Thursday, quick-service restaurant operator Wendy's/Arby's Group, Inc. (WEN) reported a profit for the third quarter compared with a loss a year ago. The results included the effect of the merger between Triarc and Wendy's. The company also said it benefited from lower commodity costs and expects this trend to continue in the fourth quarter.
The Atlanta, Georgia-based Wendy's/Arby's posted third-quarter net income of $14.69 million or $0.03 per share, compared with a loss of $12.15 million or $0.13 per share a year ago. Net income for the latest quarter included after tax special charges of $12.8 million or $0.03 per share including integration-related expenses and impairment charges.
Results for the third quarter ended September 27, 2009 included the effect of the September 29, 2008 merger between Triarc and Wendy's, while the results for year ago quarter only include results for Triarc.
For the preceding second quarter, the company had reported profit of $14.9 million or $0.03 per share, compared to a loss of $7 million or $0.07 per share in the same quarter last year.
For the quarter under review, Wendy's/Arby's generated consolidated revenues of $903.22 million, substantially up from $310.37 million in the prior year period. Sales revenues advanced to $806.04 million, up from $287.64 million a year ago, while franchise revenues grew to $97.18 million from $22.73million last year.
Wendy's/Arby's adjusted earning before interest, taxes, depreciation and amortization or EBITDA, excluding pre-tax integration-related costs of $5.0 million, was $124.4 million for the quarter, an increase of 9.1% from pro-forma third quarter 2008 adjusted EBITDA of $114.0 million.
Segment wise, Wendy's total revenues slipped to $613.5 million from the pro-forma revenues of $624.7 million in the third quarter a year ago. The company noted that the decrease in revenues was primarily due to lower company same-store sales resulting from the reduction in the number of company-operated restaurants serving breakfast, the negative effect of foreign exchange rates and fewer overall restaurants.
Meanwhile, Wendy's North America franchise same-store sales increased 0.4%, as franchise sales were not materially impacted by changes in the number of restaurants serving breakfast.
Wendy's company-operated restaurant margin was 16.5% for the quarter, compared to 12.5% in the prior year period, reflecting a 400 basis point improvement.
Wendy's ended the quarter with 6,608 restaurants, a net decrease of 17 units from the end of the third quarter a year ago.
Roland Smith, president and chief executive officer, said, "While October company-operated same-store sales have decreased, Wendy's two-year comp trends were +1% for the month excluding the effect of breakfast removal, which is consistent with 2009 year-to-date results."
Arby's total revenues for the quarter dipped to $289.7 million from $310.4 million a year ago, primarily due to lower same-store sales. Arby's sales were $269.2 million from company-operated restaurants and franchise revenues were $20.5 million.
Year-to-date, Wendy's/Arby's had net income of $18.66 million or $0.04 per share, compared with a net loss of $86.52 million or $0.94 per share in the corresponding period last year. Net income for the latest nine-month period included after tax special charges of $40.2 million or $0.09 per share. Total revenues grew substantially to $2.68 billion from $926.24 million during the corresponding period last year.
Additionally, the company indicated that during the 2009 fourth quarter, Wendy's and its franchisees entered into an agreement to establish a national supply chain cooperative or co-op for the Wendy's brand. The co-op will manage food and related product purchases and distribution services for the Wendy's system in the U.S. and Canada. The co-op is expected to begin operations in January, 2010. The company has committed to fund approximately $15.5 million for the co-op, which will be recorded as a charge in the fourth quarter of 2009 and paid over an 18 month period.
Among others in the industry, restaurant chain operator Yum! Brands Inc. (YUM) on October 6, reported third-quarter net income of $334 million or $0.69 per share, up from $282 million or $0.58 per share for the year-ago quarter. Excluding special items, the latest quarter adjusted earnings were $0.70 per share. Total revenues for the quarter declined 2% to $2.78 billion from $2.84 billion in the same quarter last year.
WEN is trading at $4.32, up $0.16 or3.84%, on a volume of about 3.56 million shares.
For the past 52-week period, the stock traded in a range between $2.81 and $5.80 on a 3-month average volume of about 7.46 million shares.
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