After recently taking the #2 position in the ranking of the top hamburger chains in the United States, investors had lots of reasons to be confident that Wendy’s would have good news about their earnings for the next few quarter. Not so fast.
Wendy’s (NASDAQ: WEN) yesterday reported first quarter results that missed estimates slightly, totalling $593.2 million in revenue against the anticipated $608.4 million. Wendy’s blames the miss on a variety of factors both in and out of their direct control, including the rising cost of beef and a failed marketing campaign for their “W” burger.
Shares in Wendy’s were down 4.11% to finish Tuesday at $4.67 per share.
The real damage came in the details shared regarding the effect various factors have had on current and future profit margins for the burger chain, specifically around their warnings that escalating beef prices have and will continue to take a bite out of their profit margins for future quarters. Investors are looking for real concrete direction from Wendy’s as to how they will be able to get their margins back on track given the current conditions of rising food prices, increased competition and a soft worldwide economy that demands competitive pricing.
Wendy’s earnings miss, along with lower than expected financial results from McDonald’s, helped drag down the shares of nearly every publicly traded fast food company Tuesday.
Foodbeat’s Take: Simple fix here, guys: bring back the Bacon Mushroom Melt. Nobody finds a triple-stacked “W” burger with a buttered bun appealing. However, the Mushroom Melt… you’ve got us!