Wendy's is still losing to rivals like McDonald's, but not by as much as feared

By Tomi Kilgore

The fast-food chain's sales fell in the latest quarter - McDonald's and Burger King's rose - but they beat Wall Street forecasts and the stock extended its bounce

Wendy's stock rallied, as sales continued to fall but not by as much as Wall Street was expecting.

Shares of Wendy's Co. rallied in early Friday trading, after the fast-food chain reported third-quarter results that showed that, while its business was still struggling, it was actually doing better than Wall Street had expected.

Wendy's (WEN) same-restaurant sales, or sales of restaurants open at least 15 months, declined from a year ago for a third straight quarter, while those of rivals McDonald's Corp. (MCD) and Restaurant Brands International Inc.'s (QSR) Burger King increased over the past two quarters. Still, Wendy's managed to beat analyst expectations, which have been falling over the past several months.

The results came as Wendy's has been aggressively working to turn things around. It replaced its chief executive in July, less than two years after being put in charge, and announced its Project Refresh turnaround plan last month. One of the problems identified by interim Chief Executive Ken Cook was that Wendy's attempts to attract customers with meal deals were just confusing them and hurting the guest experience.

The stock climbed 8.7% toward a two-month high in premarket trading. It had gained 4.7% over the past three sessions, after closing Nov. 3 at the lowest price since the pandemic-era low on March 18, 2020.

Total revenue for the quarter to Sept. 28 was down 3% to $549.5 million, amid lower advertising funds revenue and lower franchise-royalty revenue, but that was above the average analyst estimate compiled by FactSet of $534.7 million.

Same-restaurant sales were down 3.7%, but beat the FactSet consensus for a 5% decline. In a sign of how analyst expectations had deteriorated, the FactSet consensus at the end of the second quarter was for an increase of 0.2%.

Net income for the quarter was down 11.8% to $44.3 million, while adjusted earnings per share, which excludes nonrecurring items, eased to 24 cents from 25 cents and topped the FactSet consensus of 20 cents.

Looking ahead, the company affirmed its guidance range for adjusted EPS of 82 cents to 89 cents. But for free cash flow, the company boosted its outlook to $195 million to $210 million from $160 million to $175 million.

Wendy's stock has tumbled 45.8% in 2025 through Thursday, while McDonald's shares have gained 2.9% and the S&P 500 index SPX has advanced 14.3%.

-Tomi Kilgore

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11-07-25 0834ET