-Suit program.

Risks

• Dynamic consumer behavior and challenging competitive environment impacting U.S. sales.
• Commodity costs, wage rate inflation affecting U.S. company-operated restaurant margin.
• Potential underperformance of marketing initiatives if not executed with excellence.
• Uncertainty in consumer response to simplified programming calendar.

Q: David Palmer asked about marketing strategy shift A: Kenneth Cook discussed learning from 100 Days of Summer, simplifying the second half focus on chicken and beverages.

Q: Jeffrey Bernstein asked about franchisee sentiment A: Kenneth Cook talked about improving partnership, prioritization, and value targeting.

Q: Rahul Krothapalli asked about franchise development A: Kenneth Cook and Suzanne Thuerk discussed data analytics and restaurant-level P&L insights.

Q: Brian Mullan asked about company comp outperformance A: Suzanne Thuerk mentioned technology initiatives like digital menu boards and FreshAI.

Q: Jake Bartlett asked about 100 Days of Summer and chicken A: Kenneth Cook discussed confusion from multiple messages and chicken tender performance.

Q: Dennis Geiger asked about company comp outperformance A: Suzanne Thuerk talked about technology lift.

Q: Jared Hludzinski asked about breakfast performance A: Kenneth Cook discussed breakfast trends and beverage innovations.

Q: Margaret-May Binshtok asked about 100 Days of Summer and value A: Kenneth Cook mentioned simplifying focus and retelling quality story.

Q: Jon Tower asked about advertising spend A: Kenneth Cook discussed optimizing media spend and evaluating company advertising budget.

Q: Jim Salera asked about Takis collab and Wednesday LTO A: Kenneth Cook talked about Takis performance and Wednesday launch