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Wendy's, much like its peers, has had to offer cheaper items
with added promotions to get people to buy more products.
But its efforts are not bearing fruit, as the company reduced
its same-store sales growth forecast for 2018 to about 1 percent
from a previous range of 2-2.5 percent.
The company's shares fell 5.8 percent to $16.05 in after-market
trading. They have gained 4 percent this year.
Wendy's has launched a slew of promotions including "4 for $4",
discounted Baconator Fries and a 50-cent Frosty dessert that
compete with bundled meals offered by McDonald's $1, $2, $3 menu
and Taco Bell's dollar menu.
Customers have a large range of cheap fast-food options from
many chains and keeping sales robust is becoming challenging for
many big outlets.
Wendy's same-restaurant sales in North America fell 0.2 percent
in the quarter. Analysts on average had expected same-store
sales to rise 1.84 percent, according to IBES data by Refinitiv.
Net income rose to $391.2 million, or $1.60 per share, in the
third quarter, from $13.7 million, or 5 cents per share, a year
earlier.
Excluding certain items, the company earned 17 cents per share,
beating analysts' average estimate of 15 cents per share.
Revenue rose 2.4 percent to $400.6 million, missing expectations
of $405.36 million.
Franchisee royalty and franchisee rental revenue, which
contribute to about 38 percent of the company's net sales, rose
3 percent to $153.7 million in the third quarter.
(Reporting by Aishwarya Venugopal and Saumya Sibi Joseph in
Bengaluru; Editing by Shounak Dasgupta and Bernard Orr)
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