Operations

Wendy’s launches Dave’s Way turnaround, makes breakfast optional, as Q3 sales, earnings decline

Wendy’s reported declining Q3 sales and earnings as it introduced Dave’s Way, an operational turnaround strategy focused on improving restaurant execution, customer traffic and profitability. As part of the effort, the company is making breakfast optional for U.S. franchisees, allowing operators to focus on their strongest dayparts.

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November 5, 2026 by Valerie Gritton — Editor, Pizza Marketplace

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Wendy's is launching a multi-year operational turnaround strategy as the company works to reverse declining sales, rebuild customer traffic and strengthen restaurant profitability. Called Dave's Way, the strategy brings together five priorities focused on improving the food and value proposition, strengthening marketing, elevating restaurant execution, accelerating digital growth and making restaurants a stronger engine for the business.

The initiative comes as Wendy's reported another quarter of declining sales and earnings. For the third quarter ended Sept. 27, global systemwide sales fell 5.9% to approximately $3.3 billion, including a 7.6% decline in the U.S. with U.S. comp sales down 5.7% for the quarter. Wendy's international business delivered a mixed performance in the third quarter. International systemwide sales increased 3.5%, while same-restaurant sales declined 2.2%, primarily reflecting continued weakness in Canada.

Overall, revenue totaled $547 million, down 0.5% from $549.5 million a year earlier. Net income fell 65.9% to $15.1 million.

U.S. traffic declined 11.9%, partially offset by a 6.2% increase in average check. However, management said the sales trajectory improved sequentially during the quarter, with traffic trends strengthening through each period and early fourth-quarter performance showing further signs of improvement.

"We're focused on growing customer traffic and market share while strengthening restaurant profitability," CEO Bob Wright said during the company's earnings call. "It's one thing to identify the right strategy. It's another thing to build a team with the restaurant expertise, operating discipline, accountability, execution, and centricity that we're building here."

Dave's Way puts restaurant execution at the center

The five pillars of Dave's Way are built around improving the customer experience and the economics of operating a Wendy's restaurant:

Menu: Deliver quality food at real value.
Branding and marketing: Build a more distinct brand presence and drive demand.
Operational excellence: Improve restaurant execution and customer satisfaction.
Digital: Create a stronger digital experience to build customer frequency.
Restaurant growth: Make restaurants the engine for long-term growth.

Wright emphasized that operational execution is one of the most immediate opportunities for improvement. The company's data shows that restaurants in the top customer-satisfaction quintile outperform those in the bottom quintile on traffic by more than 500 basis points. And the gap in lunch drive-through speed between those groups is nearly two minutes.

"Closing even part of that gap is a traffic opportunity we control," Wright said.

The company also is working to improve consistency across its restaurants, while investing in the food and customer experience. Menu tests include thicker and crispier bacon, a richer and creamier Frosty, whole-leaf lettuce and improved salads. Wendy's is also simplifying its menu, with a refreshed menu expected in 2027 as they continue to refine ingredients for the remainder of 2026.

On the marketing side, the company has brought in a new media agency and is refining its media placement and data capabilities. Its messaging is placing renewed emphasis on Wendy's made-to-order hamburgers and fresh, never frozen beef.

Wright said the company has seen positive response to its $7.99 Dave's Single combo promotion, which received full franchisee alignment. But he cautioned that value promotions alone will not rebuild the brand.

"You can't build a brand on one item and one promotion," he said.

Digital and breakfast daypart changes

Digital growth and delivery also will be central to Dave's Way as Wendy's has been expanding its delivery promotions, with more than 90% of its U.S. franchise restaurants now participating, nearly double the level from a few months earlier. And tests have generated sales lifts ranging from the low double digits to approximately 20%, Wright said.

The company also is changing its approach to breakfast, making the daypart optional for U.S. restaurants based on individual market conditions and profitability.

"We've revised our breakfast strategy to be location-specific. That means we're making breakfast optional for all U.S. restaurants, allowing franchisees to focus on the dayparts with the greatest opportunity for profitable growth in their business," Wright said. "This option directly supports stronger restaurant economics, improves the employee experience, and importantly allows operators to concentrate on the food offerings and dayparts that have always been at the heart of Wendy's."

Wendy's CFO Steve Cirulis said the revised breakfast strategy could unlock as much as $200 million in restaurant-level EBITDA across the system.

"Mandating the franchisees operate during a daypart where they lose money is going to do nothing but hurt their business," Wright said.

The company also is working to improve franchisee economics and align its system around the turnaround. Wright said franchisee support for the strategy has been strong, pointing to increased participation in delivery promotions and positive feedback following the company's recent franchise convention.

Restaurant margins and earnings remain under pressure

Despite early signs of improvement in sales trends, Wendy's continued to face significant financial pressure during the quarter.

U.S. company-operated restaurant margin declined 140 basis points to 11.7%. The company attributed the decline primarily to lower traffic, labor-rate inflation and commodity inflation, partially offset by higher average checks and labor efficiencies.

Commodity inflation was approximately 4%, while labor-rate inflation was about 4.5%, management said during the earnings call.

For the first nine months of the year, Wendy's generated $174.2 million in free cash flow, down 10.9% from $195.6 million during the same period last year. The company ended the quarter with approximately $413 million in cash.

Cirulis said Wendy's has evaluated the investment needs of Dave's Way and believes it has the financial capacity to execute the strategy while maintaining a disciplined focus on returns. The company rejected a takeover bid led by Trian partners and is seeking to purchase up to 163 locations from Meritage Hospitality Group.

Wright acknowledged that the turnaround will take time, and reiterated the company's focus on building the operational foundation to support sustainable improvement.

"While there is significant work ahead, I'm pleased with our early progress," he said.