WEN

Wendy’s, the burger chain that asked “Where’s the beef?” and brought the Baconator to burger lovers worldwide, is getting grilled in its returns. The chain, which boasts a market cap of $1.62 billion, is losing customers, closing down stores, and seeing consecutive declining sales—so much so that billionaire activist investor Nelson Peltz may be preparing to take Wendy’s private as it struggles to get customers through the door. “Traffic is down, our value proposition has slipped, and franchisee economics are under pressure,” Wendy’s CEO Bob Wright told investors on Wendy’s latest earnings call. “We can’t just do what we’ve always done better. We do have to innovate.” Peltz’s Trian Fund Management has assembled a consortium that could potentially submit an offer to take Wendy’s private in the coming weeks, according to reports from the Financial Times and Reuters. The group is expected to include Abu Dhabi-based BlueFive Capital and Flynn Group, one of the world’s largest restaurant franchise operators and a major Wendy’s franchisee. Peltz has been preparing for a potential takeover as early as February, when Trian said in a regulatory filing that it believed Wendy’s stock was “undervalued” and disclosed the fund was reaching out to possible co-investors about strategic options, including taking the company private. Peltz personally owns roughly a 16.24% stake in Wendy’s while Trian holds roughly 7.85%, which, at over 24% combined, make up Wendy’s largest shareholder. But a potential buyer would inherit a company whose problems extend well beyond its stock price. U.S. same-restaurant sales fell 7% in the second quarter, marking the sixth consecutive quarterly decline, while traffic plunged 12.5%, according to Wendy’s second-quarter results and earnings call on Aug.7. Wendy’s withdrew its 2026 financial outlook and cut its quarterly dividend to 7 cents a share. During the first half of 2026, Wendy’s closed 289 restaurants in the U.S., and that may not be the end of it. “I’m sure there will be additional closures,” Wright told analysts. Part of the problem is that Wendy’s has experienced losses in the quick-service burger category for 17 straight months. A portion of the traffic decline came as Wendy’s pulled back on discounting and reduced or eliminated breakfast hours at some restaurants, CFO Steve Cirulis told analysts on the company’s second-quarter earnings call. Wendy’s has also historically positioned itself as a higher-quality burger chain, but Wright acknowledged that decisions made in the interest of cost and efficiency had eroded some of the food quality that historically differentiated the brand. That traffic decline was partially offset by a 5.6% increase in average check during the second quarter, according to Cirulis. This is contrary to Wendy’s U.S. President Pete Suerken’s commentary in Fortune from May, in which he argued that the chain’s “fresh, never-frozen” beef and its complicated supply chain (which relies on frequent deliveries, localized sourcing and temperature-controlled shipping) give Wendy’s a competitive advantage that rivals can’t quickly replicate. “The things that make you different are the things people remember,” Suerken wrote. But now, Wright says Wendy’s has drifted from some of those qualities, telling investors that decisions made in the interest of cost and efficiency had degraded some of the food quality that set the chain apart. Marketing hasn’t provided the answer either. Wright said Wendy’s had become “over-reliant on a calendar of one-off promotions and collaborations” rather than telling a consistent story about the brand. Its new chicken sandwich platform and Minions & Monsters movie collaboration failed to deliver the traffic Wendy’s expected last quarter, Cirulis said on the earnings call. “The real challenge for us has been that underlying traffic trend,” Cirulis said. The dynamic-pricing controversy was another recent marketing headache. Kirk Tanner, who became CEO in 2024 before Wright took over, faced backlash shortly after taking the job over plans to test “dynamic pricing.” In February 2024, Fortune reported that Wendy’s planned to spend $20 million rolling out digital menu boards to its U.S. company-operated restaurants while testing dynamic pricing and AI-enabled menu changes. Comparisons to Uber-style surge pricing quickly followed, and Wendy’s clarified that it had “no plans” to raise prices during peak demand. On the call, Wright also identified inconsistent restaurant operations and pressure on franchisee economics as problems Wendy’s needs to address. U.S. company-operated restaurants outperformed the broader U.S. system on same-restaurant sales by 280 basis points in the latest quarter, a gap that points to franchisee execution as part of the problem. Flynn’s involvement in the potential takeover could add a different kind of experience to the ownership group. Flynn Group is one of Wendy’s largest franchisees, operating about 309 restaurants in the U.S., in addition to its locations in Australia and New Zealand, according to the Financial Times. That would put a major operator with firsthand experience of Wendy’s restaurants alongside Peltz at a time when Wright says franchisee economics are under pressure. Morgan Stanley cut its price target on Wendy’s from $7 to $5.50, just two days before the FT reported on Peltz’s consortium. Following the news, Wendy’s shares jumped 12%. This story was originally featured on Fortune.com

Wrapping up Q2 earnings, we look at the numbers and key takeaways for the traditional fast food stocks, including Wendy's (NASDAQ:WEN) and its peers. Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness. The 12 traditional fast food stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.6%. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. Founded by Dave Thomas in 1969, Wendy’s (NASDAQ:WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality. Wendy's reported revenues of $570.6 million, up 1.7% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a satisfactory quarter for the company with a decent beat of analysts’ EBITDA estimates but a miss of analysts’ same-store sales estimates. Interestingly, the stock is up 16.7% since reporting and currently trades at $8.63. Is now the time to buy Wendy's? Access our full analysis of the earnings results here, it’s free. Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items. Starbucks reported revenues of $9.32 billion, down 1.4% year on year, outperforming analysts’ expectations by 1.5%. The business had an exceptional quarter with a solid beat of analysts’ same-store sales estimates and full-year EPS guidance exceeding analysts’ expectations. The market seems content with the results as the stock is up 3.4% since reporting. It currently trades at $107.72. Is now the time to buy Starbucks? Access our full analysis of the earnings results here, it’s free. Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ:PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”. Papa John's reported revenues of $482.4 million, down 8.8% year on year, in line with analysts’ expectations. It was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates. As expected, the stock is down 18.4% since the results and currently trades at $24.28. Read our full analysis of Papa John’s results here. Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States. Dutch Bros reported revenues of $550.9 million, up 32.5% year on year. This number surpassed analysts’ expectations by 4.7%. It was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and full-year EBITDA guidance beating analysts’ expectations. Dutch Bros scored the fastest revenue growth in the group. The stock is down 20.4% since reporting and currently trades at $52.25. Read our full, actionable report on Dutch Bros here, it’s free. Formed through a strategic merger, Restaurant Brands International (NYSE:QSR) is a multinational corporation that owns three iconic fast-food chains: Burger King, Tim Hortons, and Popeyes. Restaurant Brands reported revenues of $2.52 billion, up 4.6% year on year. This result was in line with analysts’ expectations. Taking a step back, it was a satisfactory quarter as it also logged a solid beat of analysts’ same-store sales estimates but EBITDA in line with analysts’ estimates. The stock is up 4.3% since reporting and currently trades at $77.66. Read our full, actionable report on Restaurant Brands here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Image source: The Motley Fool. Friday, Aug. 7, 2026 at 8:30 a.m. ET Head of Investor Relations - Aaron Broholm President and Chief Executive Officer - Robert Wright Chief Financial Officer and Chief Strategy Officer - Steven Cirulis Operator: Good morning. Welcome to the Wendy's Company Earnings Results Conference Call. [Operator Instructions] Thank you. You may begin your conference. Aaron Broholm: Good morning, and thank you for joining our fiscal 2026 second quarter earnings conference call. After this brief introduction, Bob Wright, President and Chief Executive Officer, will provide a business update and then Steve Cirulis, Chief Financial Officer and Chief Strategy Officer, will review our second quarter results as well as our capital allocation priorities. From there, we will open up the line for questions. Today's conference call and webcast includes a presentation, which is available on our Investor Relations website, ir.wendys.com. Before we begin, please take note of the safe harbor statement that appears at the end of today's earnings release. This disclosure reminds investors that certain information we discuss today is forward-looking and reflects our current expectations about future plans and performance. Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also, some of today's comments will reference non-GAAP financial measures. Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in today's earnings release. If you have any questions following today's conference call, please contact me. I will now hand the call over to Bob. Robert Wright: Good morning, everyone, and thank you for joining our call today. Let me begin by saying how happy I am to be here. Wendy's is an iconic brand with distinctive attributes that have traditionally set us apart from our competition. We're at our best when we leverage those distinctions to the advantage of our customers, our franchisees and our business. Today, we are not performing at our potential. Traffic is down. Our value proposition has slipped and franchisee economics are under pressure. That said, I've seen this brand at its best, and I know we can fix these issues. I'm incredibly optimistic about the power of the Wendy's brand and the future success we can create. I'll start by sharing a little bit of my background. I spent my entire career in the restaurant industry, including previously serving as Executive Vice President, Chief Operations Officer and International here at Wendy's. I've seen firsthand the strength of our franchise system, the capability of our restaurant teams and the power of our differentiated quality position. More recently, I served as CEO of Potbelly Sandwich Works. You'll hear from our new Chief Financial Officer and Chief Strategy Officer, Steve Cirulis in a few moments. Steve and I worked together at Potbelly, where we drove meaningful sales growth, margin expansion, franchise unit development and created significant shareholder value. That experience reinforced an important lesson. Successful turnarounds are achieved through a focused strategy, guided by clear principles and executed with discipline and accountability. That philosophy will guide how we lead here at Wendy's. Returning to Wendy's is especially meaningful to me. My first day with the company was over 28 years ago. In those days, I had the privilege to work alongside