Recent Posts

WEN (Post-Call): Unit Growth Plans thru 2025 Snagged on a Reef

Earlier today, Wendy’s reported adjusted Q2E EPS of $0.24, matching our $0.24 forecast, and coming in above sell-side consensus (according to Consensus Metrix) of $0.22. Wendy’s bumps up its full-year 2022 adjusted EPS target range to $0.84-$0.88 (previously $0.82-$0.86).

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11:22 AM

WEN: An Acquisition of Wendy’s Looks More Likely than Not

After yesterday’s market close, Wendy’s largest shareholder — Trian Fund Management LP, which owns about 19% of WEN — disclosed that it may seek to acquire Wendy’s. That news has sent up shares of WEN by about +11% in today’s regular trading session, as of this writing. Should investors buy more stock in WEN, in this context?

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11:15 AM

Updating our Q4E Kalinowski Quick-Service Burger Same-Store Sales Index

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q4E to +4.5%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December. While we believe that sector same-store sales were fairly similar in each of these three months, it appears that November was the best of the three, and December the worst of the three, although all three ended up in the positive midsingle digits.

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12:00 AM

WEN Conf. Call Showcases a Nimble Wendy’s in a Rapidly-Changing Environment

Earlier this week, Kalinowski Equity Research hosted its latest “Ask the Experts” conference call — this time around, featuring Wendy’s. The call included multiple participants from Wendy’s, including CFO Gunther Plosch and Greg Lemenchick, Senior Director – Investor Relations and Corporate FP&A. We thank them for their time!

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12:00 AM

Restaurants Full-Service Same-Store Sales Decelerating So Far in November

Based on our data-driven checks, we believe that same-store sales for U.S. chain restaurants in the casual dining, family dining, and fine dining segments are all showing sequential deceleration for the first half of November relative to fullOctober. This new trend follows 5-6 consecutive months of either sequentially improving full-service same-store sales (or at least not meaningfully deteriorating sequential same-store sales).

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12:00 AM

WEN Conference Call TODAY Featuring Wendy’s

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place today — Monday, November 16th — starting at 1:00 PM Eastern time. The featured speakers will be Wendy’s CFO Gunther Plosch; and Greg Lemenchick, Senior Director – Investor Relations and Corporate FP&A.

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12:00 AM

WEN (Post-Call) Fundamentally Solid Conf Call Featuring Wendy’s on on Nov. 16th

Earlier today, Wendy’s reported Q3 adjusted EPS of $0.19, which exceeded our $0.16 forecast and sell-side consensus (according to Consensus Metrix) of $0.17. Drivers of the outperformance included better-than-expected restaurant-level margins (16.9% actual vs. our 15.3% projection and consensus at 15.6%) and G&A/ Revenues (10.5% actual vs. our 11.1% forecast and consensus at 11.0%). Thirdquarter adjusted EBITDA reached $118.8 million, above our $108.8 million estimate and also above consensus of $112.0 million. These results are impressive given the extra marketing spend of about $6.2 million focused on the breakfast daypart that was made in Q3 (and for which we expect ~$6.5 million in Q4E).

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12:00 AM

Updating our Q3E Kalinowski Quick-Service Burger Same-Store Sales Index

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q3E to +3.6%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during July 2020 and August 2020, as well as our best guess for what September 2020 is bringing us. The approximate monthly figures we use are +2% to +3% for July 2020, +3% to +4% for August 2020, and approximately +6% for September 2020.

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12:00 AM

WEN “Ask the Experts” Call Series Wendy’s

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place on Monday, November 16th starting at 1:00 PM Eastern time. The featured speakers will be Wendy’s CFO Gunther Plosch; and Greg Lemenchick, Senior Director – Investor Relations and Corporate FP&A. If you are interested in joining the call, please e-mail caroline@analysthub.com or your sales contact.

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12:00 AM

WEN (Post-Call) It is Called the Most Important Meal of the Day, After All…

Earlier today, Wendy’s (WEN; Buy, $23.81) reported adjusted EPS of $0.12, matching our recently-raised $0.12 forecast, and coming in one cent above sell-side consensus (according to Consensus Metrix) of $0.11. Although company-operated restaurantlevel margins in Q2 at 14.4% were down year-over-year, they still amounted to a figure above our 12.0% projection and consensus of 11.3%. Wendy’s cites “a higher average check, labor efficiencies, and other dining room closure related efficiencies” as positive factors. Management also pointed to quicker drive-thru speeds.

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12:00 AM

WEN Changing Our Rating on Wendy’s to…

With this report, we upgrade the shares of Wendy’s (WEN) to Buy (from Neutral). The reasons for our upgrade include: (1) U.S. same-store sales trends that look better than the Street may expect (particularly for July, which may have positive implications for momentum for Q3 as a whole), (2) the possibility that the 5% or so of the Wendy’s worldwide store base that is company-owned produced higher-thananticipated restaurant-level margins in Q2 (and if so, what this may imply about the possibilities for such margins in Q3 and Q4), and (3) the recent nationwide launch of the Wendy’s Rewards loyalty program, which could help spur sales better than they otherwise would be through Q2 2021.

