Executive Summary

Q2 2025 delivered modest beats on EPS, revenue, and EBITDA versus Wall Street consensus, but underlying U.S. demand remained soft: Reported and adjusted EPS were $0.29, total revenue $560.9M, and adjusted EBITDA $146.6M, while global systemwide sales fell 1.8% and U.S. same-restaurant sales declined 3.6% (consensus for EPS ~$0.25, revenue ~$558.0M, EBITDA ~$138.5M; S&P Global) (S&P Global).
Full-year guidance cut across sales, EPS, EBITDA, and free cash flow, reflecting a more challenging competitive environment, softer consumer, and a simplified second-half programming calendar; commodity inflation (primarily beef) now ~4% for 2025, U.S. margin guide reduced to ~14% ±50 bps .
International remains a bright spot: Q2 constant-currency systemwide sales +8.7% with growth across all regions; net unit growth on track (44 openings; 26 net in Q2) supported by new development agreements for 190 restaurants in Italy and Armenia .
Execution catalysts: Frosty platform drove >30% YoY Frosty sales; digital mix reached 20.5% with record loyalty conversion; FreshAI and digital menu boards lifting accuracy and attachment; new beverage lineup launched and chicken tenders coming in Q4 .
Stock reaction hinges on the extent of estimate cuts post-guide, validation of simplified marketing focus (chicken, beverages), and evidence that July U.S. comps (-5% to -6%) were a trough rather than a trend .

What Went Well and What Went Wrong

What Went Well

International strength and unit growth: “International business… delivered 8.7% systemwide sales growth… opportunities for expansion,” said Interim CEO Ken Cook; 44 openings in Q2 and 118 YTD; development agreements for 170 Italy and 20 Armenia locations underpin pipeline .
Digital and AI execution: Global digital mix hit 20.5% with record loyalty conversion; FreshAI recommendation engine improved accuracy and attachment, contributing to company-operated stores outperforming U.S. system SRS by ~300 bps (company -0.7% vs. system -3.6%) .
Product activation: Frosty Swirls/Fusions lifted Frosty sales >30% YoY; beverage innovation (new cold brew, cold foam, sparkling energy drinks) targets breakfast/snacking dayparts and is designed for easier in-restaurant execution .

What Went Wrong

U.S. demand softness and marketing complexity: U.S. same-restaurant sales -3.6% and July comps down 5%–6%; management acknowledged “one hundred days of summer” created consumer confusion and operational burden; programming simplified for 2H .
Margin pressure: U.S. company-operated margin fell 30 bps YoY to 16.2%, driven by commodity (beef) and wage inflation and traffic declines, partially offset by labor efficiencies and higher average check .
Guidance reset: FY 2025 systemwide sales now down 3%–5%, adjusted EPS $0.82–$0.89, adjusted EBITDA $505–$525M, and free cash flow reduced, reflecting persistent consumer pressure and pulled-forward programming into 2026 .

Financial Results

Headline P&L and Margins

Metric	Q4 2024	Q1 2025	Q2 2025
Total Revenues ($M)	$574.3	$523.472	$560.929
Adjusted Revenues ($M)	$459.343	$423.112	$449.564
Reported Diluted EPS ($)	$0.23	$0.19	$0.29
Adjusted EPS ($)	$0.25	$0.20	$0.29
Adjusted EBITDA ($M)	$137.506	$124.517	$146.639
Operating Profit ($M)	$96.021	$83.126	$104.260
U.S. Company-Operated Restaurant Margin (%)	16.5%	14.8%	16.2%

Revenue Components (mix detail)

Revenue Component ($000s)	Q2 2024	Q2 2025
Sales	$237,355	$232,853
Franchise royalty revenue	136,318	132,233
Franchise fees	21,352	24,067
Franchise rental income	60,638	60,411
Advertising funds revenue	115,064	111,365
Total Revenues	570,727	560,929