our founder, Dave Thomas. That experience shaped how I think about this business and helped me understand the foundations of our brand from Dave himself. Wendy's is a brand rooted in quality in everything we do. We have exceptional assets, a differentiated brand, a strong franchise system with an international footprint, talented restaurant teams and passionate employees. Those strengths provide us with a solid foundation on which to build. At the same time, we're not executing to the standards we know we're capable of. Our quality differentiation has eroded. Our value proposition has weakened and we have not consistently delivered the experience customers expect from Wendy's. These issues have weighed on traffic and created pressure on the restaurant economic model, which is the heartbeat of this business. And this is reflected in our latest results. Today, I will briefly review our second quarter performance. My main focus, however, is to give you an assessment of where the business is today, followed by an outline of the initial strategic focus areas needed to improve performance. And what near-term actions we will take to execute, then Steve will take you through the second quarter results in more detail. In the second quarter, Global systemwide sales decreased by 6.5%. U.S. same-restaurant sales were down 7%, and International same-restaurant sales declined 2.3%. This sales decline drove lower adjusted EBITDA and adjusted earnings per share. These results reinforce the work needed to sharpen our execution across the system. Now there were some bright spots during the quarter. U.S. customer satisfaction scores improved and U.S. company-operated restaurants outperformed the broader system in same-restaurant sales by 280 basis points. We also opened 21 new restaurants in the U.S. Internationally, systemwide sales grew as we continued to expand our footprint with 27 restaurant openings during the quarter. Now let me share my assessment of where the business is today. I've invested a significant amount of time visiting restaurants, speaking directly with our customers, meeting with franchisees, listening to our restaurant support center teams and talking to employees across the system. What encourages me most is the passion I see throughout the Wendy's system. Our franchisees and employees care deeply about this brand. They're eager to sharpen our strategic focus on what makes Wendy's great, drive historic levels of performance and return to sustainable growth in traffic-driven sales, profit and cash flow for the company and franchisees. This level of commitment gives me confidence in what we can accomplish together. Recommitting to quality is essential to rebuilding our competitive advantage. Customers recognize it, franchisees believe in it, and it's at the heart of what Dave Thomas built. Wendy's quality heritage provides a strong foundation for the turnaround, but success will depend on translating that equity into a proposition that's relevant for today's fast-evolving QSR landscape. That heritage is a meaningful asset, but we need to be clear-eyed about the issues weighing on the business today. Based on what I've seen so far, several themes stand out, which together have contributed to our recent performance. They include quality degradation, challenges around our value offerings, inconsistent operations and marketing that is not driving customers to our restaurants. I'll walk through each of these in turn. Wendy's has always been known for quality, fresh, never frozen beef, hamburgers made to order, bacon cooked in our restaurants and fresh produce prepared daily. But over time, we've drifted away from some of the standards that made Wendy's distinctive. While we've maintained core practices in some areas, we've led cost and efficiency drive decisions that weaken that differentiation. On value, the Biggie platform was built for value-conscious consumers, but the offering has become increasingly complex and value diluting, making it less compelling and less effective as a reason to visit Wendy's. Operationally, our execution has become inconsistent and our performance management processes are not fully addressing the underlying challenges. Drive-thru is a good example where we need to better manage peak hour traffic, ensure restaurants are staffed appropriately for demand and equip teams with training, tools and systems they need to deliver consistently. And we need to sharpen marketing. We've been over reliant on a calendar of one-off promotions and collaborations rather than a consistent, relevant brand narrative grounded in our equity and what Wendy's stands for. All of these factors combined have created persistent traffic pressure, particularly among our most frequent and loyal customers. It's going to take time, but these issues are within our control. In my conversations with franchisees, restaurant employees and customers give me strong conviction that attacking these issues head-on will yield results. In addition to acknowledging where we are and how we got here, turnarounds also require deep understanding of what needs to be done to improve performance. Next quarter, we'll share more detail around the specific actions we're taking to drive our turnaround. But I can tell you already, we've aligned to 5 areas we believe are most critical. First, strengthening our menu with quality food at a compelling value. We win when we have fresh, craveable food that our customers identify as distinctively Wendy's. We will rebuild the menu at the ingredient level, at the menu item level and the category level while also addressing the menu price architecture that brings value to our customers. Second, distinct branding and marketing that drives demand. We have one of the most recognizable brands in the industry, and we need to make our messaging, media and creative drive a meaningful connection with our customers and drive traffic to our restaurants. Third, driving operational excellence that delights customers. We must set clear performance standards, establish the processes and procedures needed to meet them, provide training that enables every team member to execute consistently and ensure the organizational structure supports our restaurants and reinforces our commitment to excellence. Fourth, creating a digital experience that builds frequency. There are significant opportunities to improve analytics, customer-facing digital assets, fully-integrated restaurant technology solutions and our customer loyalty approach along with the integration with third-party aggregators. Lastly, we must ensure our most visible and prominent brand asset, our restaurants, are leveraged as an engine for growth. Ultimately, that means getting back to market expansion and unit growth domestically. More immediately, our focus must ensure we have compelling 4-wall operating economics and a consistent deployment of high-return investments at existing restaurants. We must also have a franchise system that is well capitalized and poised for growth. This applies to every restaurant in the system, whether company or franchise owned. Now in addition to adding Steve to the management team, I've already invested in critical professional services and utilized the expertise of several outside brand, business and strategy resources. This has been beneficial in accelerating the strategy development and organizational development work to this point, and it will be of great value in compressing the time to impact. Equally as important to developing our strategy is having the right structure and talent to deliver upon it going forward. This means ensuring the organization is aligned and able to deliver on these strategic focus areas with meaningful impact. In some areas, that means enhancing existing capabilities. In others, it means building new capabilities that are essential to the work ahead. We've already started looking at necessary restructuring and reorganization efforts, and I look forward to sharing more details with you as they develop. I'll be closely engaged in key decisions across the organization and ensure we are moving with focus, speed and accountability. In addition, we need to ensure we have the right level of funding for our strategic initiatives. That may include targeted investments alongside our franchisees, technology that elevates customer experience and improves efficiency, restaurant investments or acquisitions or actions that strengthen the balance sheet. Our decision to reduce the dividend creates additional flexibility to invest in initiatives to support the turnaround and create sustainable long-term value for shareholders. I look forward to sharing more details on those strategic initiatives and the funding of our investments in them soon. We are committed to providing a full strategic plan by our next quarterly update. We're in the early stages of this work, and meaningful change won't happen overnight. What you should expect from us is transparent communication and measurable progress that builds over time. We'll measure our progress through the indicators that matter the most, including traffic, customer satisfaction, franchisee economics and return on the investments we choose to scale. You should expect to see clear connection between the actions we take and the operating metrics and financial results we deliver. That's how we'll measure success, and that's how we expect you to measure us. Now I'll turn it over to Steve to discuss the quarter and our financial outlook and then come back with some final thoughts. Steven Cirulis: Thank you, Bob. Good morning, everyone. I'm honored and excited to be here for my first earnings call as Wendy's Chief Financial Officer and Chief Strategy Officer. I have experience with turnarounds and transformation, and I look forward to partnering with Bob and the team to strengthen Wendy's performance and return the brand to growth. I'll begin with our second quarter results and our decision to withdraw our full year outlook, then touch on our capital allocation and balance sheet priorities before turning it back over to Bob. Our second quarter performance fell short of prior expectations and reinforced the need for a thorough revision of the path forward. Global systemwide sales declined 6.5% on a constant currency basis, primarily driven by U.S. same-restaurant sales, which declined 7.0% and the impact of 289 U.S. restaurant closures in the first half of the year. The decline in U.S. same-restaurant sales was driven by a 12.5% decrease in traffic, which included the impact of less discounting and reducing or eliminating breakfast operating hours at certain locations, partially offset by a 5.6% increase in average check. While our new product innovation and collaboration with the Minions & Monsters movie delivered average check benefit, traffic did not increase as expected. The U.S. business did see sequential improvement in same-restaurant sales of 80 basis points from quarter 1 to quarter 2 this year. International systemwide sales grew 3.4%, supported by continued new restaurant development. This was partially offset by softness in same-restaurant sales, which declined 2.3%, primarily driven by a challenging consumer and competitive environment in Canada. Excluding Canada, International sales grew 8.6%, including positive same-restaurant sales. Turning to the company P&L for the second quarter. Total adjusted revenue was $443.2 million, a decrease of $6.4 million, down 1.4% compared to the prior year. This was primarily driven by lower franchise royalty revenue and lower rental income. These were partially offset by higher company-operated restaurant sales following the acquisition of franchise-operated restaurants during the third quarter of 2025. Global company-operated restaurant margin was 13.6% for the second quarter and