Wendy’s, McDonald’s and Burger King All Report Strong Sales

Wendy’s, McDonald’s and Burger King All Report Strong Sales

The Wendy’s Company (NASDAQ:WEN) reported a second quarter loss, primarily due to a $25.2 million charge for refinancing its debt and impairment charges incurred on the consolidation of its restaurant support business. Rising expenses also pressured earnings.

Wendy's, McDonald's and Burger King All Report Strong Sales

On the other hand the core business of the company improved as its drive to remodel itself as a high end hamburger chain gained traction. Sales at restaurants, open at least 15 months, climbed 3.2 percent in the quarter, as its remodeled restaurants, menu innovations, and a brand new TV campaign played a role.

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Quarterly loss was $5.5 million (1 cent per share), against a profit of $11.3 million (3 cents a share) in the year-ago period. Excluding items, earnings were 5 cents a share. Sales climbed 3.8 percent to $645.9 million. These were almost in line with analyst’s estimates of EPS of 5 cents on revenues of $647 million.

The company is on a drive to remodel its restaurants, to improve the customer experience, and to expand its international presence. By 2015, about half of its company-owned restaurants will have the airy new look, which features leather chairs, flat-screen TVs, and metallic highlights. According to CEO Emil Brolick, renovations will cost $80 million this year, and will be instrumental in positioning The Wendy’s Company (NASDAQ:WEN) for long-term growth.

The Wendy’s Company (NASDAQ:WEN) is re-affirming its guidance for the full year, with EBITDA expected in the range $320 million – $335 million, though costs, such as of beef, could rise in tandem with grain costs. Headwinds such as intensifying competition and a weak economy could also pressure results.

Yesterday, Wendy’s top rival, McDonald’s Corporation (NYSE:MCD) reported flat July same store sales, which missed analysts’ expectations of an increase of 2.3 percent. Domestic sales, expected to grow 2.2 percent, in fact, fell by 0.1 percent. The reasons according to MCD: competition and a slow economy.

On the other hand, recently listed Burger King Holdings, Inc. (NYSE:BKC) reported a 60 percent jump in its quarterly profit as a hugely expanded menu and a focus on quality and health foods met with customers’ approval. Bill Ackman is the largest shareholder of the company.




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