The Wendy's Company reported preliminary, unaudited results for the fourth quarter and fiscal year ended Dec. 30, 2012. The company plans to release its audited financial statements on Feb. 28.
CEO Emil Brolick said the company's 2012 North America same-store sales growth of 1.6 percent and record-high average annual restaurant sales of $1.48 million are "evidence" that its growth initiatives are starting to work — namely the Image Activation store remodels and "A Cut Above" brand positioning.
"As we look to 2013, we are optimistic about our product pipeline and marketing plans," Brolick said. "We are also very encouraged by the continued success of our Image Activation initiative, which is transforming our brand in the eyes of consumers by contemporizing the Wendy's restaurant experience."
Given the successful preliminary results of these remodels, Wendy's plans to accelerate the initiative in 2013. The company plans to complete 200 total reimages this year, including about 100 franchised reimaged restaurants.
"Average sales volumes for Image Activation restaurants have increased more than 25 percent, and we remain on track to reimage more than 600 company-operated restaurants by the end of 2015. We expect franchisees will also reimage a significant number of restaurants over the next three years," Brolick added.
Financial highlights from 2012 include:
- Consolidated revenues were $2.505 billion, an increase of 3.0 percent compared to $2.431 billion in 2011.
- Wendy's North America Company-operated restaurants generated a same-store sales increase of 1.6 percent during 2012. Franchise same-store sales in North America also increased 1.6 percent during the year.
- Company-operated restaurant margin was 14.0 percent in both 2012 and in 2011.
- As of Dec. 30, 2012, the company's total number of worldwide restaurants was 6,560, including 6,186 restaurants in North America and 374 restaurants outside of North America.
For 2013, the company anticipates:
- Same-store sales growth of 2.0 to 3.0 percent at Wendy's North America company-operated restaurants.
- New restaurant development of approximately 25 new company restaurants and 40 new franchise restaurants, plus approximately 60 new international franchise and joint-venture restaurants.
- Five to 10 company-operated restaurant closures and approximately 90 to 100 franchise restaurant closures in North America, plus approximately 15 to 20 international restaurant closures.
- The reimaging of 100 company-operated restaurants and 100 franchised restaurants. The outlook includes the cost of a $10 million incentive program for franchisees to reimage their restaurants in 2013.
- Wendy's Company-operated restaurant margin of 14.2 to 14.5 percent, compared to 14.0 percent in 2012. This estimate assumes the benefit of same-store sales increases, Image Activation sales, discontinuation of breakfast at certain restaurants and cost-savings initiatives. It also assumes a 90 to 120 basis-point impact from higher commodity costs, driven primarily by rising beef and chicken costs.
- Capital expenditures of approximately $245 million, compared to approximately $200 million in 2012. This estimate includes $145 million for Image Activation designs at 25 new and 100 reimaged company-operated restaurants in North America.
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