Wendy’s third-quarter results reflected persistent sales challenges in its U.S. business, even as overall performance topped Wall Street’s revenue and profit expectations. Management pointed to continued pressure on U.S. same-restaurant sales, driven by lower guest traffic and heightened competition. Interim CEO Ken Cook emphasized the launch of Project Fresh, a comprehensive turnaround plan, as the company’s response to these issues, stating, “We are acting with urgency to return U.S. comp sales to growth.” International operations remained a bright spot, delivering robust system-wide sales growth and new market openings.
Is now the time to buy WEN? Find out in our full research report (it’s free for active Edge members).
Wendy's (WEN) Q3 CY2025 Highlights:
- Revenue: $549.5 million vs analyst estimates of $533 million (3% year-on-year decline, 3.1% beat)
- Adjusted EPS: $0.24 vs analyst estimates of $0.20 (22.9% beat)
- Adjusted EBITDA: $138 million vs analyst estimates of $123.6 million (25.1% margin, 11.7% beat)
- Management reiterated its full-year Adjusted EPS guidance of $0.86 at the midpoint
- EBITDA guidance for the full year is $515 million at the midpoint, in line with analyst expectations
- Operating Margin: 16.8%, in line with the same quarter last year
- Locations: 7,363 at quarter end, up from 7,292 in the same quarter last year
- Same-Store Sales fell 3.7% year on year (0.2% in the same quarter last year)
- Market Capitalization: $1.66 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Wendy's’s Q3 Earnings Call
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David Palmer (Evercore ISI) asked about franchisee cash flow and how Project Fresh could deliver quick wins. Interim CEO Ken Cook explained that system optimization—closing or improving underperforming stores—will help franchisees reinvest and improve profitability, but emphasized a focus on long-term rather than immediate gains.
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Jeffrey Bernstein (Barclays) questioned Wendy’s value positioning versus competitors. Cook acknowledged increased pressure on value-conscious consumers and noted that while the $5 Biggie Bag and $8 meal performed well, attracting new customers remains a challenge. He said the company is exploring new ways to communicate value.
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Brian Mullan (Piper Sandler) asked about expected U.S. restaurant closures under system optimization. Cook estimated a mid-single-digit percentage of closures, stressing that each case would be evaluated to allow franchisees to reinvest in remaining locations rather than penalizing them with closure fees.
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Margaret-May Binshtok (Wolfe Research) inquired about the beverage platform and breakfast performance. Cook said new cold brew, cold foam, and energy drinks were well received, though breakfast sales remain under pressure due to broader industry trends.
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Andrew Strelzik (BMO) pressed for details on margin outlook. CFO Suzanne Thuerk reiterated that beef inflation and lower traffic are weighing on margins, but stressed that Project Fresh’s focus on profitable AUV growth and menu balance (with chicken tenders) should help offset these pressures over time.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the rollout and scaling of Project Fresh’s operational initiatives across the U.S. franchise system, (2) progress on international unit development and market entries, and (3) management’s ability to mitigate cost inflation’s impact on margins. The success of new menu items and the closure of underperforming stores will also be closely watched as indicators of turnaround progress.
Wendy's currently trades at $8.77, in line with $8.82 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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