Wendy’s withdraws financial guidance for 2020 as same-store sales decrease by 20%

Wendy’s (NASDAQ:WEN) said on Thursday that Coronavirus fueled a 20% decline in its same-store sales. The American international fast food restaurant also highlighted measures directed at supporting its franchisees and improving liquidity at large.

Wendy’s
also withdrew its forecast for the current year while it refrained from giving
its long-term financial guidance for 2021 to 2024 as well. In its previous
guidance, Wendy’s had expected £9.90 billion to £10.3 billion in sales in 2020.
In terms of earnings, it had forecast 49 to 51 pence per share.

Wendy’s
had also estimated its global system-wide sales to grow at 4-5% annually
between 2021 and 2024.

Wendy’s
Drive-Thru Orders Account For 90% Of Total Sales

In
the week that ended on 22^nd March, Wendy’s same-store sales were 20%
down. Digital orders made up 4.3% of the companies’ total sales while drive-thru
orders accounted for 90% of it. Wendy’s digital sales were capped at 2.5% in
2019.

The
fast-food
chain introduced a new breakfast on its menu across the country on March 2^nd.
Breakfast sales in that week were reported 15% higher. Wendy’s estimates that
its breakfast menu will eventually account for 10% of the company’s total sales
per day.

In
light of the sharp demand for its breakfast menu, Wendy’s said that that it
plans on cutting advertisements to save costs in 2020 amidst
the ongoing Coronavirus pandemic. Originally, it was supposed to spend £57.66
million to £65.90 million on marketing its newly launched breakfast.

In
support of its franchisees, Wendy’s said it will extend royalties and marketing
funds payments by 45 days in the upcoming 3 months. During this time, it will
defer the base rent payments for franchisees that rent property from the
company by 50%. Franchisees, as per Wendy’s, will also get an additional year
to meet the new requirements of restaurant development and for renovation of
their existing restaurants.

Wendy’s
Suspends Its Share Buyback Program

Further measures from Wendy’s included suspension of the share buyback program. After fully withdrawing funds from its revolving financing facility, Wendy’s said it now has around £280 million in cash.

To
minimize the fast transmission of COVID-19, Wendy’s has ordered a temporary shut
down at 189 international locations and 46 of its U.S restaurants.

In
the morning session, Wendy’s was seen trading 3% up on Thursday. At £11.80 per
share, the stock has lost around 33% in the stock market in 2020 so far. Wendy’s
currently has a market cap of £2.64 billion.