Wendy's Plans to Improve Operations as Consumers Cut Back on Spending

Wendy's Co. Is a Publicly Traded Company With a Market Capitalization Of Over $5 billion. The Company Operates More Than 6,500 Restaurants In 30 Countries And Employs More Than 340,000 People.

Wendy's Co. is best known for its hamburgers and fries, but the company also offers a variety of other menu items, including chicken sandwiches, salads, and breakfast items.

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On Friday, McDonald's announced that two executives were leaving the company as part of a broader organizational overhaul. This overhaul could include staff reductions and new investments.

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Trian Fund Management LP, Wendy's largest shareholder, said on Friday that it was putting its push for potential strategic alternatives for the company on hold. The activist hedge-fund firm had said in May that it intended to explore a potential transaction involving Wendy's, either alone or with third parties, that could include an acquisition, merger or other deal.

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Trian said Friday that Wendy's business momentum supported a new capital-allocation plan instead of a sale. Wendy's said it was doubling its dividend and increasing its stock-buyback program.

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The company announced preliminary fourth-quarter results on Friday, which showed that same-store sales in the US had grown by nearly 6% in the three months ended Jan 1, compared to the previous year's period. Wendy's said that it had opened 38 US restaurants during the quarter, but had also seen a number of closures.
As the U.S. economy slows down, people are still going to fast-food restaurants, but they are spending less money. Wendy's said that more customers are coming to the restaurant looking for deals.

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"We are seeing a consumer who is a little more strapped for cash," Wendy's Chief Executive Todd Penegor said during an investor call Friday.
Wendy's shares rose 5% to $22.87 in morning trading. However, they are down 2.85% over the past 12 months.

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Wendy's has announced that it is re-evaluating some of its newer investments in light of the current economic situation, and that it plans to better align its U.S. and global operations. The company has said that it is scaling back a previous test to build to-go only locations with startup Reef Global Inc., and will instead focus on building traditional units. Mr. Penegor has stated that Wendy's is also looking at its headcount and how it can be reduced.

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As part of its reorganization, fast-food company Wendy's said that Leigh Burnside, its chief accounting officer and U.S. chief financial officer, is stepping down to become the financial chief of a different restaurant company. Kurt Kane, U.S. President and Chief Commercial Officer, is leaving the company after his position was eliminated in a organizational restructuring designed to keep general and administrative costs low. The company will pay Mr. Kane compensation for termination without cause, it said in a filing.

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In the next 45 days, Wendy's plans to determine further organizational changes to help reduce costs and boost efficiency, according to Mr. Penegor.
Other companies in the US have announced cost reductions and restructuring plans this month as an economic downturn looms. McDonald's Corp. said last week that it planned to make "difficult" decisions about potential changes to its corporate staffing levels by April, as part of a broader strategic plan. This comes as other companies are also making plans to cut costs and prepare for a potential economic downturn.

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Wendy's announced on Friday that it expects its revenue for the fourth quarter to reach $536.5 million, up from $473.2 million last year and above analyst expectations of $518.3 million, according to FactSet. This would represent a significant increase in Wendy's revenue and would be a welcome boost for the company.
Wendy's has announced that it is doubling its quarterly cash dividend to 25 cents per share. This increase will take effect when the first quarter's dividends are paid out in March.

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The company’s board also canceled a $250 million share-repurchase program, which had been slated to end next month. They replaced it with a $500 million repurchase plan due to expire in February 2027.

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Nelson Peltz, co-founder of Trian, said on Friday that the company's new capital-allocation strategy would support its long-term growth plans.
After Trian announced its push for Wendy’s to explore potential strategic alternatives last spring, some investors were hoping for a sale of the company. However, deals have slowed down in the past year as interest rates have risen, financing has tightened, and a recession is looming over the United States.

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Trian, an investment firm headed by Mr. Peltz, has been a long-time investor in the chain. The activist investor recently made headlines for a planned proxy fight against Walt Disney Co.