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Wendy’s Revenue May Come In Lower Year-Over-Year

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Wendy’s revenue sources

Wendy’s (WEN) earns revenues from company-operated stores as well as franchise stores. This is similar to restaurants such as Panera Bread (PNRA), McDonald’s (MCD), Yum! Brands (YUM), and those included in the Consumer Discretionary Select Sector SPDR ETF (XLY), which earns revenues from company-operated as well as franchise stores.

 

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Analysts expect year-over-year revenues to decline

Wall Street analysts estimate $506 million for Wendy’s revenues, which sequentially is 1% down from 3Q14 revenues of $512.5 million. It’s a 14% decline year-over-year from $532 million in the corresponding quarter a year ago in 2013.

Wendy’s operates a fast food format restaurant. Fast food restaurants, as the name suggests, specialize in serving food they can prepare and serve quickly. Fast-food restaurants have no table service, and the menus are priced at the lower end.

For example, the average check at a fast food restaurant such as McDonald’s (MCD) is between $4 and $8, compared to $20 at a full-service restaurant such as Bloomin’ Brands (BLMN). Most fast food restaurants also have a drive-through facility.

Peers

Jack in the Box (JACK) is expected to report $458 million in sales. Yum! Brands (YUM), which operates KFC, Taco Bell, and Pizza Hut, is expected to report $3.94 million, or a -5.5% year-over-year decline in sales.

McDonald’s (MCD) reported a year-over-year decline in revenue of -7.3%, or $6,572 billion.

Wendy’s reports same-store sales data for restaurants that have been open for 15 consecutive months. This includes restaurants that have opened after remodeling. In the next part, we’ll look at the importance of same-store sales for Wendy’s (WEN).

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