Why Wendy's changed its fries
Wendy's (WEN) much talked about recent changes to its fries — mostly an improved cooking process — appear to be paying early dividends.
"The start to the fourth quarter with Buck biscuits and the french fry innovation, we're off to a nice start ahead of the plan internally and with the guidance we just provided," Wendy's CEO Todd Penegor said on Yahoo Finance Live.
Penegor said it was time for Wendy's to up its fry game, after reportedly not updating its fries in close to 10 years.
"We wanted them to be hotter and crispier. At the end of the day, the consumer wants an experience that is hotter, crispier and we worked hard to deliver on that experience and make it easier operationally to manage within the restaurant to deliver on that promise time and time again. We have the hot and fresh guarantee. If you are disappointed about the fries at Wendy's, they do stay hotter and crispier longer. The feedback has been strong, with the initial trial that we have had," Penegor explained.
The positive start to the fourth quarter may help alleviate some fresh concern on Wendy's growth trajectory headed into 2022.
Wendy's posted a mixed third quarter earnings report on Wednesday as it was dealt with tough sales comparisons to its year ago breakfast launch and an inflationary environment.
Here is how Wendy's performed compared to Wall Street analyst estimates:
Net Sales: $470.3 million vs. $471.6 million
Global Sales Store-Store Sales: +3.3% vs. +4.9%
Diluted EPS: $0.19 vs. $0.18
Wendy's shares fell about 6% in afternoon trading as investors digested the mixed quarter.
For the full year, Wendy's sees global systemwide sales growth of 11% to 12%. Previously, Wendy's guided to growth of 11% to 13%. Full-year adjusted earnings are seen in a range of $0.79 to $0.80, compared to $0.79 to $0.81 previously.
"It should come as little surprise that industry pressures around labor, supply chain and inflation posed challenges for WEN's operations during 3Q given uniform commentary from companies this reporting season," said Wells Fargo restaurant analyst Jon Tower. "We find it difficult to see shares moving higher on this print and 21 guidance adjustments, especially when the company is likely to defer LT questions to the just announced March 2022 investor day."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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