Wendy’s Says Fast Food Sales Could Fall by 2025

Key Takeaways

• 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 announced Friday that it had lowered its outlook while also announcing results for the quarter which were largely below analyst expectations.
• Wendy's executives said traffic in the latest quarter fell, while the cost of supplies and labor rose.

Wendy’s, the fast-food chain, is the latest to be concerned about the months to come. It has cut its earnings outlook and stated that sales could drop in 2025.

Wendy’s, a burger chain best known for its square patties and square patties, announced Friday that sales will be flat or down up to 2% by 2025. The company had previously forecasted a 2%-3% increase for the entire year.

Wendy’s first quarter sales and profit, ending March 30, fell short of expectations. Visible Alpha’s consensus estimates show that the company’s net income was $39.2 millions, which is just below the $39.8 billion analysts expected. Wendy’s $523.5 millions in revenue was below the $524.9 consensus estimate. 

AlphaSense has obtained a transcript of CFO Ken Cook’s comments. He said that the pressure was widespread. This pressure, he said was particularly acute among households with incomes below $75,000

Wendy’s report follows a day earlier when McDonald’s (MCD), the fast-food giant, told investors that the economic stress experienced by low-income consumers has spread to middle-income families.  

Domestic Same Store Sales Dropped in the Third Quarter

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 that inflation drove up the cost for supplies and labor while traffic dropped at the company’s U.S. operated locations.

Cook said the pullback in consumer spending was most noticeable during breakfast and in March. Cook said that during parts of the month, the industry saw a drop in traffic by households earning less than $75,000 per year.

Kirk Tanner, the CEO of Wendy’s said that as a result of waning demand Wendy’s is planning to run its “100 Days of Summer Promotion” with innovative products and a focus value when “our clients need it most”.

Wendy’s shares rose less than 1% during Friday’s recent trading. The stock, however, has lost more that a fifth in value this year.