As struggling U.S. consumers reduced their restaurant visits, Wendy’s Co. shares fell approaching a five-year low Friday as the fast-food burger giant reported a decline in a key quarterly sales metric for the first time since the COVID pandemic’s peak.
The profitability of Wendy’s (WEN) U.S., based in Ohio, was also negatively impacted by the drop in same-restaurant sales, which are sales of restaurants that have been open for at least 15 months, as well as increased expenses for worker compensation and commodity products, which were somewhat offset by a larger average check.
Additionally, the company lowered its full-year outlook, assuming that consumers would continue to suffer, even if the profit for the first quarter ended March 31 met expectations.
In morning trade, the stock fell 1.2%, heading for the lowest closing price since March 23, 2020. It is headed for its sixth weekly loss in the last eight weeks after losing 3.1% this week.
Since the majority of ingredients are obtained where they are sold, Chief Executive Kirk Tanner said on the post-earnings call with analysts that tariffs would not have a significant impact.
100% of the beef and 95% of the other ingredients are sourced domestically in the United States.
“In several of our biggest overseas markets, we use the same sourcing strategy. For instance, Tanner stated, “In Canada, we only use 100% Canadian beef,” as per a FactSet transcript. “This is particularly advantageous in the current environment as tariffs have minimal impact on our supply chain.”
Overall same-restaurant sales during the first quarter decreased 2.1% from the same period last year. That was the first drop since they fell 5.8% in the second quarter of 2020 and fell short of the 1.2% average analyst projection that FactSet had prepared.
Same-restaurant sales in the US fell 2.8%, marking the first decline since Q2 2020. That fell short of the 1.3% forecast.
“This was driven by adverse weather in January and February, coupled with a weaker-than-expected consumer environment throughout the month of March,” Tanner stated.
McDonald’s Corp. (MCD), a rival burger company, also reported a 3.6% drop in comparable sales in the United States as a result of fewer customers visiting its locations.
Additionally, company-run eateries in the US saw a decline in profitability, with margins falling from 15.3% to 14.8%.
International same-restaurant sales, meanwhile, increased 2.3% in the first quarter and kept growing.
The total revenue, which includes sales of more recent locations, fell 2.1% from the previous year to $523.5 million, falling just short of the $525.4 million FactSet consensus.
Adjusted earnings per share, which do not include nonrecurring charges, decreased from 23 cents to 20 cents to meet the FactSet average, while net income down 6.7% to $39.2 million.
The business lowered its 2025 guidance ranges for adjusted EPS from 98 cents to $1.02 to 92 cents, and overall sales from a previous range of growth of 2% to 3% to flat.
The revised projection, according to Chief Financial Officer Kenneth Cook during the call, is predicated on the present “challenging” consumer climate continuing for the remainder of the year.
In 2025, Wendy’s stock fell 24.3%, McDonald’s stock increased 8%, and the S&P 500 index SPX fell 3.7%.