U.S. company-operated restaurant margin was 13.8%. U.S. company-operated restaurant margin declined compared to the prior year, primarily due to commodity cost increases of approximately 9%, including both continued inflation in beef prices and investments in upgrading our products, a decline in traffic and labor rate inflation of approximately 4%. These were partially offset by higher average check and labor efficiencies. Adjusted EBITDA was $124.1 million, which was down $22.5 million versus the prior year. This was driven by lower franchise royalty revenue, an increase in general and administrative expense, a decrease in U.S. company-operated margin and lower net franchise fees. Adjusted earnings per share was $0.18 in the second quarter. Moving on to capital expenditures and free cash flow. During the second quarter, we invested $26.0 million across capital expenditures and restaurant development. Capital expenditures included $8.3 million in technology initiatives, including enhancements to the user experience and enabling more targeted marketing within our app. We also invested $12.8 million in restaurant development, including the Build-to-Suit program. Turning to free cash flow. We generated $120.3 million of free cash flow through the first half of the year, an increase of $10.8 million versus the prior year. The increase was primarily driven by a decrease in cash taxes, capital expenditures and investments associated with the company's franchise development fund, partially offset by lower net income adjusted for noncash items. Moving on to capital allocation and our balance sheet. Our priority is investing in the key focus areas Bob described earlier to create durable performance improvements. As we continue to develop our strategic plan, we will provide more detail on how that funding will accelerate the turnaround. Every dollar of capital will be evaluated against one question, will this materially improve traffic, restaurant economics or long-term shareholder value. On shareholder returns. Today, we announced a quarterly dividend payment of $0.07 per share. While we do not anticipate repurchasing shares in 2026, future buybacks will remain a component of our capital allocation framework as appropriate. We have approximately $35 million remaining under our existing authorization, which expires in February 2027. Turning to the balance sheet. We ended the quarter with approximately $380 million in cash and a net leverage ratio of 5.0x. Given current performance, we expect leverage to remain elevated in the near term. As we improve operating performance, leverage should trend lower over time. Later this year or in early 2027, we anticipate refinancing approximately $430 million of debt that matures in March of 2028. With the second quarter behind us and our attention directed on the strategic focus areas of our turnaround, let me spend a moment on what investors should expect. The trajectory of the business in the first half of the year suggests similar sales performance in the back half of the year. Traffic in July was consistent with second quarter trends. And as a result, we expect continued traffic headwinds to impact our ability to return to year-over-year system-wide sales growth in either the third or fourth quarter. We expect continued pressure on company-operated restaurant margin and adjusted EBITDA in the second half of the year from sales deleverage, full year commodity inflation of approximately 5% to 6% and a step-up in G&A driven by investments in our people and in professional services in support of our turnaround plan. This will also pressure adjusted net income as we work to refine and deploy elements of our plan. Traditionally, the dividend payout was 50% to 60% of adjusted net income. Today's dividend announcement implies an annualized rate slightly above this range for the year. As noted in our press release this morning, the company is withdrawing its 2026 financial outlook. As a new leadership team, we are fully assessing the business and our opportunities within a comprehensive turnaround plan, including the optimal deployment of capital. At the same time, we are continuing to take actions to improve performance with a focus on strengthening our core value perception, elevating restaurant operational performance and enhancing the digital experience for our customers. Before I turn the call back to Bob, I want to emphasize that we are approaching this next phase with an objective view of both the challenges and the opportunities ahead. As we move forward, our priorities will be maintaining financial discipline, making thoughtful investment choices and supporting the actions needed to improve performance across the system. My role in this organization is to bring these disciplines to life, both as we plan strategically and as we execute on behalf of every stakeholder in the business. With that, I'll now turn it back over to Bob. Robert Wright: Thank you, Steve. As I said, Wendy's is an iconic brand built on quality with talented people, committed franchisees and a strong foundation to build from. At the same time, we have been clear today that our performance is not where it needs to be, we have plenty of work ahead. But I'm confident we are focused on the right priorities and taking the decisive actions needed to drive meaningful change and restore our performance. We've been deliberate and meticulous in our diagnosis to ensure we have a deep understanding of those issues. We've already begun taking the right steps to shape the path forward on a turnaround and have identified 5 key strategic focus areas that will support growth and value for our franchisees and shareholders. You can expect us to communicate transparently, execute with discipline and accountability and work to earn your confidence through consistent, measurable progress over time. Before I close, I want to thank our employees, franchisees and restaurant teams for their continued commitment to Wendy's and for the important role they play during this time. Their feedback, partnership and willingness to confront challenges directly are essential as we work to turn around the business. With that, operator, I'll turn the call over to you so we can take questions. Operator: [Operator Instructions] Your first question comes from the line of David Palmer with Evercore ISI. David Palmer: Thanks for all the detail in your opening comments, Bob. A lot of us remember you from happier times at Wendy's, and I know you have a great reputation, especially in the system, and that's obviously a great start. But investors are probably also thinking this is the third CEO in about as many years and the challenges are much different than the last time you were there. So could you perhaps give a little bit more detail on why you think a turnaround can happen now and under your leadership? And I'll have maybe a quick follow-up. Robert Wright: Sure. Thanks, David. Good to hear your voice again. Look, the thing I would say about that confidence measure is that I think there's something we have to really understand about the restaurant business and restaurant companies in general. And they are so dependent upon execution. It's a very execution-dependent industry. From the customer experience all the way to the support center, every level of the organization. It isn't about developing a strategy, understanding what needs to be done, it's also about knowing how to get it done. And this is my 40th year in the restaurant business. This is all I've ever done. I started with Wendy's 28 years ago, and I know this brand, like I mentioned -- I knew Dave Thomas before he passed. The other thing is that I have turnaround experience. Steve and I worked together on a very significant turnaround at Potbelly here over the last 5.5 years. And I think what you heard in my remarks is step one is making sure that you have a clear diagnosis of what's going on. And then being clear and candid about what those issues are and developing a plan that will address the core issues that will turn that performance around. We outlined those 5 strategic focus areas, and I'm confident that with the brand that we have and a clear understanding of the issues that are facing us that I know we can win. A mentor of mine told me a long time ago, when you have a strong brand and you have a strong culture, you have the opportunity to do something really special. It becomes a performance issue. And that's what we're facing. And that's what we try to outline very clearly is the performance matters that are facing us and the things that we own are within our control. And I'm just delighted to see when I came back that we still, in fact, have every bit of that strong brand at the core and the foundation, whether it's our employee base or the franchisees that make up our culture is still intact, and we can build from that. David Palmer: I just wanted to ask you about just on the marketing side, often these turnaround flywheel franchise turnarounds start with innovation, marketing, sort of that jump-start that kind of you can build upon and getting some operational wins and bigger and bigger asks of the system after that. How is the pipeline of innovation and marketing as you see it today? Are there any near-term wins that might bend the trend perhaps in the second half? And I'll pass it on. Robert Wright: Yes. I think in my comments, you hear me talking about where I think we stand because of the efforts that we need. And it's not just marketing, I know you know that. It's really branding and marketing that draws people in. And I'm not satisfied with how effective our marketing has been. I love the part of your question, though, is what is it that you're marketing? Is there a breakthrough in the world of product innovation or even the core menu? And I know we'll talk about this in the coming weeks and months and years, but that is what we're so focused on in that first area of focus is having a menu that's rebuilt at the item level and at the ingredient level and at the category level that breaks through to the customer, it is a very competitive environment out there. We can't just do what we've always done better. We do have to innovate, and we have to lead in the things that are core to the brand. We also have to stay close to home. Our marketing, David, has been -- our calendar, frankly, has been somewhat focused on promotions and collaborations without the continuity of the brand building that goes underneath it and a story that the customers really kind of connect with and resonates with them that, that has them drawn back to Wendy's. That's still ahead of us, but I think we've got everything we need at the core of the brand to be able to do that. Operator: Your next question comes from the line of Brian Mullan with Piper Sandler. Brian Mullan: Thanks for the prepared remarks. You talked about the quality differentiation has maybe eroded. I'm wondering if you could just unpack that a little bit. How much do you think is the actual quality differentiation with the product itself, either on a stand-alone basis versus peers? And then maybe how much of that is just a marketing or a messaging issue, which you were just talking about, but whereby maybe just the consumer isn't as aware of the quality of Wendy's as the consumer should be. Any comments on that would be helpful. Robert Wright: Yes. Look, it's always a multi-variant equation because what we say about our brand, with our marketing and how we bring that to life in a compelling way is really important. But I do want to be clear, the quality comments that I made are related directly to the quality of our food. And we don't have anything to share today to kind of talk about what we've already done or what we're working on, but in the diagnosis phase, you saw me talk about ingredients, and