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The phrase may be there is no such thing as a free lunch, but
Wendy’s
doesn’t agree.
On Wednesday, the fast-food company issued a news release titled “Holidays, Hugs, and Warm Nuggs,” offering a free six-piece order of nuggets with any purchase made via its app every Wednesday through the end of the year.
That initiative, which the company said is only available at participating U.S. stores for a limited time, might be just the ticket for the company. The shares have tumbled 17% this year, while
McDonald’s
(ticker: MCD) stock is up 1.7%,
Starbucks
(SBUX) has gained 4.9%,
Chipotle Mexican Grill
(CMG) has soared 50%, and
Domino’s Pizza
(DPZ) is up 7.3%.
On Nov. 2, Wendy’s (
WEN
) posted mixed results for its third quarter. It reported U.S. same-restaurant sales growth of 2.2%, falling from 6.4% in the year-ago quarter and below the consensus call for 3.6% among analysts tracked by FactSet. Adjusted earnings of 27 cents a share beat analysts’ forecast by two cents, while revenue of $550.6 million fell short of estimates.
“While the relative and monthly sales trends were better than the headline number appeared, they remained below major competitors, and still pointed to a moderating trend amid the general industry and economic malaise,” wrote BTIG analysts Peter Saleh and Ben Parente in a report earlier this week. They rate shares at Neutral.
“We continue to view the company’s results as respectable, but remain skeptical of the planned unit growth acceleration and struggle to find obvious sources of upside,” the analysts wrote, adding that management issued a weak forecast for same-restaurant sales in the fourth quarter.
In short, the company needs to get more customers in the door. It’s time to see if chicken nuggets can help.
Write to Emily Dattilo at [email protected]
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