Wendy's Says Sales Could Fall in 2025 as Fast Food Shows Signs of Slowing Down
Wendy's now expects this year's sales to range from flat to down 2% from 2024, a downgrade from its earlier forecast of 2% to 3% growth for the year.
The company lowered its outlook Friday while announcing quarterly results that largely missed analyst expectations.
Wendy's executives said traffic in the latest quarter fell, while the cost of supplies and labor rose.Wendy's (WEN) is the latest fast-food chain to express wariness about the months ahead, trimming its earnings outlook for the year and saying sales in 2025 may fall year-over-year.
The burger chain known for square patties anticipates finishing 2025 with sales that are flat or down as much as 2% from the year prior, Wendy's said Friday. The company previously had forecast a 2% to 3% increase for the year.
Wendy's sales and profit for the first quarter, which ended March 30, missed expectations. The company reported $39.2 million in net income, just under the $39.8 million analysts expected, according to consensus estimates from Visible Alpha. Wendy's $523.5 million in revenue came in below the $524.9 million consensus estimate.
'We saw broad-based pressure in the quarter,' CFO Ken Cook said, according to a transcript made available by AlphaSense. That pressure, he said, was particularly acute with households that make under $75,000.
Wendy's report comes after McDonald's (MCD) told investors the day before that economic stress already seen by the fast-food giant among low-income consumers appears to have spread to middle-income households.
Although sales improved 8.9% year-over-year in international markets, domestic same-restaurant sales dropped 2.8% in the first quarter—more than the 1.7% Wall Street expected, according to the consensus estimates.
Wendy's said inflation pushed up the cost of supplies and labor, while traffic declined at company-operated U.S. locations.
Consumer pullback was most evident during breakfast hours and in the month of March, Cook said. During parts of that month, the broader industry experienced a low-double-digit drop in traffic among households making less than $75,000 annually, Cook said on an earnings conference call Friday.
In response to waning demand, Wendy's plans to run a '100 Days of Summer' promotion with innovative items and a focus on value when 'our customers need it most,' CEO Kirk Tanner said in the call.
Wendy's shares were up less than 1% in recent trading Friday. However, the stock has lost more than a fifth of its value this year.
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