you heard me talk about that. There are issues that we've created for ourselves. There are decisions that we've made in the interest of cost and efficiency that maybe have degraded a little bit of our quality. There are certainly some execution elements to that. And there's also the innovation component that David asked about, are we bringing to life the food in the very best way possible. Those are things within our control, though. And I think that's the beauty of what we're facing today is we can take advantage of the core elements of the Wendy's brand that have always been there. Fresh, never frozen beef, prepping vegetables inside our restaurants and handmade sandwiches that are made to order every single time a customer orders them. Those are things that we still own. I do think, to your point, we can leverage them far more than we have, and we can focus on the operations systems, processes and oversight and leadership that helps execute it more consistently. But the customer notices when you make a few changes, and we need to make sure that we're putting that experience ahead of everything else we do when it comes to quality. Operator: Your next question comes from the line of Danilo Gargiulo with Bernstein. Danilo Gargiulo: Great. I wanted to ask about the U.S. system and the number of stores that are currently available at Wendy's. I think you mentioned that in the near term, there is an assessment still in place. I'm just trying to understand whether you think that the system is in a healthy place right now in terms of the number of franchisees that you have, the number of unit per franchisee that you have? And should we be expecting some additional restaurant rationalization as part of the turnaround? Or is the portfolio already optimized and we're going to be growing from this moment onwards? Robert Wright: That's a great question because as we talk about all the things we plan to do strategically with the brand. We have to do that in the context of how healthy the system is and our capabilities to execute against those things. Let me start by telling you that I mentioned, I've spent a lot of time in the field. I've been with a lot of franchisees in these few short weeks as well as the Board and employees and analysts, and we met some of you guys in New York. And this is really personal to me. This is not a system filled with private equity ownership. It's filled with family ownership of our businesses. And these are people that I know. I know their families, and I know their personal situation. So the health of this system is a personal matter for us. And understand that the health of franchisees certainly is pressured right now because of the sales declines that we've had. You guys know this business. When you see some of the sales declines, it's going to show up in restaurant profitability and it's going to pressure the franchisees and create a little bit of fragility there. But when it came to closures, I think what you heard in some previous quarters was closures addressed more as a program for the system. And you'll see us take a much more targeted approach. We're going to come alongside our franchisees if they need our help. And if we need to use closures of a few restaurants here and there to make a portfolio a little bit healthier and help that franchisee get to the right place, maybe a trade area has moved on, and it's no longer a business that's viable going forward, then we'll certainly help them make that decision close a restaurant and get their portfolio healthier. But overall, the health of the system is tied to the health of the brand. And I'm just thrilled to say that franchisees are invested in the work that we're doing. They're excited about the work that we're doing, and they're certainly looking forward to the progress on the top line, because at the end of the day, nothing cures financial health in the restaurant system like top line growth. Everything we're doing is going to be pushing that to the top of the list, and that will help everybody. Operator: Your next question comes from the line of Margaret-May Binshtok with Wolfe Research. Margaret-May Binshtok: I just wanted to ask if you could walk us a little bit through how you saw comps progress through the quarter on monthly? And then relatedly, kind of what you're seeing across the different income cohorts? Are you seeing the gap between the higher and the lower income consumer widen or what you're seeing there? Steven Cirulis: Sure. Thanks, Margaret-May. It's great to meet you in this environment. Stepping into this role and seeing the progression of sales in the quarter. It's kind of an interesting dynamic, right? The early part of the April period, we saw system -- same-restaurant sales, I should say, in the U.S. dropped 6.4%, which was kind of in keeping with the trend coming out of P3 or March. I think the challenge, though, was as we moved into May, we saw that actually slip back to negative 7.5% same-restaurant sales in the U.S. system. Some of that due to some promotions from the prior year, which like we had a $3 Son of Baconator promotion, which was pretty powerful, and it was a little bit of a tougher challenge to lap that. And then as we moved into P6, we expected and we thought we would see some improvement in the progress of the business. This was -- we had launched our new Chicken Sandwich platform. The P6 period saw us launch our Minions & Monsters promotion. And honestly, those did not perform. They did not drive the traffic that we expected. They pushed a little bit on average check. But the real challenge for us has been that underlying traffic trend. So while comps bounced around a little bit, negative 6.4%, negative 7.5%, back to negative 7%, the traffic trend is the one that we pay the most attention to. And we had negative double-digit traffic each period of the quarter, and it did not improve over the quarter, and we ended it with a negative 12.5% as we discussed. Operator: Your next question comes from the line of Dennis Geiger with UBS. Dennis Geiger: Bob, recognizing you probably don't want to give any kind of rigid time line at this early juncture. But can you help us think a little bit about how you think about timing or cadence of some of the turnaround plan implementation across the 5 key points of focus that you outlined? And generally, again, from your experience, how you think about where traction comes first versus what takes a little bit longer, generally speaking? Robert Wright: Yes, happy to. Hopefully, what you see and the fact that we're having this conversation after only a few weeks is we are moving with urgency. And we're pulling out all the stops to make sure we have the right support to be able to get this work going and get the strategy moving. The way that we like to operate, when I say we, I'll start with just Steve and I, but that applies to the team, too, is that establishing that strategy is the first step. And frankly, you all should recognize those areas of focus as critical to any restaurant company, but especially to us in the current situation that we're in. What we're working on now already is the strategic initiatives that underpin those areas and those specific things that we will take action on with an expectation of what it will cost to invest in those things and what our expected returns on those things will be. Now you often want to do the biggest thing first, but it may have a little bit more time to develop that bigger thing, but we'll go ahead and take advantage of the quicker wins in those strategic initiatives as well. Our franchisees expect that -- we know that the investors expect us to do that, and our employees are counting on the same thing. There's a lot of energy around action in the organization. And I think a lot of enthusiasm for what those things might be. We committed to you that when we come back to have our next update, we'll have the full strategy. I think you'll have even more clarity than we've given you today. We hope to give you quite a bit today, but we'll give you some more. And then the other thing you can count on is for us to develop a pattern of talking about what we are doing, not what we will do. I -- candidly, it's just the way I like to manage the business is once we start working on something, we're going to prove that it's worth it, that the investment makes sense. The returns are there. And when we're ready to scale, that's when we'll start investing that time and communicating those things to you. And it's just a cadence that comes for a long time to come. That's our process for operating a strategic plan. Yes, in a turnaround situation like I've most recently done, but frankly, on an ongoing basis, like successful companies do year-on-year on year-on-year, that is what we're entering today. Operator: Your next question comes from the line of Brian Bittner with Oppenheimer & Co. Brian Bittner: And Bob, for those of us that perhaps weren't as close to monitoring your success at Potbelly over the last 5 years, can you just maybe touch on or help us understand if there's anything specific from a skill set perspective or an experience there that benefited you at Potbelly that you can utilize here at Wendy's that's worth talking to? And secondly, just as it relates specifically to improving the quality degradation, which you pointed out, is that something you have experienced doing? Can you help us understand the steps and how you actually take that idea into action and actually improve the quality of the product? Robert Wright: Absolutely, Brian. Thanks for the question. Yes, and I understand for a smaller company, you may not have a lot of that story. But look, there are some similarities to the starting place there. First of all, it's a great brand, had been off track for some time, years of traffic losses and yet a culture and a connection to the customer that was, if I can say this, we're kind of rooting for it to be its best again. There were significant issues with quality and value when we walked in the door there as well. And this strategic approach that you're hearing us discuss today is the same approach that was used there. I think you'll note Steve's titles, Chief Financial Officer and Chief Strategy Officer. And he was there already when I walked in the door. So this approach is similar. You've got some similar foundations. Let's be clear though, every brand and every system is different. There is no one-size-fits-all, but I like your question about lessons. You asked specifically about some of those learnings. It was clear to us that the decisions of the past around food quality, food portions, ingredients, sizes, sandwiches, the lineup of the sandwiches, how they're presented on the menu, the other add-ons, the price architecture of the menu and the promotional aspects of the way that was delivered needed so much work that, frankly, there, we had to rebuild the menu from the bottom up and did so successfully. The results were fantastic, we put over 40% more sales on the top line inside of 5 years. And I'm not promising that here, but I'm telling you that customers respond to a great brand that recognizes the problems they've created for that relationship and they begin to reward you for it. And I think that's some of the stuff that we can do here. It is a significant opportunity for us for our franchisees. One of the great things about being here at Wendy's, which is different than Potbelly, we expanded through franchising there. Here, we have a mature and strong and a storied generational franchise system who understands what we're talking about and can be a massive advantage for us as we start to move forward and make many of these improvements. Operator: Your next question comes from the line of Jim Salera with Stephens, Inc. James Salera: Bob, I appreciate