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12:00 AM

WEN We Look for Wendy’s to Launch the Following in the Near Future…

The Wendy’s Rewards loyalty program isn’t the only initiative Wendy’s (WEN; Neutral, $21.43) has on tap for the near future. We look for Wendy U.S. to launch a Pretzel Pub Burger, a Pretzel Pub Chicken Sandwich, and Pretzel Pub Fries — likely fairly soon, and nationwide. After an approximate five-year hiatus from when it last sold the Pretzel Bacon Cheeseburger and the Pretzel Pub Chicken Sandwich, Wendy’s likely has some pent-up demand amongst its guests for these menu items’ return.

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12:00 AM

WEN A Look at Potential Details for Wendy’s Upcoming Loyalty Program

Wendy’s (WEN; Neutral, $21.66) is getting closer than ever to launching its loyalty program — apparently to be called “Wendy’s Rewards” — for U.S. guests. On Wendy’s May 6th conference call, CEO Todd Penegor stated that “As we have stressed before, frequency remains an opportunity for us. And it will be more important than ever, as normal routines resume in the months to come. We will be looking to our loyalty program to help us solve for this, and the team has been preparing diligently for a launch in the near future. We believe that we have built a loyalty program that people will love. And we could not be more excited to get this into the hands of our customers.”

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12:00 AM

WEN Beefing Up Some Estimates

After today’s market close, Wendy’s (WEN; Neutral, $22.65) published a business update, including a -1.9% U.S. same-store sales number for May 4-31, and noting that global same-store sales “for the last week of May turned positive in the low-single digit range.” This strongly suggests that U.S. same-store sales were positive the last week of May, as U.S. same-store sales have been running ahead of global same-store sales by roughly 130-140 basis points as of late.

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12:00 AM

WEN Updating Our Rating on Wendy’s

With this report, we change our rating on the shares of Wendy’s (WEN) to Neutral (from Buy). Our ratings change largely reflects two factors: (1) a possible slowdown in U.S. same-store sales momentum given recent media attention about alleged beef shortages at Wendy’s, and (2) the stock’s rise from $7.47 as of the March 13th market close to $20.78 as of yesterday’s (May 13th’s) market close. Shares of WEN have also outperformed the S&P 500 by 5-6 percentage points year-to-date, despite being in what is arguably one of the more challenged industries in a COVID-19 world.

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12:00 AM

WEN Updating Our Same-Store Sales and EPS Estimates for 2020E & 2021E

We lower our U.S. same-store sales estimates for Wendy’s (WEN; Buy) as follows:
Q1E 2020: down by -4.8 percentage points to +0.2%
Q2E 2020: down by -22 percentage points to -15.0%
Q3E 2020: down by -11.5 percentage points to -5.0%
Q4E 2020: down by -7 percentage points to 0.0%
Full-year 2020E: down by -6.4 percentage points to -5.0%
Full-year 2021E: up by +5 percentage points to +8%

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12:00 AM

WEN A Closer Look at Wendy’s Latest Test Menu Item

We recently sampled Wendy’s (WEN; Buy) PBC (Plant-Based Chicken sandwich), that was tested in some (but not all) restaurants in the Orlando market in very late December and early-to-mid January. We maintain our Buy rating on WEN, and briefly note some of our observations:

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12:00 AM

WEN What Concepts Might Wendy’s Take Breakfast Share from in 2020

With Wendy’s (WEN; Buy) planning to launch a nationwide breakfast business in Q1 2020, and aiming to generate $1 billion in annualized sales from this initiative fairly quickly, we thought it might be wise to examine exactly which restaurant concepts out there might be most at risk from share loss from Wendy’s breakfast launch — and to what (quantified) degree. In our view, the publicly-traded concepts most at risk include McDonald’s (MCD; Neutral), Burger King (owned by Restaurant Brands International [QSR; Not Rated]), and Dunkin’ (owned by Dunkin’ Brands Group [DNKN; Neutral]).

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12:00 AM

WEN (Post-Call) The Calm Before the Breakfast Storm

Earlier today, Wendy’s (WEN; Buy) reported adjusted Q3 EPS of $0.19, coming in ahead of our $0.15 forecast and sell-side consensus (according to Consensus Metrix) of $0.15. We attribute the earnings beat to two main factors: (1) better-thanexpected success of Spicy Chicken Nuggets, which drove Q3 same-store sales up by +4.4%, the third-best quarterly showing this decade, and (2) a more favorable-thanexpected adjusted tax rate.

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12:00 AM

WEN Updating Forecasts on Planned 2020 Nationwide Breakfast Launch

After today’s (Monday’s) market close, Wendy’s (WEN; Buy) announced it plans to launch breakfast nationwide during 2020 — and that as part of this, it’s lowering its financial targets for 2019, and removing its financial targets for 2020. The shares are down in after-market trading by about -5% as of this writing.

