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Wendy’s reported its third quarter earnings results Friday morning — its first report since introducing its Project Fresh turnaround plan in October — and though executives sounded optimistic about the chain’s progress so far, it’s clear they have their work cut out for them.
Wendy’s domestic same-store sales fell by 4.7% in Q3. This is compared to its quick-service burger peers McDonald’s, which was up 2.4%, and Burger King, which was up 3.2%. Wendy’s cited commodity and labor inflation, as well as a decline in traffic for the tough quarter.
During the company’s earnings call Friday morning, interim chief executive officer Ken Cook said the company is “acting with urgency” to return the domestic system back to comp sales growth. He added that the Project Fresh initiatives have so far bolstered performance at company-operated restaurants, “significantly outperforming” the overall system.
During the quarter, Wendy’s shifted its capital focus on growing average unit volumes over net unit growth in the U.S. system. The company reduced its growth capital by approximately $20 million from the outlook shared in the beginning of the year. Notably, AUVs in 2024 were just over $2 million, according to Technomic data.
To support its turnaround, Wendy’s is leveraging former Yum Brands’ CEO Greg Creed’s consulting firm to strengthen its brand positioning and enhance marketing effectiveness. In October, the company launched a “needs-based customer segmentation study,” aimed at understanding what drives consumer purchases. The study is also expected to help Wendy’s refine how it communicates value. Earlier this year, Wendy’s executives admitted the company was pushing out too many promotions and confusing its customers.
“We now have visibility to how consumers behave both inside the system and with the competition, which will enable us to focus our media efforts on high value audiences and allow us to adapt quickly to shifts in consumer behaviors,” Cook said. “We’re segmenting consumers to make sure we have the most relevant segmentations to drive growth. Then we get into relevance, easy, and distinctive(ness), and the culmination is a brand essence.”
What that essence translates to is, “sales overnight and brand over time.”
“When we look back at what we’ve been focused on in the U.S. over the past few years, we’ve focused on sales overnight and not enough on brand over time,” Cook said. “We have some work to do to reestablish Wendy’s as a leader in quality and freshness in the industry, and by doing that, we’re confident we’re going to drive AUVs higher.”
Wendy’s is also sharpening its focus on operations and has ramped up its investments in training to improve customer experiences, which Cook said has driven “measurable results” so far at company-operated restaurants.
Perhaps the biggest takeaway from Wendy’s earnings call is its “system optimization” pillar, which Cook described as “having the right restaurant footprint to maximize profitability.” Wendy’s is evaluating every underperforming restaurant in its domestic system from “both a financial and a customer experience” perspective. Some of those restaurants could improve from technology deployment or productivity enhancements, while others are expected to close. Wendy’s expects its system assessment to be completed over the next several months, with “some closures” beginning later this year and into 2026.
Cook estimates the number of closures to be “around mid-single digit,” which equates to about 200 to 300 restaurants.
“We’re talking about net unit development. Gross unit development is still on track,” he said. “This is about taking a long-term view, looking forward, and asking ourselves, ‘Three years from today, what decisions do we wish we would have made?’”
It’s also about improving restaurant-level economics, he added. By optimizing the system and focusing on stronger restaurants, customer experience should improve, “which is ultimately going to result in more demand,” Cook said.
Wendy’s Q3 by the numbers
- Global systemwide sales were $3.5 billion, a decrease of 2.6% year-over-year
- International systemwide sales grew 8.6% with growth across all regions
- International same-store sales grew 3%
- Domestic sales declined 4.4%
- Domestic same-store sales declined 4.7%
- Opened 54 new restaurants, bringing total additions to 172 through the end of the third quarter
- Net income was $44.3 million and adjusted EBITDA increased 2.1% to $138.0 million
Contact Alicia Kelso at Alicia.Kelso@informa.com
Follow her on TikTok: @aliciakelso
