News
Wendy's/Arby's posts loss in pre-merger Q3 results
November 5, 2008
ATLANTA — Wendy's/Arby's Group Inc., parent company of Wendy's International Inc. and Arby's Restaurant Group Inc., has announced pre-merger results for Triarc and Wendy's for the third quarter and nine months ended Sept. 28. As previously announced, the merger between Triarc Co. Inc. and Wendy's International Inc. was completed on Sept. 29, 2008. In connection with the merger, Wendy's became a wholly owned subsidiary of Triarc and Triarc changed its name to Wendy's/Arby's Group Inc. Consolidated financial reporting including Wendy's will begin with the fiscal fourth quarter of 2008.
Triarc's highlights
Arby's company same-store sales declined 7.2 percent and franchise same-store sales were down 4.0 percent. Revenues for the quarter were $310 million, down 4.3 percent from $324 million in the same period last year. Year-to-date, revenues were $926 million, down 1.8 percent from $943 million last year.
Triarc recorded a net loss of $12.1 million, including pre-tax impairment charges totaling $14.1 million related to company-operated assets held for sale and to underperforming restaurants, as compared to net income of $3.7 million for the third quarter of 2007. Year-to-date, the net loss was $86.5 million, nearly five times that of the $17.2 loss at the same time last year.
Wendy's highlights
Wendy's same-store sales declined 0.2 percent and franchise same-store sales increased 0.2 percent, with September and October same-store sales at company-operated restaurants up 2.1 percent and approximately 5 percent, respectively. Sales decreased 1.2 percent during the quarter to $548.1 million for company-operated restaurants, and franchise revenues increased 2.4 percent to $76.8 million.
Wendy's net loss from continuing operations was $30.8 million, which included Special Committee and restructuring pre-tax charges of $68.5 million related to merger fees, costs related to change in control provisions in executive employment agreements and merger-related equity compensation, a portion of which did not require the use of cash. The results also reflect the effect of flat sales, higher food costs and wage inflation.
Wendy's/Arby's Group initiatives to drive performance
Following the completion of the merger, the company has launched new initiatives aimed at:
- Achieving synergies and overhead reductions over the next two to three years that will result in annualized savings of approximately $60 million of reduced general and administrative expenses as compared to pre-merger forecasts through the elimination of duplicate corporate functions and a streamlining of support services
- Generating approximately $100 million of annual incremental store-level operating profit at the Wendy's brand over the next two to three years, as compared to pre-merger results, with cost improvements in food, labor and general operating expenses
- Expanding dayparts for both brands
- Exploring dual-concept unit development in countries outside the U.S. and possibly in high-cost U.S. real estate markets.
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