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Wendy's: Turnaround efforts take hold

Wendy's: Turnaround efforts take hold

The Wendy’s Company's turnaround efforts appeared to be taking hold in the second quarter, and the company plans to accelerate remodeling efforts next year as “new look” units show a sales lift of up to 25 percent, the company said Thursday.

For the second quarter ended July 1, Wendy's reported a loss of $5.5 million, or a loss of 1 cent per share, compared with income of $11.3 million, or 3 cents per share, last year, primarily as a result of a $25.2 million pretax charge from the early extinguishment of debt.

However, consolidated revenues rose 3.8 percent to $645.9 million for the quarter, and both company-operated units in North America and franchise locations, respectively, generated a same-store sales increase of 3.2 percent, representing the fifth consecutive quarter of comparable sales increases.

The same-store sales climb was even better than the 3-percent increase projected at an analyst conference earlier this year. The increase also contributed to climbing margins at company-operated locations of 14.1 percent for the quarter, compared with 13.9 percent last year, though that increase was offset somewhat by higher labor costs as the chain invests in improving customers service with the new “My Wendy’s” initiative, training employees to be friendlier, greet all guests, show pride and other attributes.

The service improvements are part of Wendy’s ongoing “A Cut Above” brand positioning strategy, which has included menu innovation, cost cutting, daypart expansion and restaurant growth.

A cornerstone of the effort, however, has been Wendy’s reimaging campaign, which began last year.

Emil Brolick, Wendy’s chief executive, said 10 new-prototype restaurants opened in 2011 have shown a sustained average sales lift of 25 percent, and the company is shifting into overdrive, with plans to open 50 remodeled restaurants this year, along with another 17 new builds featuring the more contemporary design.

In 2013, that number will grow. The company is planning to remodel 100 locations and open another 20 with the new look. Another 100 franchised locations are scheduled for remodeling.

By 2015, Brolick expects about half, or 750, of the chain’s company-operated restaurants to have the new design.

The re-imaging comes in three options, or tiers, with the 25-percent lift seen among units with the Tier I redesign, the most comprehensive. Tier II tends to generate a 15-percent lift, and Tier III a 5-percent sales increase.

Brolick said promotions for late night launched around Memorial Day have helped increase sales during that daypart by about 7 percent.

Breakfast, however, remains a challenge. The company began testing a breakfast program in 2006 that has seen several iterations. Brolick said the daypart is still not showing the desired economic results, and work will continue.

“We want our share of [the breakfast] business, but it has to be a profitable share,” he said.

Wendy’s is also continuing efforts to build its market share among Hispanic consumers, which Brolick sees as an opportunity.

The chain’s marketing efforts in general are resonating with guests, Brolick said, including commercials featuring Wendy Thomas, founder Dave Thomas’s daughter, as well as a redheaded actress known as “Red.”

In July, the chain launched a new mobile app that helps guests plan a meal under a certain number of calories. Brolick said the app already has 26,000 users.

Higher commodity costs also remain a challenge, the company said. Some relief on beef costs is expected for the balance of the year, as the price of ground beef is dropping with more cattle being sent to slaughter because of the drought in the Midwest and lowered demand because of the “pink slime” controversy earlier this year. But beef prices are expected to rise next year because of herd liquidation, which could have a long-term impact.

Dublin, Ohio-based Wendy’s operated or franchised 6,547 locations at the end of the second quarter, including 1,425 company-owned locations. During the quarter, the company closed 19 underperforming restaurants and franchisees closed 28.

Contact Lisa Jennings at [email protected]
Follow her on Twitter: @livetodineout


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


Wendy's transformation push starts to take hold

FILE - This undated file photo provided by Wendy's Co. shows the interior of a remodeled restaurant. The Wendy's Co.’s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold. The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by remodeled restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign. Wendy's Co., File, Associated Press

NEW YORK — The Wendy's Co.'s push to transform itself as a higher-end hamburger chain is showing early signs of taking hold.

The Dublin, Ohio-based fast food company says a key sales figure rose 3.2 percent in the second quarter, helped by renovated restaurants, new menu items such the Spicy Guacamole Chicken Club sandwich and a new TV ad campaign.

Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of newly opened and closed locations.

Wendy's said the boost was driven by increased spending per visit, which is in line with its long-term goal of enticing customers to pay more for higher-quality food. But executives noted in a conference call with investors that the company still has a long road ahead. The turnaround efforts also come at a time when competition is intensifying and the economy remains weak.

To cast itself as a more premium fast-food chain, Wendy's is investing heavily to give its restaurants a fresher look. In the next three years, half of its company-owned locations will be remodeled with an airy new style that features leather chairs, flat-screen TVs and metallic highlights.

CEO Emil Brolick said the renovations — which will cost $80 million this year — are critical because they "enhance all dimensions of the Wendy's experience." He noted that restaurants that were renovated last year enjoyed a 25 percent increase in sales.

To justify its higher prices and build loyalty, Wendy's is also working to improve customer service. Additionally, Brolick noted the chain will need to offer a steady pipeline of compelling limited-time offers to keep customers coming back.

After years of lackluster sales and eroding market share, Wendy's hired Brolick last September and has since been on a mission to revive its business. The push hit an early snag in the first quarter, when the company said its "You Know When It's Real" marketing didn't resonate as strongly as its competitors and sales came in weaker than expected. The company vowed at the time to make adjustments.

In the latest quarter, Wendy's said its new two-pronged ad campaign helped drive sales. The TV ads feature a young, red-headed woman referred to internally at the company as "Red," who encourages customers to discover the surprisingly high-quality foods at Wendy's.

Other ads featuring the real Wendy Thomas, the daughter of founder Dave Thomas, are intended to underscore the company's roots and run less frequently.

Citing its second-quarter sales performance, Wendy's stood by its outlook for the year, with adjusted earnings before interest, taxes, depreciation and amortization costs, or EBITDA, from continuing operations to range from $320 million to $335 million. Wendy's said it still targets an average adjusted EBITDA growth rate in the high-single-digit to low double-digit range starting next year.

The company said it expects beef costs to ease for the rest of the year, as a result of the drought that has pushed up grain prices and prompted farmers to sell off cattle they can no longer afford to feed.

After that, however, Wendy's expects beef costs to rebound and continue pressuring margins. Beef and chicken each make up about 20 percent of the company's commodity costs.

For the quarter, Wendy's said it lost money because of costs to refinance its debt and impairment charges related to the consolidation of its restaurant support business.

For the three months ended July 1, Wendy's says it lost $5.5 million, or a penny per share. That compares with a profit of $11.3 million, or 3 cents per share, a year ago.

Excluding one-time items, Wendy's earned 5 cents per share, in line with expectations.

Revenue rose to $645.9 million, up 4 percent from a year ago but shy of the $647.9 million analysts expected.

The profit margin of company-operated restaurants during the quarter improved to 14.1 percent, from 13.9 percent, as a result of higher sales and selling more profitable items. The increase was offset by higher labor costs, the result of its efforts to improve customer service.

Wendy's shares were flat at $4.54 in early afternoon trading. The company has more than 6,500 restaurants, mostly in North America.


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