Menu innovation driving Wendy’s recent success

DUBLIN, OHIO — Successful limited-time promotions and seasonal menu items helped Wendy’s Co., bolster its 2024 fourth-quarter earnings.

In particular, a SpongeBob SquarePants promotion and corresponding themed menu — which included a pineapple-flavored frosty — last October gave Wendy’s a 10% increase in US same-restaurant sales compared to a year ago, the company’s highest monthly growth since 2021.

“In the US, (fourth-quarter) growth was led by the success of our collaboration with Paramount, celebrating SpongeBob’s 25th anniversary,” said Kirk Tanner, president, chief executive officer. “At its peak, this fan favorite drove an impressive 20% lift in same-restaurant sales with increased traffic and average check. Growth in the quarter also was supported by innovative limited-time offerings, including our salted caramel frosty and mushroom bacon cheeseburger. The morning daypart also continued to be a strong contributor to US growth, with sales up over 4% compared to the prior year.”

Wendy’s fourth-quarter net income was $47.5 million, an increase of 1.3% compared with the same quarter last year, while adjusted earnings per share was 25¢. Systemwide sales were $3.7 billion — an increase of 5.4% compared to last year — while total adjusted revenues were $459.3 million, up 6.4% versus the prior year. US sales accounted for $3.17 billion.

For the full 2024 fiscal year ended Dec. 29, 2024, Wendy’s saw the company’s 14th consecutive year of global, same-restaurant sales growth. Net income was $194.36 million, equal to 95¢ per share on the common stock, down 5% from $204.44 million, or 98¢ per share, in fiscal 2023.  Adjusted EBITDA, meanwhile, totaled $543.6 million, up 1.4% from $535.9 million. Total adjusted revenues were $1.8 billion, which was 2% higher than last year. Systemwide sales were $14.5 billion, of which $12.6 billion were from the United States, for a 3.1% increase compared to 2024. 

Wendy’s focus on breakfast also paid off in 2024, as sales grew over 6% compared with the previous year, “which outpaced the QSR (quick-service restaurant) burger category,” Tanner said. “Breakfast remains a top priority at Wendy’s and will provide a tailwind to our growth. In 2025, we will invest in innovation to drive continued momentum around this daypart. We expect the next stage of growth in breakfast to be driven by product innovation, which we will share more about later this year.”

Tanner added overall menu innovation in 2024 that helped the bottom line included “our saucy nuggs that expanded our chicken offerings. We also featured new limited-time frosty flavors tailored to each season to provide fresh, exciting experiences that resonated with our customers throughout the year.”

2025 outlook

To continue the new-product sales momentum in 2025, Wendy’s is collaborating with Girl Scouts to offer a thin mint-flavored frosty later this month. The company also plans to expand further into the fast-growing categories of chicken and beverages, and continue to evolve Wendy’s value menu, known as the “Biggie Bag.”

“We have plans to further strengthen our value leadership position through continuous innovation and the strategic expansion of our Biggie Bag platform,” Tanner said. “We know customers will continue to look for value throughout 2025, and Wendy’s is uniquely positioned to lead with this important customer need.”

Ken Cook, chief financial officer, said factors outside of menu innovation likely will impact the company this year.

“We began planning for 2025 by looking at multiple third-party forecasts for both food away from home and industry traffic,” he said. “These indicate that consumer spending for food away from home is expected to remain pressured, and traffic in the QSR burger category is expected to be flat to down 1% compared to last year. Our 2025 outlook does not include any impact from new tariffs. Based on those forecasts, we anticipate full-year 2025 global system-wide sales growth of approximately 2% to 3%, driven by the combination of same- restaurant sales and new unit growth. Our system-wide sales growth rate in 2025 is negatively impacted due to the actions we took in the fourth quarter to close underperforming restaurants and strengthen our system.” 

Tanner added that Wendy’s 2025 outlook also includes, “commodity inflation of about 1% and wage rate inflation of about 4%. In terms of commodities, we think beef will be the biggest driver of that increase year over year. We think we’ll also see a little bit of pressure from bacon, partially offset by improvements in other areas. Right now, we wouldn’t expect any significant impact to cost of goods sold as a result of tariffs, but it is something that we’re watching closely, working with our partners at (Quality Supply Chain Cooperative) to make sure if there are incremental headwinds to what we guided to, that we’re doing what we can to offset that in other areas of the commodity basket.” 

Wendy’s adjusted 2025 earnings per share are forecast between 98¢ and $1.02, while the company expects to pay out 67¢ per share in dividends. 

Digital sales

Wendy’s digital sales initiatives via the company’s app took a step forward in 2024, as global digital sales grew nearly 40% while loyalty member growth increased 25% compared to last year.  

“We also advanced our digital journey with the implementation of digital menu boards at over 300 company and franchisee locations,” Tanner said. “We deployed voice-enabled AI order taking at nearly 100 locations, and we’re pleased with the results we’re seeing in improving accuracy and driving labor efficiency. Our execution in all of these areas drove a higher average check and provided labor efficiency that led to an 80-basis point improvement to our global company-operated, restaurant-level margin compared to the prior year.”

After the earnings call, Wendy’s stock price increased 3.8% to $14.76 per share. The company plans to elaborate further on several of the menu initiatives and company strategies at its upcoming investor day, set for March 6.