|Wendy's tops expectations, selling restaurants||| Print ||
|Written by Associated Press|
|Tuesday, 23 July 2013 08:25|
NEW YORK (AP) — Wendy's reported a quarterly profit that came in above Wall Street expectations and said it's selling 425 of its restaurants to franchisees.
Fast-food companies often own only a small percentage of their restaurants. This fattens their profit margins by reducing operating costs and lets them instead rely on fees paid by franchisees.
Wendy's Co. says the sale of its restaurants will reduce its ownership to 15 percent of its locations, from 22 percent. It said it now expects long-term adjusted earnings-per-share growth in the mid-teens percentage range starting next year. Previously, it had forecast single-digit to double-digit growth.
The company, based in Dublin, Ohio, also raised its dividend by 25 percent to 5 cents per share. Its stock shot up 8 percent to $7.21 in premarket trading.
CEO Emil Brolick said in a statement that the restaurants sale is intended to help expand the adoption of new restaurant designs among franchisees. That renovation, which features a more modern, inviting look, is part of the company's push to recast itself as a higher-end fast-food chain.
For the quarter, Wendy's Co. says sales edged up 0.4 percent at restaurants open at least a year. McDonald's on Monday said its sales rose 1 percent in the U.S., noting that people were being careful about eating out.
Wendy's says it earned $12.2 million, or 3 cents per share. That compares with a loss of $5.5 million, or 1 cent per share, a year ago.
Not including one-time items, it earned 8 cents per share, more than the 6 cents per share Wall Street expected.
Revenue rose to $650.5 million, short of the $659.5 million analysts expected.
Copyright 2013 The Associated Press.