Wendy's serves up profit beat as franchising plan reaps benefits

Industries Reuters

(Reuters)

U.S. burger chain Wendy's Co (WEN) reported better-than-expected quarterly profit and sales, helped by higher franchise revenue and rental income.

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The company's shares were up nearly 3 percent at $15.66 in premarket trading on Wednesday.

Franchisee royalty and franchisee rental revenue, which contribute to about 48 percent of the company's net sales, rose 29 percent to $159.5 million in the second quarter.

Same-restaurant revenue from North America, the company's biggest market, rose 3.2 percent, helped by new items such as fresh mozzarella chicken salad on its menu.

Analysts had expected a 3.10 percent rise, according to research firm Consensus Metrix.

The company swung to a net loss of $1.85 million or 1 cent per share, in the second quarter ended July 2, compared with a profit of $26.48 million, or 10 cents per share, a year earlier.

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The latest quarter included a $41.1 million loss related to acquiring and selling some restaurants.

Excluding certain items, the company earned 15 cents per share, beating the average analyst estimate of 13 cents, according to Thomson Reuters I/B/E/S.

The company's revenue fell 16.3 percent to $320.34 million, mainly due to the company refranchising its restaurants. Analysts on average had expected $301.7 million, according to Thomson Reuters I/B/E/S. (Reporting by Karina Dsouza in Bengaluru; Editing by Maju Samuel)

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