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Wendy's plans to adjacent hundreds of U.S. restaurants successful the coming months arsenic gross and profits decline, with the institution citing cutbacks by lower-income consumers that it expects volition persist done year's end.
On a Friday capitalist call, Ken Cook, Wendy's interim CEO, didn't disclose the nonstop fig oregon locations of restaurants that it plans to shutter. But helium said the Dublin, Ohio-based institution is apt to adjacent successful the "mid-single digit percentage" of its 6,011 U.S locations, oregon astir 300 store closures if it shuts 5% of its existing restaurants.
Wendy's said the closures volition commencement successful the 4th fourth this year. Closing underperforming locations volition amended postulation and profitability astatine its remaining U.S. restaurants, Cook added.
Fast-food chains person been struggling to assistance income arsenic lower-income consumers consciousness progressively squeezed by rising nutrient costs. Both Wendy's and McDonald's person introduced value meals to entice diners, but Cook said helium doesn't expect the fiscal strain connected these households to easiness soon.
"We bash spot much unit connected the lower-income consumer," helium said Friday. "We continued to spot that successful [the 3rd quarter] and we expect that to proceed into the fourth."
The caller circular of closures comes connected apical of the closure of 140 U.S. Wendy's locations successful 2024. At the time, Wendy's said that galore of the 55-year-old chain's restaurants are simply retired of date.
Cook became Wendy's CEO successful July aft the company's erstwhile CEO, Kirk Tanner, near to go the president and CEO of Hershey Co.
Cook said successful immoderate cases, Wendy's volition marque improvements to struggling stores, including adding exertion oregon equipment. In different cases, it volition transportation ownership to a antithetic relation oregon adjacent the edifice altogether.
"When we look astatine the strategy today, we person immoderate restaurants that bash not elevate the marque and are a resistance from a franchisee fiscal show perspective. The extremity is to code and hole those restaurants," Cook said during a league telephone with investors.
In the archetypal 9 months of this year, Wendy's said its U.S. same-store sales, oregon income astatine locations unfastened astatine slightest a year, fell 4% compared to the aforesaid play past year. Wendy's gross fell 2% to $1.63 cardinal successful the aforesaid period, portion its nett income fell 6% to $138.6 million.
Cook said $5 and $8 repast deals — which person been matched by McDonald's — person helped bring immoderate postulation backmost to its U.S. stores. But Wendy's isn't doing a bully occupation of bringing successful caller customers, Cook said, truthful the institution plans to displacement its selling to stress its worth and the freshness of its ingredients.
Wendy's shares roseate 10 cents, oregon 1.1%, to $8.63 successful aboriginal Tuesday trading, but stay down 46% for the year.
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