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Wendy's Co (WEN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was in line with expectations: global systemwide sales fell 2.6% on constant currency as U.S. comps declined 4.7%, offset by international growth of 8.6%; total revenues were $549.5M, adjusted EBITDA rose 2.1% to $138.0M, and reported diluted EPS was $0.23 (adjusted EPS $0.24) .
  • Against consensus, Wendy’s beat on revenue ($549.5M vs $534.5M*) and EPS ($0.24 vs $0.195*), aided by lower incremental advertising spend and G&A, despite U.S. margin pressure; estimate counts: EPS (26), revenue (17)* .
  • Management launched “Project Fresh” turnaround (brand revitalization, operational excellence, system optimization, capital allocation) and disclosed a mid‑single‑digit percentage of U.S. closures beginning Q4’25 into 2026 to improve unit economics .
  • 2025 guidance was largely reaffirmed, but capex + franchise development fund was cut to $135–$145M (from $165–$175M) and free cash flow raised to $195–$210M, with Q4 expected to be the trough; dividend of $0.14 declared and $14M buybacks in Q3 .
  • Near-term catalysts: clarity on U.S. system optimization and closures, scaling FreshAI/digital menu boards, and national launch of core chicken tenders (“Tendys”) with six sauces; strong early demand noted .

What Went Well and What Went Wrong

What Went Well

  • International strength: systemwide sales +8.6% with growth across all regions; openings included first restaurant in Ireland and second in Australia (highest opening day sales in history) .
  • Operating discipline: adjusted EBITDA +2.1% to $138.0M, supported by lower incremental advertising funding and G&A, plus higher other operating income .
  • Company-operated outperformance: U.S. company stores outperformed the system by 400 bps in SRS; “we’re proud of this progress and are scaling these initiatives across the system” — Ken Cook .

What Went Wrong

  • U.S. margin compression: U.S. company-operated restaurant margin fell 250 bps YoY to 13.1%, driven by commodity (beef) and labor inflation and weaker traffic .
  • Lower revenue drivers: total revenues declined 3.0% YoY to $549.5M, primarily due to lower advertising funds revenue and franchise royalty revenue .
  • Consumer/value pressure: management cited “heightened industry competition and consumer pressure,” with lower-income cohorts under strain; Q4 expected to be trough .

Financial Results

Sequential performance (Q1 → Q3 FY2025)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$523.5 $560.9 $549.5
Reported Diluted EPS ($)$0.19 $0.29 $0.23
Adjusted EPS ($)$0.20 $0.29 $0.24
Adjusted EBITDA ($USD Millions)$124.5 $146.6 $138.0
U.S. Company-Operated Restaurant Margin (%)14.8% 16.2% 13.1%
Operating Profit ($USD Millions)$83.1 $104.3 $92.0
Net Income ($USD Millions)$39.2 $55.1 $44.3

Year-over-year (Q3 FY2024 → Q3 FY2025)

MetricQ3 2024Q3 2025
Total Revenues ($USD Millions)$566.7 $549.5
Reported Diluted EPS ($)$0.25 $0.23
Adjusted EPS ($)$0.25 $0.24
U.S. Company-Operated Restaurant Margin (%)15.6% 13.1%
Adjusted EBITDA ($USD Millions)$135.2 $138.0
Global Systemwide Sales Growth (%)+1.8% (2.6)%

Segment and KPIs

MetricQ3 2024Q3 2025
U.S. Systemwide Sales ($USD Millions)$3,141.0 $3,004.1
International Systemwide Sales ($USD Millions)$495.2 $534.0
Global Systemwide Sales ($USD Millions)$3,636.2 $3,538.1
U.S. SRS Growth (%)+0.2% (4.7)%
International SRS Growth (%)+0.7% +3.0%
Global SRS Growth (%)+0.2% (3.7)%
KPIQ1 2025Q2 2025Q3 2025
Restaurant Openings – Total74 44 54
Quarter-End Restaurant Count (Global)7,308 7,334 7,363
Share Repurchases (#, $USD Millions)8.2M; $124.1 4.8M; $61.9 1.4M; $14.0
Dividend Declared ($/share)$0.14 $0.14 $0.14
Cash and Cash Equivalents ($USD Millions)$335.3 $281.2 $291.4
U.S. Digital Mix (%)——20.3% (all-time high)
U.S. Digital Sales Growth (%)——+14.9% YoY

Results vs Wall Street Consensus (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)*526.6*558.0*534.5*
Revenue Actual ($USD Millions)523.5 560.9 549.5
Primary EPS Consensus Mean ($)*0.2003*0.2544*0.1952*
Adjusted/Primary EPS Actual ($)0.20 0.29 0.24
Primary EPS – # of Estimates*25*26*26*
Revenue – # of Estimates*19*19*17*

Values retrieved from S&P Global.

