Wendy's to sell 640 restaurants
On Wednesday, Wendy's said that it is planning to sell 640 restaurants in the US and Canada in order to generate cash and reduce expenses.
The company is also planning to sell its bakery operation, which is based in Zanesville, Ohio. Wendy's shares were up over 6% in the morning trading.
Earlier, Wendy's announced that it was planning to sell some restaurants to franchisees. Now, it will sell 380 restaurants this year, including 100 in Canada, and 260 restaurants in 2016.
The company mentioned that the move will result in $400-$475 million in pretax proceeds and is going to significantly reduce the future capital expenditure requirements.
In a statement, CEO Emil Brolick, said, “Going forward, we intend to buy and sell restaurants opportunistically to act as a catalyst for growth by further strengthening our franchisee base, driving new restaurant development and accelerating Image Activation adoption”.
In the first quarter, the fast food chain announced earnings of $27.5 million, or 7 cents a share, in comparison to $46.3 million, or 12 cents a share, a year ago, beating Wall Street expectations for earnings of 5 cents a share.
Wendy's revenue fell to $466.2 million, which was down 10.9% from the year-ago quarter mainly due to selling off restaurants. The company sold 240 company-operated restaurants to franchisees.
Wendy's Co is the No. 3 US burger chain. It reported better-than-expected same-restaurant sales for the first quarter.
On Wednesday, the company said that same-restaurant sales rose 3.2% per cent in the quarter ended March 29. According to Consensus Metrix, analysts on average had expected a 2.5 per cent rise.
Same-restaurant sales showed 2.6% growth for North American company-operated locations and 3.4% for franchised sites. System wide, same-restaurant sales went up by 3.2%, which was above the 2.5% growth that Consensus Metrix had forecast.
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