Operational KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Global Systemwide Sales Growth (constant FX, %)	+2.6%	(1.1)%	(1.8)%
U.S. Same-Restaurant Sales Growth (%, const FX)	+0.6%	(2.8)%	(3.6)%
International Same-Restaurant Sales Growth (%, const FX)	+2.5%	+2.3%	+1.8%
Global Systemwide Sales ($M)	$3,729.2	$3,389.3	$3,660.2
Net Openings (quarter)	13	68 YTD	26
Digital Mix (% of sales, global)	—	20.3%	20.5%
Frosty Sales YoY	—	—	>+30%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Global Systemwide Sales Growth	FY 2025	(2.0)% to flat	(5.0)% to (3.0)%	Lowered
Adjusted EPS ($)	FY 2025	$0.92 to $0.98	$0.82 to $0.89	Lowered
Adjusted EBITDA ($M)	FY 2025	$530 to $545	$505 to $525	Lowered
Free Cash Flow (excl. franchise dev fund, $M)	FY 2025	$250 to $270	$225 to $240	Lowered
Free Cash Flow (new definition, $M)	FY 2025	—	$160 to $175	New metric provided
Global Net Unit Growth (%)	FY 2025	2–3%	2–3%	Maintained
Capex & Franchise Dev Fund Investments ($M)	FY 2025	Capex $100–$110	$165–$175 (combined)	Restated/raised combined
U.S. Co. Op. Margin (%)	FY 2025	~15% ±50 bps	~14% ±50 bps	Lowered
Dividend per share ($)	Q3 2025	—	$0.14 declared	Announced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
AI/Technology (FreshAI, digital boards)	~100 voice AI locations; target 500–600 in 2025; digital boards >300 locations	FreshAI “getting smarter,” lifting accuracy and sales; digital mix 20.5%; loyalty conversion at ATH; company stores outperformed system	Strengthening adoption and impact
Supply chain/tariffs/macro	2025 outlook did not include tariffs; Canada local sourcing insulation	Macro consumer softness drove guide cut; plan to be agile with media effectiveness; no new tariff impact called out in Q2	Macro headwinds persist
Product performance (Frosty, chicken, beverages)	Frosty collaborations launched; plan to expand chicken and beverage in 2025	Frosty +30% YoY; beverages launched (cold brew, energy drinks); chicken tenders set for Q4 with strong test vs largest competitor	Execution sharpening; focus narrowed
U.S. marketing/programming	Q1 scoped “100 days of summer” value + collabs	Summer calendar deemed cluttered; simplified 2H focus on chicken and beverages; move some innovations to 2026	Refocus and simplification
Regional trends	International comp/systemwide growth; Europe/APMEA strong; Australia entry	International +8.7% systemwide; Japan +27%, Mexico +16%; new agreements (Italy, Armenia)	Broad-based international momentum
Capital allocation	Dividend reset to $0.14 from Q2; up to $200M buybacks in 2025	Q2 buybacks 4.8M shares/$61.9M; Q3 dividend $0.14; ~$40.2M buyback remaining as of Aug 1	Continued returns amid guide reset

Management Commentary

“In the U.S., we have work to do… strengthen relationships with franchisees, improve marketing effectiveness, and elevate the customer experience… increasing our focus… positions the Company for stronger long-term performance.” — Ken Cook, Interim CEO .
“We now anticipate full year Global Systemwide sales to decline between 3–5%. We expect adjusted EBITDA to range between $505–$525M and adjusted EPS of $0.82 to $0.89… maintaining net unit development guidance of 2% to 3%.” — Prepared remarks .
“Frosty sales up over 30% year over year in the second quarter… beverage innovation will be a key enabler of growth… new cold brew formulation and indulgent offerings with cold foam.” — Ken Cook .

Q&A Highlights

Marketing clarity: Management acknowledged 100-days-of-summer created execution complexity and consumer confusion; 2H calendar narrowed to chicken and beverages with targeted app value, pulling broad $1 promotions .
U.S. trend update: July comps down 5%–6%; breakfast weaker than rest of day; beverages aimed to address habitual morning behavior .
Value strategy: Focus shifting to precision value via app and retelling quality story (Biggie Bag at $5 positioned as highest-quality value) .
Technology uplift: FreshAI and digital menu boards increasing accuracy and attachment; company-operated SRS declined only 0.7% vs. system -3.6% .
Franchise/operations: New restaurant-level P&L benchmarking; expanded field teams; intent to improve unit economics and strengthen “One Wendy’s” partnership .

Estimates Context

Metric	Actual (Q2 2025)	Consensus (Q2 2025)	Surprise
EPS ($)	0.29	0.2544*	Beat
Revenue ($M)	560.929	558.031*	Beat (small)
EBITDA ($M)	146.639	138.542*	Beat

Values marked with * retrieved from S&P Global.

Implication: Despite soft U.S. traffic and margin pressure, disciplined cost management and lower company advertising spend supported an EPS/EBITDA beat; however, the FY guide cut suggests estimates should move materially lower near term .

Key Takeaways for Investors

Near-term: Expect consensus reductions following the multi-line guidance cut; monitor whether July’s -5% to -6% comps were the trough and if beverage/chicken focus stabilizes U.S. traffic .
International growth offsets: Strength across regions (+8.7% systemwide; new development deals) provides partial cushion to U.S. softness and supports net unit growth trajectory .
Execution watchpoints: Track digital KPI progress (mix, loyalty conversion), FreshAI rollout, and margin trajectory vs. commodity inflation (~4% beef) and wage pressure .
Marketing discipline: A simplified calendar and targeted value could improve ROI on compressed media budgets; evidence of sustained attachment and repeat after activations is key .
Capital returns: Ongoing buybacks and $0.14 dividend continue, but free cash flow outlook reduced under new definition; balance sheet remains manageable with planned WBS refinancing .
Medium term: If “One Wendy’s” operational upgrades (restaurant-level benchmarking, field teams) translate to improved franchisee economics, unit growth and system health should accelerate into 2026 .
Risk/Reward: Narrative shift from growth to stabilization in U.S.; international and digital/AI execution are positives, but the competitive/value environment and commodity inflation remain key headwinds .

Wendy's Co (WEN)·Q2 2025 Earnings Summary