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12:00 AM

WEN A Spicy Ratings Change for Wendy’s

With this report, we upgrade the shares of Wendy’s (WEN) to Buy from Neutral. We believe that August 2019 same-store sales for Wendy’s were easily the best such month for the concept so far this year, with the return of Spicy Chicken Nuggets proving to be a large — maybe even massive — hit with guests. In fact, we believe that August 2019 was perhaps the best or second-best month for Wendy’s samestore sales so far this decade. While there was nothing unusual about July 2019 (the start to Q3), if Wendy’s can retain some of the momentum that it apparently gained during August, that bodes well for the brand for September and as it heads toward its planned October 2019 Analyst Meeting.

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12:00 AM

WEN (Post-Call) Easier Same-Store Sales Comparisons to be Lapped in 2H

Earlier today, Wendy’s (WEN; Neutral) reported second-quarter adjusted EPS of $0.18 — one cent above our $0.17 forecast and sell-side consensus (according to Consensus Metrix) of $0.17. We would note that D&A/Revenues came in at 7.2% actual vs. our 7.7% estimate, accounting for the $0.01 difference between the actual and our model. Given the one-cent EPS beat, we raise our full-year 2019E EPS estimate by one cent, to $0.64. (FYI, our full-year 2020E EPS forecast stays at $0.78.)

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12:00 AM

WEN 2019 Franchise Disclosure Document Review for Wendys

Not too long ago, Wendy’s (WEN; Neutral) filed its 500+ page Franchise Disclosure Document (FDD) for 2019. In this report, we cite some of the highlights from that document following our review of it, including our review of it in comparison to last year’s Franchise Disclosure Document. For example, we note that the median U.S. company-owned restaurant generated $1,868,693 in revenue last year (versus $1,830,565 in 2017), and that the median U.S. franchised restaurant generated $1,548,551 in revenue last year (versus $1,541,069 in 2017). The best-performing restaurant in the Wendy’s U.S. system overall — generating $4,714,549 in 2018 sales — is in Chicago. Our report also contains data regarding the sales lifts provided by the company’s Image Activation initiative, broken down by type of design. For franchised restaurants that underwent a Refresh — the most frequently chosen Image Activation format — that was completed during 2018, the median gross sales lift cited in the FDD is +4.6%. We reiterate our Neutral rating on WEN and note the following:

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12:00 AM

WEN (Post-Call) A Biggie Bag of Q1 Earnings Upside

Earlier today, Wendy’s (WEN; Neutral) reported adjusted EPS of $0.14, surpassing our $0.11 estimate and sell-side consensus (according to Consensus Metrix) of $0.11. Relative to our model, outperformance came from: (1) better-than-expected G&A/Revenues (12.1% actual vs. 12.7% estimated), (2) better-than-expected Cost of Sales/Sales (85.0% actual vs. 85.8% forecasted), (3) lower-than-projected Interest Expense ($29.1 million actual vs. $30.1 million projected), and (4) a somewhat more favorable tax rate than anticipated (20.0% actual vs. 22.5% forecasted). These positives were partially offset by some other factors, such as higher-than-anticipated Other Operating Expenses.

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12:00 AM

WEN (Post-Call) 2019 Craves Some Digital Investments

Earlier today, Wendy’s (WEN; Neutral) reported Q4 2018 adjusted EPS of $0.16, one cent above our $0.15 forecast and the sell-side consensus (according to Consensus Metrix) of $0.15. Fourth-quarter adjusted EBITDA of $107.8 million was a little short of our $110.1 million projection and consensus of $108.4 million. Company-operated restaurant margins of 16.0% were short of our 17.5% forecast and consensus of 17.4%.

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12:00 AM

Restaurants The Set-Up into the Print re CAKE, WEN, DIN, DPZ, and PZZA

A number of restaurant companies are scheduled to report quarterly earnings over the February 20-26 time frame, including The Cheesecake Factory (CAKE; Neutral), Wendy’s (WEN; Neutral), Dine Brands (DIN; Buy), Domino’s (DPZ; Buy), and Papa John’s (PZZA; Neutral). In this report, we look at the set-up into the print for each of these five companies:

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12:00 AM

WEN Adjusting Estimates, and Dreaming of Ghirardelli Chocolate Sauce

Based on our data-driven checks regarding Wendy’s (WEN; Neutral) and the burger sector regarding December, we bump up our Q4E same-store sales forecast for Wendy’s North America by +50 basis points to +0.5%. While we still believe Wendy’s had a rough go of it in November (our Wendy’s checks for November 2018 were the worst of any month since those we did for February 2012), December appeared to be a meaningful bounce-back month sequentially — better than we expected. Our Q4E EPS estimate remains at $0.15.

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12:00 AM

Modifying our Q4E Kalinowski Quick-Service Burger Same-Store Sales Index

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q4E from +1.2% to +1.8%. Our key takeaway: we believe that U.S. quick-service burgers chains in aggregate enjoyed their best same-store sales month during December 2018 since February 2016. The 60 basis-point increase in this index of ours is based on our latest proprietary checks/data as regards same-store sales performance for this segment during the last half of November and all of December.

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12:00 AM
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