  • indicates consensus estimate values.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Global Systemwide Sales Growth (%)FY 2025(5) to (3) (5) to (3) Maintained
Adjusted EBITDA ($USD Millions)FY 2025$505–$525 $505–$525 Maintained
Adjusted EPS ($)FY 2025$0.82–$0.89 $0.82–$0.89 Maintained
Global Net New Unit Growth (%)FY 20252–3 2–3 (likely low end) Maintained (tone lower)
Capex + Franchise Dev. Fund ($USD Millions)FY 2025$165–$175 $135–$145 Lowered
Free Cash Flow ($USD Millions)FY 2025$160–$175 $195–$210 Raised
G&A ($USD Millions)FY 2025$260–$270 $250–$260 Lowered
Interest Expense ($USD Millions)FY 2025~$127 ~$130 (securitization plan reiterated) Slightly higher planning

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 and Q2)Current Period (Q3)Trend
Turnaround planFocus on fresh famous food, ops excellence, global unit growth; expanding field resources and FreshAI rollout Project Fresh launched: brand revitalization, ops excellence, system optimization, capital allocation Intensifying execution/structure
Technology (FreshAI, digital)FreshAI toward 500 sites by year-end; digital menu boards; accuracy tools; app conversion record; digital mix >20% U.S. digital mix 20.3%, digital sales +14.9% YoY; scaling FreshAI and digital boards systemwide Scaling with measurable KPIs
Supply chain/tariffsEmphasis on domestic sourcing; tariffs minimal in Canada No material change; commodity (beef) inflation noted Commodity pressure persists
Value & pricingBiggie Bag anchored value; app-targeted deals; reduced $1 promotions Lower-income consumer under pressure; $5 Biggie Bag and $8 JBC meal performed; opportunity to retell quality story Maintain value, sharpen messaging
Product pipelineFrosty collabs drove traffic; Takis & beverage rollouts planned National launch of core chicken tenders (“Tendys”) with six sauces; strong early demand Shift to core platform innovation
Regional trendsInternational growth across APMEA, Europe; new commitments (Italy, Armenia); Canada strong International SWS +8.6%; new market milestones (Ireland, Australia record) Sustained international momentum
Macro/consumerQSR traffic weaker than expected; plan for persistent pressure Q4 trough expected; maintain FY guidance with focus on execution Cautious near-term macro

Management Commentary

  • “Project Fresh is structured around four strategic pillars: Brand Revitalization, Operational Excellence, System Optimization, and Capital Allocation… to increase AUVs, improve restaurant profitability, and create value” — Ken Cook .
  • “U.S. company-operated restaurants outperforming the system by 400 basis points in same restaurant sales during the 3rd quarter… we’re scaling these initiatives across the system” — Ken Cook .
  • “Closures expected to begin later this year and continue into 2026… around a mid‑single‑digit percentage of U.S. restaurants would end up closing… intent is to strengthen the system, not to charge closure fees” — Ken Cook .
  • “We launched a new core menu offering: Chicken Tenders… demand was so strong that some restaurants sold out even before the national media support” — Ken Cook .

Q&A Highlights

  • Franchisee health and cash flow: pockets of pressure to be addressed via system optimization (improve, transfer, or close underperformers), redeploy capital into remaining units .
  • Value strategy: Biggie Bag ($5) and $8 JBC meal performed; opportunity to attract new customers by balancing price with quality story; app-targeted value .
  • Unit optimization: mid‑single‑digit % U.S. closures; case-by-case approach; potential land monetization on company-owned properties (~645 sites) to fund reinvestment .
  • AUV over unit growth: capital shifting from U.S. build-to-suit to tech and marketing to drive AUVs; FreshAI/digital menu boards and back‑of‑house systems highlighted .
  • Dayparts and beverages: breakfast underperformed but new cold brew/cold foam and sparkling energy to support morning and snacking; beverage launches on track .

Estimates Context

  • Q3 2025 beat on both revenue and EPS versus consensus: revenue $549.5M vs $534.5M*, EPS $0.24 vs $0.1952*; 17 revenue estimates and 26 EPS estimates* .
  • Q2 also beat; Q1 was roughly in line on EPS and slightly below on revenue. With Q4 expected to be the trough, estimate revisions may focus on U.S. comp trajectory, margin recovery pace (beef inflation), and cadence of system optimization benefits .

Values retrieved from S&P Global.

  • indicates consensus estimate values.

Key Takeaways for Investors

  • International growth is a resilient engine; expect continued outperformance even as U.S. comps remain pressured near term .
  • Project Fresh actions (unit optimization, capital reallocation) should improve U.S. AUVs and margins over 2026, but Q4 2025 is likely the trough; watch for disclosed closure counts and early uplift where initiatives scale .
  • Earnings quality improved: adjusted EBITDA up despite margin headwinds, supported by lower incremental advertising funding and G&A; monitoring beef inflation is key for margin recovery .
  • Balance sheet/capital returns intact: dividend maintained ($0.14) and buybacks ongoing; free cash flow raised to $195–$210M on reduced capex/franchise fund and cash tax benefits .
  • Product platform pivot: core “Tendys” launch plus beverages provide sustainable traffic levers versus transient collabs; early demand signals are positive .
  • Digital execution gains (FreshAI, menu boards) correlate with company-store outperformance and higher digital mix; broader system rollout is a 2026 story to watch .
  • Near-term monitoring: U.S. value messaging efficacy, breakfast recovery, and evidence of share stabilization against peers amid consumer pressure .