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What Drove Wendy’s Same-Store Sales Growth in 4Q17?

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4Q17 performance

Wendy’s (WEN) posted SSSG (same-store sales growth) of 1.3% in the North American region compared to 0.8% in 4Q16. Analysts had forecast SSSG of 1.8%. Increased competition from other fast food restaurants such as McDonald’s (MCD) lowered Wendy’s traffic, resulting in lower-than-expected SSSG in 4Q17.

Wendy’s 4Q17 SSSG was driven by menu innovations, the enhancement of customer experience by remodeling old restaurants, the implementation of technological advancements, the introduction of a delivery service, and various marketing and promotional initiatives. The company image activated 551 restaurants in North America in 2017. By the end of 4Q17, it had image activated 43% of its global system. It reported that its image activation resulted in a sales increase in the mid- to high-single-digits. During the quarter, it introduced its Chicken Tenders and reintroduced its Double Stack into the 4 for $4 Meal Deal.

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During the quarter, Wendy’s started delivery service by partnering with DoorDash. The service was extended to 20% of its restaurants by the end of the year. At the end of 2017, 80% of the company’s North American restaurants were taking mobile orders. Wendy’s also installed kiosks in approximately 150 restaurants to enhance the customer experience and increase throughput.

Peer comparisons

During the same period, McDonald’s (MCD), Jack in the Box (JACK), and Burger King operating under Restaurant Brands International (QSR) posted SSSG of 5.5%, -0.2%, and 4.6%, respectively.

Next, we’ll look at analysts’ revenue expectations for 2018.

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