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Wendy's Sales Disappoint As US Winter Hits Store Traffic

By Dave Simpson

Wendy's Co WEN.O has missed Wall Street estimates for quarterly results as fierce storms and freezing temperatures across the United States earlier this year hit store traffic and cooled demand for the burger chain's breakfast items.

Details

Shares of the Dublin, Ohio-based fast-food chain fell as much as 13% to hit an over two-year low on after the company said that it now expects breakfast sales for the full year to linger toward the lower end of the 10% to 20% growth range it had projected earlier.

Analysts have said Wendy's breakfast menu - known for items including the Baconator burger and Frosty-ccino coffees - could face pressure from consumers turning to cheaper meals as rising inflation hit Americans' pockets.

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"I view the first quarter results really as a little bump," said Wendy's chief financial officer Gunther Plosch.

Wendy's company-operated restaurant margin fell to 11.6% in the quarter ended 3 April from 17% a year earlier due to higher costs of labor and commodities such as beef, chicken, coffee and edible oils.

The company said there has been a slowdown in traffic from its lower-income consumers, but some of its more affluent customers were continuing to order its hamburgers and fries.

Larger rival McDonald's MCD also said last month that some of its customers were buying cheaper or fewer items.

Wendy's US same-store sales rose 1.1% in the first quarter, but missed analysts' average estimate for a 2.28% increase, according to Refinitiv IBES.

It said that traffic at its outlets was also pressured in the quarter due to the Omicron variant of the coronavirus.

Total Revenue And Adjusted Profit

Total revenue rose 6.2% to $488.6 million, also below estimates of $496.9 million.

Adjusted profit of 17 cents per share fell short of expectations by one cent.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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