all the detail and your thoughts around where the business sits today. I wonder if you can give us some thoughts about managing some of these changes with a pretty challenging macro backdrop and if that maybe shuffled around the rank order of your priorities about what to address first to get the trends to start to bend towards the right direction? Robert Wright: Yes, absolutely. Thanks, Jim. Look, we have to take a near-term, long-term approach to our strategy. The strategic initiatives are going to be year-long, multi-year-long things that we need to do to build the business. And I think if we're too reactive to the current situation with the macros, then we can find ourselves off strategy. I think the danger of being eager to respond to the matters of the day, it is some of what maybe we've been dealing with here recently. So of course, we have to be aware of those things. I think one of the big ones that you see in the news and other brands talk about it, we certainly talked about where we thought we were losing some of our customers. Customers today are extremely value conscious. But I think it's important that you all understand, we think about value differently. I think traditionally in the QSR space, you would think of value as that bottom right-hand side of the menu board, where it may even have the title value menu, and that's where value was compartmentalized. And today's consumers, especially as the broad-based pressure on consumer spending is what it is, are looking for value everywhere. And not to go back to the Potbelly question, but that's one of the things we understood very clearly there is that having value across all of the offerings, what you get for what you pay equation must make sense to the customer. In fact, we established sort of a tiered approach to, and we'll be using that same thinking here at Wendy's. This notion that the menu itself, the core menu, not the bottom right-hand side of the menu, but the core menu has to be infused with what I call intrinsic value. You should buy a double with cheese and medium-sized combo and walk away from that meal and you take that last bite of that double with cheese and feel like that was a good deal. That's something that I got what I paid for, maybe a little more as well as when you buy something off the Biggie platform. And so there's this intrinsic value in the core menu. There's the everyday value in the bottom right-hand corner of the menu, if you allow me that lingo to compartmentalize that a little bit. Today, for us, it's the Biggie platform. And then there's the promotional value that you deliver with promotional activity in the digital world as well as sometimes promoting things on television nationally. All 3 of those have to work. I know I've strayed deeper into value. But your question about the customer is at the root of that. That's what customers are looking for, whether they're super pressured because gas is $5 a gallon or they're feeling a little flush because it's $3 a gallon or whether it's the day after they got paid, or it's 2 days before they got paid. They have to know that they can count on their relationship with your brand to be there for them in the way that they need. And I think you can see where those various consumer need states fit with that overall approach to being there for them. So it is our strategy, but I think it will apply to the pressures of the day for the consumer as well. Operator: Your next question comes from the line of Lauren Silberman with Deutsche Bank. Lauren Silberman: I think you mentioned the potential for targeted investments. Can you expand on this and whether this is more like franchisee support through royalty relief, investments in the assets or more about marketing? And then the second part, if I could follow up on Daniel's question. Wendy's already previously announced plans to close, I think, 5% to 6% of the store base. Do you see potential for additional closures above what's already been identified? Robert Wright: Yes, absolutely, Lauren. Thank you. Look, we're not going to make a lot of news on those targeted investments today. I think the main thing that we wanted you to hear is that we see in these strategic focus areas, opportunities to push this business further than it's ever been, and that's going to take investment. Some of those targeted investments will be in the form of initiatives, things that we will do with and on behalf of and alongside our franchisees to make our restaurants more profitable to grow the business at the restaurant level to maybe enhance or expand or add something to what we have as a restaurant brand and facing the consumer. Those things will be those strategic investments. Those are the things we'll work on to prove the model and come to you when we're talking about scaling those things. There certainly will be some unique and specific situations with franchisees. I mentioned earlier, we may have to come alongside franchisees and do some things to help them with their business. The closures question that you followed up on is an example of that. We will look to fill that toolbox that we'll use to help franchisees when they need us, and that may include some investments. You heard me talk about the restructuring and the reorganization. Traditionally, here at Wendy's, restructuring has meant job cuts and pulling resources. And that isn't always the case. When I think about the first thing that follows a solid strategic plan is the structure of the organization to be able to deliver on that strategic plan. And we are going to need additional capabilities. We're going to need beefed up capabilities in certain parts of the industry -- or business, I'm sorry. And we're going to need additional talent in places that we may not have talent today. So those will be investments in the business, all of which though will have to stand the test of the returns that they provide for us and for our franchisees. On the closures, again, I think what I said was, and that is really the state of affairs here is that it really was presented to you all as a program. We've decided we're going to close or need to close a certain number of locations that was a fairly large percentage. Will there be additional closures? I'm sure there will be additional closures. I just put it on the table in that targeted approach that we would use when we're working with franchisees to help get their portfolios healthy. But not as a matter of programmatic closing just to shrink the brand. It's all about creating brand health, and it's brand health at a level that makes the most sense for the owners, whether we're the owner or the franchisees the owner and where we connect with the customer. The trade area has moved on and it is a financial drag on that portfolio, then we're going to support the closing of that location for the health of the system. Operator: Your next question comes from the line of Chris Carril with KeyBanc Capital Markets. Christopher Carril: Thank you for all the detail and looking forward to the evolution of the strategy here in the coming quarters. I did want to ask about breakfast and your assessment so far on the viability of the daypart for the broader system. I know you mentioned pressure on the comp in the 2Q from reducing or eliminating breakfast operating hours at certain locations. So curious how you're thinking about breakfast as part of the business going forward here? And then any detail on where breakfast sales mix is today would be helpful. Robert Wright: You are welcome. Thanks for the question. This is a big one. Breakfast is important to us, and it's a complex topic that, frankly, we're still analyzing very deeply. It can't be disconnected from the broader strategy and the work that we're doing there. But let's sort of baseline everything. The large majority of the system continues to serve breakfast. We did have some opt-out activity. And frankly, it was very helpful for some of the franchisees that took advantage of that opt-out because it was a drag on their business, just like I said, that about the tool of closing. For some franchisees, the opt-out was really helpful and provided a little bit of a relief valve, but it's still a key area that's under evaluation for us. And as I said, we need to get our footing on the remainder of the strategy before we start deciding exactly where breakfast fits into that. Steve can provide some color on the specifics of what it meant for the system sales. Steven Cirulis: Sure, sure. Look, overall, the pressure to same-restaurant sales from the daypart itself was about 120 basis points. And you asked the contextual question on what's the sales mix for breakfast. For us, it's about 5 -- between 5% and 5.5% of overall sales. Now the specific actions around opt-outs impacted the same-restaurant sales for the quarter by about 70 basis points. So as Bob said, this is a component of our overall approach to thinking about the strategy. We want to make sure that we're looking at this as a brand, as a complete menu in the context of the consumer, the franchisees and where we think growth is going to come from in the years ahead. Operator: Your next question comes from the line of Peter Saleh with BTIG. [Operator Instructions] Your next question comes from the line of Sara Senatore with Bank of America. Sara Senatore: A follow-up on the point you made about intrinsic value. If you were to sort of diagnose the reason customers aren't walking away thinking something was a good deal, is it because the quality, the service, is it about production? I guess, how much of this is an operational issue that needs to be addressed? And as you think about that, is there an opportunity, whether it's for kind of process engineering or technology? I guess I was surprised that the Chicken Sandwich relaunch didn't -- that platform didn't move the needle on traffic because it does seem to address kind of the quality issues that you mentioned at the beginning very directly. So any thoughts on how much of this can be fixed through just -- I don't know if it's listening to franchisees or operators and improving the process. Robert Wright: Yes. You sound like an operator, Sara, it is all of those things, honestly. But obviously, we can't throw everything into this and solve it. So we try to work on these things in their component parts, recognizing that they all come together for the value equation for the customer. And you are 100% right. That's what intrinsic value is, how it is derived. Look, there have been some decisions that have been made on the menu that I think we can address on the core menu that we have today and then on the innovation of the core menu that we have that can bring additional excitement and enthusiasm towards those products. Price is a significant component of that. People have this mental model based on all of the consumption they have in the restaurant space about where that price neutrality seems to be from a competitive perspective, we have to evaluate that, and we have to have a pricing architecture for the menu. So not only do we fit well with our competitive set, but even reference pricing on our own menu always has to make sense, and that's an area of opportunity for us. So we will be addressing that as well. I did mention the operations inconsistency as a challenge. As soon as we lose consistency as a brand, you start to lose confidence and trust really in the minds of the customer that they can get the overall experience that they're looking for. The execution comments I made when David asked his question, I think these really come to life in this area because every one of these elements, some of it is brand, it's design, it's sort of the menu price architecture, the menu itself, the ingredients. We control quite a bit of that as a brand. But at the end of the day, even