Wendy's forecasts tepid profit on rising competition, labor shortage

[November 10, 2021]  (Reuters) -Wendy's Co on Wednesday missed market expectations for same-store sales growth in the United States and tightened its annual profit forecast amid rising competition and a widespread labor shortage.

 A Wendy?s restaurant displays a "Now Hiring" sign in Tampa, Florida, U.S., June 1, 2021. REUTERS/Octavio Jones

The tepid forecast comes as rival fast-food chains McDonald's and Taco Bell parent Yum Brands launch new menu items and collaborate with celebrities to lure more customers.

Wendy's said higher labor costs have pressured its margins as restaurants grapple with a tight labor market, making it difficult for them to ensure staffing and forcing some like Domino's Pizza to cut store hours.

Wendy's U.S. same-store sales rose 2.1% in the third quarter ended Oct. 3, falling short of analysts' average estimate of 4.4%, according to Refinitiv data.

The fast-food chain said it now expects annual adjusted earnings between 79 cents and 80 cents per share, compared with its prior range of 79 cents to 81 cents. Analysts were expecting annual earnings of 82 cents.

Total revenue rose to $470.3 million from $452.2 million a year earlier, marginally exceeding expectations of $470.2 million.

(Reporting by Deborah Sophia in Bengaluru; Editing by Aditya Soni and Arun Koyyur)

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