News
Wendy's/Arby's reports Q4 loss on non-cash charges
March 1, 2009
ATLANTA — Wendy's/Arby's Group Inc., parent company of Wendy's International Inc. and Arby's Restaurant Group Inc., has reported a $393.2 million loss for the fourth quarter ended Dec. 28 due to after-tax special items totaling $417.9 million. The special items included a non-cash goodwill impairment charge at Arby's.
The results include the effect of the merger between Triarc Companies Inc. and Wendy's, which 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.
Wendy's North America systemwide same-store sales increased 3.7 percent for the quarter, with franchise store comps up 3.8 percent and company-owned stores up 3.6 percent.
Arby's North America systemwide comps were down 8.5 percent for the quarter, with franchise store comps down 7.6 percent and company-owned stores down 10.6 percent. For the year, Arby's franchised-store comps were down 3.6 percent, and company-owned stores down 5.8 percent.
Consolidated revenues were $896.5 million compared with $320.6 million in the same period last year. Year to date, revenues were $1.8 billion, up 38.5 percent compared with $1.3 billion last year.
The company posted a net loss of $393.2 million, compared with a profit of $33.3 million in the same period last year. For the year, the company posted a loss of $479.7 million, compared with a profit of $16.1 million last year.
Roland Smith, president and CEO of Wendy's/Arby's Group, said: "During the fourth quarter, our initial period of ownership of the Wendy's brand, we produced strong same-store sales despite an extremely tough competitive and economic environment. We also launched initiatives at Wendy's targeting future transaction improvement and margin growth. During the brief time since the merger was completed, the Wendy's brand is already producing more effective marketing, improving restaurant operations and rebuilding the new product pipeline.
"The Arby's brand experienced same-store sales declines in the quarter as our sandwich competitors continued to discount at unprecedented levels," said Smith. "Arby's long-established marketing strategy has been to provide premium quality, hand-carved sandwiches with fresh ingredients as the foundation for our premium brand positioning of 'Something Different, Something Better.' Our introduction this month of the unique, new Roastburger line is aimed at attracting core roast beef customers more often and growing sales.
2009 financial outlook
- On track with its merger integration process, including progress toward its target of $100 million of improvement in Wendy's restaurant margins and $60 million in general and administrative cost reductions by the end of 2011.
- Open 10 new Wendy's company and five new Arby's company restaurants in 2009.
- Reduce capital expenditures to approximately $140 million in 2009, which is more than $60 million less than the combined capital spending of Wendy's and Arby's in 2008 primarily due to lower new restaurant development.
- Combine Wendy's and Arby's revolver and term-loan borrowings under a single credit agreement.
- Deliver average annual EBITDA growth in the mid-teens through 2011.
2009 initiatives
- Continue to exmphasize value and high quality products at Wendy's in the first quarter, including Premium Fish Fillet.
- Promote first quarter Arby's rollouts, including Roastburger sandwiches, roasted chicken, swirl shakes and iced fruit teas.
- Launch new chicken and hamburger menu items at Wendy's as well as retool the breakfast program for a national rollout.
- Test value-priced products and introducing new operations initiatives to improve customer service at Arby's.
Related Media
Subscribe
Get the latest news and resources from QSR Web.