for digital orders, and I say this all the time, even a digital order that's placed on your phone and picked up or delivered or whatever. At the end of the day, it's a human being, making food for another human being, that's made fresh when they order, that's going to be consumed. Every single experience ends analog, not digital. And the digital business is promising that also. And so there are tools and systems and processes. And as you heard me talk about training. Candidly, I think we have a lot of great work we can do in the area of training. It could be one of our elements of creating additional consistency and really tightening that consistency gap on execution. You may not be satisfied with my answer is kind of yes, all of the above. It is all of the above, but the real secret is to unpack those individually and attack each one of them individually to their very best. And then they come back together for the customer and they start to come to life. So that's kind of how we think about it. Operator: Your next question comes from the line of Brian Harbour with Morgan Stanley. Hilary Lee: This is Hilary Lee on for Brian Harbour. So I just want to kind of ask, how would you compare your plans to like the prior Project Fresh? And do you kind of see it as a continuation or expansion or just kind of a complete overhaul of it? Robert Wright: Yes, good question. We're not talking about Project Fresh. It's really not a continuation of it. I think you'll recognize some elements of what was discussed in Project Fresh in these areas that we're focused on. That makes sense. I mean there are certain sort of indisputable truths that you have to battle for in the restaurant space and here at Wendy's, too. But there was some work that was done on the brand. I think previous leaders talked about a partnership with an outside resource that was helping us kind of diagnose what was going on at the branding level. And I've tried to pick up everything that we had during this early diagnosis phase and understanding the situation that we're in, including Project Fresh, including some of that early work that was done. But this is our strategy. This is a sort of a declarative position on the things that are going to be the most important to strengthen this company and strengthen the brand and restrengthen our franchisees going forward. So I think you can draw a hard line between the two. Hilary Lee: Got it. And I guess just as a quick follow-up, could you share any of the key talking points that you've had with franchisees? Robert Wright: That's the beauty of this conversation. We've been doing a lot of work with franchisees in market. We've had them in. In fact, we've got all of our franchise leadership together next week to actually tear apart this strategy and start working on those initiatives that I told you about. They are fully engaged. I mentioned my personal relationships with many of the franchisees, so you can only imagine the number of individual phone calls I've had and text messages and communications. This goes up as well in our first Board meeting together was just a couple of weeks ago. And I think one of the things that is unique about our situation is we're finding very close strategic alignment with the Board, with the management team, with our employees, with our franchisees, these are the things we need to work on. This isn't just something that was developed and delivered. It was something that we developed in partnership with those, including the franchisees. And sure, they have a lot of feedback, but they're thrilled to know that we saw the business the way we saw it, and we spoke openly about it and that we've developed these 5 areas to focus on. Operator: Your next question comes from the line of Peter Saleh with U.S. Bancorp BTIG. Peter Saleh: Hey, guys, can you hear me okay? Robert Wright: Yes. Thanks for jumping back in Peter. Peter Saleh: Yes. No, some technical difficulties. Bob, I wanted to get your pulse on the image of the system as we sit today. How do you feel about the look and feel of the restaurants? Do you feel like there's more CapEx needed to get up to speed and up to par with the rest of the industry? Just curious if you have any thoughts on remodels and how you're thinking about that going forward? Robert Wright: Look, I mentioned that as the fifth area of focus is our restaurants, our #1 asset have to be a source of high-return investments that we can make in the system. I don't want you to read into that, that we've got a remodel program we're going to unveil. I think in my visits in the field, I've been across the country already, we still have a strong base of assets in the hands of our franchisees and in the company hands. I'll be honest with you, some of them are not being maintained and supported and cleaned and sort of giving our best faith. But the core asset base is still very strong. And I think we've got something we can work with there. We can lean on the execution elements of how we support, maintain and invest maintenance capital in our existing restaurants for the near term. Long term, what we call image activation here at Wendy's is more than a decade old. And so sure, I think we're going to want to look at what we can do to put an even better face on our restaurants going forward. But again, always tested for, and we're going to be dogging about this, dollars that would go into our restaurants should be dollars that provide returns on that invested capital for our franchisees and for our company business, too. So those will always be. And that may be in the areas of image. It could be -- you can imagine all kinds of investments, digital, capabilities, could be in the transaction-driving capabilities with how we operate. It could be equipment potentially that is connected to the menu. I'm not giving you insights. These are all categories you would expect restaurants to think about investing in, but again, with those returns. We're in a good place to start. Operator: Your next question and last question comes from the line of Jon Tower with Citi. Jon Tower: Maybe just two quick ones from me. Obviously, you mentioned that you're not happy with the state of the marketing these days. I'm just curious if we should expect, aside from the store closures that have taken place already, an actual retrenchment in the dollar spend from a marketing perspective in the near term as you're kind of adjusting the system and working your way back to the right messaging for the brand in the marketplace. And then two, do you feel like you have the right level of field leadership in the system to get this turnaround going today? Robert Wright: Great questions. Thanks, John. Great last questions, in fact, I appreciate it. No, I think we all have to be honest about the performance of our marketing efforts are not delivering what we want, but that would not suggest that we would pull back from the marketing spend. It really is more about messaging. It's about creative, and we're exploring media as well. So where the marketing is being delivered. And pulling ourselves out of a cycle of promotion and collaboration type of events and getting back to a much more cohesive and long-term approach to the calendar, that's reflective of the things that we want to continue to communicate to the customer. Pulling back on the spend does not make any sense. We need to adjust while we're going forward, not the other way around. And I love your question about the field staff, too. I know that the company has made some recent investments in additional support in the field. I've been with many of those field leaders here recently, and I'm impressed with some of what we've done. I will say, this is an area I have a lot of experience in. I think you guys know that. This is kind of a home base for me when it comes to ops. And I'm eager to learn more and eager to make sure that we have the right structure, that we have the right balance of support for franchisees and even down to the level of what our field teams are being asked to do. We want to set them up for success and make sure that they're -- certainly, there are activities that need to be performed, but we need outcomes out there, too, and empowering them to be the most helpful and supportive and impactful leaders that they can be. I continue to say that I think training is an area of significant opportunity for us in the field. Don't read that as we need to invest a bunch more in training individuals. I think the training systems actually are areas we can invest in first, and that gives our field staff unique and special and new things to work on as well. So we have something to build from here, but we really have to scale up in the field, too. Aaron Broholm: That was our last question of the call. Thank you, everyone, for joining us this morning. I hope everybody has a great day. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Wendy's (WEN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

The Wendy’s Company WEN used its Q2 2026 earnings call to frame a broad turnaround under president and CEO Bob Wright, with management acknowledging weaker traffic, value and execution while withdrawing its 2026 outlook. Adjusted earnings of $0.18 per share topped the Zacks Consensus Estimate of $0.16, while revenues of $570.6 million beat the $564.6 million estimate. The call focused less on the earnings beat than on resetting the operating model and funding a longer-term recovery. The Wendy's Company price-consensus-eps-surprise-chart | The Wendy's Company Quote Wright said that Wendy’s is not performing at its potential, citing degraded food quality, a weaker value proposition, inconsistent restaurant execution and marketing that has not generated enough customer visits. Wright organized the turnaround around five areas: menu quality and value, demand-driving branding and marketing, operational excellence, a frequency-building digital experience and restaurants as an engine for growth. Wright said management will provide a full strategic plan at the next quarterly update, while moving now on quicker actions and developing larger initiatives that require more time. CFO and chief strategy officer Steve Cirulis said that U.S. same-restaurant sales fell 7%, driven by a 12.5% traffic decline that was partly offset by a 5.6% increase in average check. Cirulis said that July traffic remained consistent with second-quarter trends. Management expects similar sales performance in the second half and does not expect year-over-year systemwide sales growth in either the third or fourth quarter. Cirulis also cited continued margin and adjusted EBITDA pressure from sales deleverage, full-year commodity inflation of about 5-6% and higher G&A tied to people and professional-services investments. Wright said that past decisions made for cost and efficiency weakened aspects of Wendy’s food quality. He also said that the menu needs work at the ingredient, item and category levels rather than only more promotional activity. In response to a BofA Securities analyst, Wright stated that value extends beyond a designated value menu. He emphasized core-menu price architecture, product quality and consistent service as parts of the customer’s value equation. An Evercore ISI analyst asked about marketing and innovation. Wright said that the company had relied too heavily on one-off promotions and collaborations and needs a more cohesive brand narrative tied to product improvements. Wright said that franchisee profitability is under pressure from sales declines, making restaurant economics central to the turnaround. He said that future closures will be targeted to specific portfolios rather than pursued as a broad program. Wright also said that restructuring can include adding capabilities and talent, not only reducing resources. Targeted investments may involve franchisees, restaurant assets, technology and other initiatives tied to measurable returns. Cirulis said the quarterly dividend was reduced to $0.07 per share and share repurchases are not expected in 2026. He also said net leverage ended the quarter at 5 times. A KeyBanc Capital Markets analyst asked about breakfast. Wright said that the large majority of restaurants still serve the daypart, while Cirulis said breakfast represented about 5% to 5.5% of sales and reduced same-restaurant sales by about 120 basis points. A Citi analyst asked whether Wendy’s would retrench marketing spending. Wright said that management does not plan to pull back spending, instead focusing on messaging, creative, media placement and a more consistent calendar. A Morgan Stanley analyst asked whether the turnaround was an extension of Project Fresh. Wright said that it is not a continuation, describing the current five-part framework as the new leadership team’s strategy. Wright said that progress will be measured through traffic, customer satisfaction, franchisee economics and returns on investments that are scaled across the system. He also said that management intends to prove initiatives before scaling them and to communicate increasingly through actions already underway rather than promises about future steps. WEN carries a Zacks Rank #4 (Sell) at present. Under the Zacks framework, the Rank reflects earnings-estimate revision trends and takes priority over a favorable Style Score when the signals conflict. