Key Takeaways:
Wendy's cut its dividend to $0.28 a share and withdrew its 2026 outlook after U.S. same-restaurant sales fell 7.0% in the second quarter.
"We are clearly not performing at our potential," Bob Wright, president and chief executive officer, said. "Our traffic, our value proposition and franchisee economics are not meeting our expectations."
Revenue rose 1.7% to $570.6 million, while net income fell 40.8% to $32.6 million. Adjusted EBITDA declined 15.4% to $124.1 million. Reported diluted EPS was $0.17, adjusted EPS $0.18. Operating profit fell 24.0% to $79.3 million on lower franchise royalty revenue, higher general and administrative expense and a narrower U.S. company-operated margin.
Shares fell 1.9% to $7.25, giving the Dublin, Ohio-based chain a market value of about $1.5 billion. Wright, who returned in May, said the company is acting across five areas — menu value, marketing, operations, digital and restaurant growth — with a full turnaround plan still being formulated.
Global systemwide sales declined 6.5% to about $3.4 billion, with U.S. systemwide sales down 8.2% and international up 3.4%. International same-restaurant sales fell 2.3%. The company ended the quarter with 7,180 restaurants, down from 7,334 a year earlier, after 71 net closures globally — including 81 in the U.S. — and 10 net international openings.
U.S. company-operated restaurant margin narrowed 240 basis points to 13.8%, pressured by commodity and labor inflation and lower traffic, partly offset by higher average checks. General and administrative expense rose 11.3% to $66.2 million on professional services and compensation. The revenue increase reflected higher advertising funds revenue and company-operated restaurant sales from franchise acquisitions, partly offset by lower royalty and rental income.
Cash from operations reached $160.0 million in the first half, up 9.6%, and free cash flow rose 9.9% to $120.3 million. The company declared a quarterly dividend of $0.07, payable Sept. 15, down from $0.14, and made no share repurchases in the quarter, with about $35 million left under an authorization expiring in February 2027.
The decline extends a stretch of U.S. traffic weakness for the burger chain, which competes with McDonald's and Restaurant Brands International's Burger King in the quick-service segment. The dividend cut and guidance withdrawal free up capital for the turnaround as Wright's team reassesses the business. Investors will watch the Aug. 7 conference call for details on the plan and any timeline for restoring U.S. traffic growth.
This article is for informational purposes only and does not constitute investment advice.
