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Fast-food chain Wendy’s (NASDAQ:WEN) met Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 2.1% year on year to $523.5 million. Its non-GAAP profit of $0.20 per share was in line with analysts’ consensus estimates.

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Wendy's (WEN) Q1 CY2025 Highlights:

• Revenue: $523.5 million vs analyst estimates of $524.9 million (2.1% year-on-year decline, in line)

• Adjusted EPS: $0.20 vs analyst estimates of $0.20 (in line)

• Adjusted EBITDA: $124.5 million vs analyst estimates of $122.5 million (23.8% margin, 1.7% beat)

• Management lowered its full-year Adjusted EPS guidance to $0.95 at the midpoint, a 5% decrease

• Operating Margin: 15.9%, in line with the same quarter last year

• Free Cash Flow Margin: 12.9%, up from 10.5% in the same quarter last year

• Locations: 7,308 at quarter end, up from 7,248 in the same quarter last year

• Same-Store Sales fell 2.1% year on year (0.9% in the same quarter last year)

• Market Capitalization: $2.3 billion

StockStory’s Take

Wendy’s leadership attributed its first quarter results to a combination of challenging consumer conditions, adverse winter weather, and the impact of new promotional efforts. CEO Kirk Tanner highlighted that while global same-store sales fell, the company maintained U.S. traffic and dollar share, driven by product innovation such as the Thin Mint Frosty and ongoing emphasis on value. He pointed to international growth, notably in Canada and new markets like Australia, as a bright spot in the quarter’s performance.

Looking ahead, management lowered its full-year adjusted EPS guidance, citing ongoing uncertainty in consumer demand and broader industry traffic softness. Tanner emphasized that Wendy’s is prioritizing operational improvements, increased digital engagement, and menu innovation to offset these pressures. He explained, “We are focused on controlling what we can control and adapting to the current environment through both value and innovation,” while reiterating the company’s commitment to net unit growth and expanded international presence.

Key Insights from Management’s Remarks

Wendy’s first quarter was influenced by macroeconomic pressures and strategic programming, with management focusing on menu innovation and operational improvements to drive future growth and maintain competitiveness.

• Menu Innovation and Collaborations: The launch of new Frosty flavors and collaborations with brands such as Girl Scouts and Takis helped boost customer traffic temporarily, with further product tie-ins planned for summer and fall.

• Operational Excellence Initiatives: The company rolled out new training programs, doubled in-restaurant field visits, and introduced operational tools like menu item labels and delivery scales to improve order accuracy and customer satisfaction.

• Technology Investments: Management accelerated the deployment of digital menu boards and AI-based order-taking, aiming to enhance personalization and drive higher digital sales, which reached over 20% of total sales for the first time.

• International Expansion: Over 60% of new restaurant openings occurred in international markets, with record growth in Canada and early success in Australia, reinforcing Wendy’s strategy to expand its global footprint.

• Franchisee Support and Benchmarking: A new system for collecting and benchmarking franchisee financials at the restaurant level was introduced, intended to drive operational best practices and improve franchisee profitability.