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The stock has a Value Score of A, Growth Score of D, Momentum Score of F and VGM Score of C, showing stronger value characteristics than growth or momentum. The Zacks Rank can change as analyst estimates are revised following the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Wendy's Company (WEN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in The Wendy's Company? Here are five stocks we like better. Wendy’s reported weak second-quarter results: Global systemwide sales fell 6.5%, U.S. same-restaurant sales declined 7% as traffic dropped 12.5%, adjusted EBITDA decreased to $124.1 million, and adjusted EPS was $0.18. New CEO Bob Wright said the brand’s quality, value proposition, operations and marketing have deteriorated. Wendy’s is developing a turnaround plan focused on menu quality and pricing, branding, restaurant execution, digital capabilities and franchisee economics. The company withdrew its 2026 financial outlook and expects continued pressure on margins, EBITDA and earnings amid weak sales, 5%–6% commodity inflation and higher turnaround-related expenses. Leverage is expected to remain elevated, and Wendy’s does not anticipate share repurchases in 2026. 2 Short Squeezes for Summer Speculation: What the Bears Are Getting Wrong Wendy's (NASDAQ:WEN) reported weaker second-quarter results as U.S. traffic declines, pressure on franchisee economics and what new Chief Executive Officer Bob Wright described as erosion in the brand’s quality and value proposition weighed on performance. Global systemwide sales declined 6.5% on a constant-currency basis in the fiscal 2026 second quarter. U.S. same-restaurant sales fell 7%, while international same-restaurant sales declined 2.3%. Adjusted EBITDA fell $22.5 million from the prior year to $124.1 million, and adjusted earnings per share was $0.18. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Burger King’s Turnaround Is Putting Restaurant Brands Back in Focus Wright, who recently returned to Wendy’s after previously serving as an executive at the company and most recently led Potbelly Sandwich Works, said the chain is beginning a turnaround effort centered on menu quality, value, operations, marketing, digital capabilities and restaurant economics. Chief Financial Officer and Chief Strategy Officer Steve Cirulis said the U.S. same-store sales decline was driven by a 12.5% decrease in traffic, partly offset by a 5.6% increase in average check. Reduced discounting and the reduction or elimination of breakfast hours at some locations also affected traffic. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Short Sellers Are Piling Into Wingstop, But Analysts See Big Upside Cirulis said U.S. same-store sales improved sequentially by 80 basis points from the first quarter to the second quarter, but traffic remained negative by double digits during each period of the quarter. U.S. same-store sales declined 6.4% in April, 7.5% in May and 7% during the final period of the quarter, he said. New product launches and the company’s Minions & Monsters movie collaboration supported average check but did not generate the expected traffic increase, Cirulis said. Traffic in July was consistent with second-quarter trends, and the company does not expect to return to year-over-year systemwide sales growth in either the third or fourth quarter. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling International systemwide sales grew 3.4%, supported by new restaurant development, although international same-store sales declined 2.3%, primarily because of a challenging consumer and competitive environment in Canada. Excluding Canada, international sales rose 8.6%, including positive same-store sales. Wright said Wendy’s has “not” been performing at its potential, citing declining traffic, weakened value offerings, inconsistent operational execution and marketing that has not sufficiently driven restaurant visits. He said the company has allowed cost and efficiency decisions to weaken certain parts of its quality differentiation over time. Wendy’s continues to have core attributes including fresh, never frozen beef, produce prepared in restaurants and made-to-order sandwiches, but Wright said the company needs to better execute and communicate those advantages. “Our quality differentiation has eroded, our value proposition has weakened, and we have not consistently delivered the experience customers expect from Wendy’s,” Wright said. On value, he said the Biggie platform has become increasingly complex and “value diluting.” He outlined an approach that would address value across the core menu, everyday value offerings and promotional activity rather than limiting value perception to a specific section of the menu. Operational priorities include better management of peak drive-thru traffic, appropriate staffing, stronger training and improved systems and performance management. Wright also said marketing needs to shift from an overreliance on one-off promotions and collaborations toward a more consistent brand narrative. Wright said Wendy’s will provide a full strategic plan at its next quarterly update. The company has identified five focus areas: Strengthening the menu through food quality, product development and value-oriented pricing architecture. Developing distinct branding and marketing intended to build customer connection and traffic. Improving operational execution through standards, processes, training and organizational support. Enhancing digital experiences, including analytics, loyalty, restaurant technology and third-party delivery integration. Improving four-wall economics, restaurant investment returns, franchisee health and eventual domestic unit growth. Wright said the company has begun using outside brand, business and strategy resources, while also evaluating restructuring and organizational changes. He said some changes will require enhanced or new capabilities and that the company will assess targeted investments based on their potential to improve traffic, restaurant economics or long-term shareholder value. The company opened 21 U.S. restaurants and 27 international restaurants during the quarter. U.S. company-operated restaurants outperformed the broader U.S. system by 280 basis points in same-store sales, while U.S. customer satisfaction scores improved, according to Wright. Total adjusted revenue declined 1.4% from the prior year to $443.2 million, reflecting lower franchise royalty revenue and rental income, partly offset by higher company-operated restaurant sales following restaurant acquisitions in the third quarter of 2025. Global company-operated restaurant margin was 13.6%, while U.S. company-operated margin was 13.8%. Cirulis said U.S. margin declined because of approximately 9% commodity cost inflation, including higher beef costs and product-upgrade investments, as well as lower traffic and roughly 4% labor rate inflation. Capital expenditures and restaurant development investments totaled $26 million in the quarter, including $8.3 million for technology initiatives and $12.8 million in restaurant development. First-half free cash flow was $120.3 million, up $10.8 million year over year, primarily due to lower cash taxes, capital expenditures and franchise development fund investments. Wendy’s ended the quarter with approximately $380 million in cash and a net leverage ratio of 5.0 times. Cirulis said leverage is expected to remain elevated in the near term, with the company anticipating a refinancing of approximately $430 million of debt maturing in March 2028, either later this year or in early 2027. The company announced a quarterly dividend of $0.07 per share and said it does not anticipate share repurchases in 2026. Approximately $35 million remains under its existing repurchase authorization, which expires in February 2027. Wendy’s withdrew its full-year 2026 financial outlook as the new leadership team evaluates the turnaround plan and the allocation of capital. Cirulis said the company expects continued pressure on company-operated margins, adjusted EBITDA and adjusted net income in the second half from sales deleverage, anticipated full-year commodity inflation of 5% to 6%, and increased spending on personnel and professional services supporting the turnaround. The Wendy's Company (NASDAQ:WEN) operates as a global quick-service restaurant chain, best known for its square-shaped beef patties, fresh ingredient sourcing and signature Frosty dessert. The company's menu features a variety of hamburgers, chicken sandwiches, salads, breakfast sandwiches, sides and beverages, designed to appeal to a broad customer base seeking both classic and contemporary fast-food options. Wendy's has placed particular emphasis on product innovation, introducing limited-time offerings and revamped core menu items to maintain customer interest and respond to evolving dining trends. Founded in 1969 by entrepreneur Dave Thomas in Columbus, Ohio, Wendy's expanded rapidly through both company-owned and franchised outlets. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Wendy's Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Wendy's (WEN) came out with quarterly earnings of $0.18 per share, beating the Zacks Consensus Estimate of $0.16 per share. This compares to earnings of $0.29 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +12.50%. A quarter ago, it was expected that this hamburger chain would post earnings of $0.1 per share when it actually produced earnings of $0.12, delivering a surprise of +20%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Wendy's, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $570.57 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.07%. This compares to year-ago revenues of $560.93 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Wendy's shares have lost about 11.3% since the beginning of the year versus the S&P 500's gain of 12.6%. While Wendy's has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Wendy's was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.14 on $552.39 million in revenues for the coming quarter and $0.57 on $2.24 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Restaurants is currently in the bottom 21% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, GEN Restaurant Group, Inc. (GENK), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This company is expected to post quarterly loss of $0.06 per share in its upcoming report, which represents a year-over-year change of -250%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. GEN Restaurant Group, Inc.'s revenues are expected to be $55 million, down 0.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Wendy's Company (WEN) : Free Stock Analysis Report GEN Restaurant Group, Inc. (GENK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Global System-Wide Sales: Decreased 6.5% on a constant currency basis. US Same-Restaurant Sales: Declined 7.0%, with a 12.5% decrease in traffic partially offset by a 5.6% increase in average check. International Same-Restaurant Sales: Declined 2.3%, primarily due to softness in Canada; excluding Canada, international sales grew 8.6%. Total Adjusted Revenue: $443.2 million, a decrease of 1.4% compared to the prior year. Adjusted EBITDA: $124.1 million, down $22.5 million versus the prior year. Adjusted Earnings Per Share: $0.18 in the second quarter. US Company-Operated Restaurant Margin: 13.8%, impacted by commodity cost increases of approximately 9% and labor rate inflation of approximately 4%. Free Cash Flow: Generated $120.3 million through the first half of the year, an increase of $10.8 million versus the prior year. Capital Expenditures: Invested $26.0 million during the quarter, including $8.3 million in technology and $12.8 million in restaurant development. Restaurant Openings: Opened 21 new restaurants in the US and 27 internationally during the quarter. Dividend: Announced a quarterly dividend payment of $0.07 per share. Balance Sheet: Ended the quarter with approximately $380 million in cash and a net leverage ratio of 5.0 times. Warning! GuruFocus has detected 5 Warning Signs with WEN. Is WEN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 07, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. The Wendy's Co (NASDAQ:WEN) reported a sequential improvement in US same-restaurant sales of 80 basis points from Q1 to Q2 2026. International systemwide sales grew 3.4%, with an 8.6% increase excluding Canada, supported by new restaurant development. The company generated $120.3 million in free cash flow in the first half of 2026, an increase of $10.8 million year-over-year. US customer satisfaction scores improved during the quarter, and US company-operated restaurants outperformed the broader system by 280 basis points in same-restaurant sales. The new leadership team, with prior turnaround experience at Potbelly, has identified five strategic focus areas and is committed to transparent communication and measurable progress. Global system-wide sales decreased 6.5%, with US same-restaurant sales down 7.0% and international same-restaurant sales down 2.3%. US traffic declined 12.5% in Q2, with negative double-digit traffic each period of the quarter, and July traffic remained consistent with Q2 trends. Adjusted EBITDA fell $22.5 million year-over-year to $124.1 million, and adjusted EPS dropped to $0.18. The company withdrew its 2026 financial outlook and expects continued pressure on margins and EBITDA in the second half due to sales deleverage and commodity inflation of 5-6%. Net leverage is elevated at 5.0 times, and the company reduced its dividend to $0.07 per share, with no share repurchases anticipated in 2026. Q: Bob, investors are thinking this is the third CEO in about as many years, and the challenges are much different than last time you were there. Why do you think a turnaround can happen now and under your leadership?A: Robert Wright (President and CEO): The restaurant business is highly dependent on execution. This is my 40th year in the industry, and I have direct turnaround experience, having worked with Steve Cirulis on a significant transformation at Potbelly. We have a clear diagnosis of the issues and a plan to address them. When you have a strong brand and culture, it becomes a performance issue, and the things we need to fix are within our control. The core brand and culture at Wendy's are still intact, which gives me confidence we can win. Q: Can you unpack the quality differentiation erosion a bit? How much is the actual product quality versus a marketing or messaging issue where the consumer isn't as aware of Wendy's quality?A: Robert Wright (President and CEO): The quality comments are directly related to the food itself. We have made decisions in the interest of cost and efficiency that have degraded our quality. However, these are within our control. We still own the core elements of the brand, such as fresh, never frozen beef and made-to-order sandwiches. We can leverage these assets far more than we have and focus on the operations, systems, and leadership to execute more consistently. Q: How did comps progress through the quarter on a monthly basis, and what are you seeing across different income cohorts?A: Steven Cirulis (CFO and Chief Strategy Officer): US same-restaurant sales were negative 6.4% in April, slipped to negative 7.5% in May due to tough comparisons with a prior-year promotion, and ended the quarter at negative 7.0%. The underlying traffic trend is the main concern, with negative double-digit traffic each period of the quarter, ending at negative 12.5%. New product launches, like the chicken sandwich platform and the Minions and Monsters promotion, did not drive the expected traffic. Q: How do you think about the timing or cadence of implementing the turnaround plan across the five key focus areas? Where does traction come first versus what takes longer?A: Robert Wright (President and CEO): We are moving with urgency. We are currently working on the strategic initiatives that underpin the five focus areas, with expectations for cost and returns. We will take advantage of quicker wins while developing bigger initiatives. We have committed to providing a full strategic plan by our next quarterly update. Our management style is to talk about what we are doing, not what we will do, and to prove that investments are worth it before scaling them. Q: Can you share any specific experiences from your time at Potbelly that you can utilize here, particularly regarding improving quality degradation?A: Robert Wright (President and CEO): At Potbelly, we faced a similar starting place with a great brand that had been off track with significant quality and value issues. We rebuilt the menu from the bottom up, which was successful and put over 40% more sales on the top line within five years. Customers respond to a great brand that recognizes its problems. Here at Wendy's, we have a mature and storied franchise system, which is a massive advantage as we move forward with improvements. Q: How are you managing these changes with a challenging macro backdrop? Does that shuffle the rank order of your priorities?A: Robert Wright (President and CEO): We must take a near-term and long-term approach. We cannot be too reactive to current macro conditions or we risk going off strategy. Customers are extremely value-conscious, and we think about value differently. We need to infuse the core menu with "intrinsic value" so customers feel they got a good deal, while also having everyday value (the Biggie platform) and promotional value. All three must work together to meet the customer's needs. Q: You mentioned the potential for targeted investments. Can you expand on whether this is more franchisee support, royalty release, investments in assets, or marketing? And do you see potential for additional store closures above what's already been identified?A: Robert Wright (President and CEO): Targeted investments will be in the form of initiatives to make restaurants more profitable and grow the business. We will come alongside franchisees who need help, which may include investments. On closures, we are taking a more targeted approach rather than a programmatic one. We will support closing a location if it helps a franchisee get their portfolio healthier, but it is not about shrinking the brand. It is about creating brand health. Q: What is your assessment of the breakfast daypart and its viability for the broader system?A: Robert Wright (President and CEO): Breakfast is important and a complex topic we are still analyzing. The opt-out activity was helpful for some franchisees as a relief valve. It is a key area under evaluation, and we need to get our footing on the broader strategy before deciding where breakfast fits. Steven Cirulis (CFO and Chief Strategy Officer): The breakfast daypart pressured same-restaurant sales by about 120 basis points, with the opt-outs impacting sales by about 70 basis points. Breakfast is about 5% to 5.5% of overall sales. Q: Is the reason customers aren't walking away thinking something was a good deal an operational issue? I was surprised the chicken sandwich relaunch didn't move the needle on traffic.A: Robert Wright (President and CEO): It is all of those things. We have to unpack the components and attack them individually. There have been decisions on the menu and pricing architecture that we can address. Price is a significant component, and we need to ensure our pricing fits well with the competitive set. Operations inconsistency is a challenge, and training is a significant opportunity to tighten the consistency gap. Every experience ends analog, with a human being making food for another, so we need the right tools, systems, and processes. Q: How would you compare your plans to the prior Project Fresh? Is it a continuation, expansion, or complete overhaul?A: Robert Wright (President and CEO): This is not a continuation of Project Fresh. While you may recognize some elements, this is our own strategy developed through our diagnosis. We have picked up everything from the early diagnosis phase, including Project Fresh, but this is a declarative position on what is most important to strengthen the company. We have found close strategic alignment with the board, management, employees, and franchisees For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Texas Roadhouse (TXRH) came out with quarterly earnings of $1.85 per share, missing the Zacks Consensus Estimate of $1.9 per share. This compares to earnings of $1.86 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -2.63%. A quarter ago, it was expected that this restaurant chain would post earnings of $1.87 per share when it actually produced earnings of $1.87, delivering no surprise. Over the last four quarters, the company has not been able to surpass consensus EPS estimates. Texas Roadhouse, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $1.68 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 0.29%. This compares to year-ago revenues of $1.51 billion. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Texas Roadhouse shares have added about 25.6% since the beginning of the year versus the S&P 500's gain of 12.8%. While Texas Roadhouse has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Texas Roadhouse was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.32 on $1.59 billion in revenues for the coming quarter and $6.45 on $6.55 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Restaurants is currently in the bottom 22% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Wendy's (WEN), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 7. This hamburger chain is expected to post quarterly earnings of $0.16 per share in its upcoming report, which represents a year-over-year change of -44.8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Wendy's' revenues are expected to be $564.56 million, up 0.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Texas Roadhouse, Inc. (TXRH) : Free Stock Analysis Report The Wendy's Company (WEN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research