The Wendy's Co (WEN) (Q3 2026) Earnings Call Highlights: U.S. ...

Negative Points

• Global systemwide sales decreased 5.9% and U.S. same-restaurant sales declined 5.7% in Q3, with U.S. traffic down 11.9%.

• Adjusted EBITDA fell $24.6 million to $113.4 million, and adjusted EPS was only $0.13, reflecting lower franchise royalty revenue and higher costs.

• U.S. company-operated restaurant margin declined to 11.7% due to traffic declines, commodity cost increases of ~4%, and labor rate inflation of ~4.5%.

• G&A increased $15.2 million, including $11.9 million in strategic investments and $3.3 million in higher stock compensation, pressuring profitability.

• Net debt leverage ratio stands at 5.2 times and is expected to remain elevated in the near term, with $430 million of debt maturing in March 2028.

Q & A Highlights

Q: David Palmer of Evercore asked why this turnaround plan would succeed when past Wendy's plans emphasizing food quality, modernization, and operational consistency did not. A: CEO Robert Wright said the difference is execution capability and franchise alignment, not the strategy itself. He noted the company is building a team with restaurant operating discipline and accountability, and that franchisee sentiment swung more positively around the September convention than at any time the company has measured. He also cited concrete early actionsthicker bacon, data-driven operations metrics, and delivery initiativesand said more than 90% of franchisees are now participating in digital and third-party delivery efforts, more than double pre-convention levels.

Q: David Palmer of Evercore asked whether Wendy's can improve food quality and value perception while protecting margins, given food and paper costs near 32% and high break-even sales. A: CEO Robert Wright acknowledged frustration that food-cost investments are not earning quality or value credit, and said the company is reviewing menu mix, pricing architecture, and which items to emphasize. He pointed to the $7.99 Dave's Single Combo as a step in the right direction because its marginal food cost is better than discounting items at $4$5, and said the full menu refresh is targeted for 2027. He also tied franchise health to the breakfast decision, estimating the location-specific breakfast strategy could return up to $200 million in restaurant-level EBITDA to the system.

Q: Rahul Krotthapalli of J.P. Morgan asked about the state of franchise unit economics relative to Meritage, whether closures or bringing stores on balance sheet could accelerate, and whether incentives are aligned across stakeholders. A: CEO Robert Wright said closures are not a path to system health and that the P&L is a scorecard, not a verdict on a restaurant's potential; the company reviews each closure candidate against trade area, traffic counts, and competitive positioning. He said the best route to franchise health is traffic growth, especially from lunch through late night. On incentives, he said the system is being aligned toward success, including a breakfast incentive structured so franchisees are rewarded for recapturing sales quickly, and he described a portfolio optimization team building bespoke plansroyalty deferrals, lender discussions, targeted closures, or company acquisitionsfor the small number of franchisees needing help.

Q: Danilo Gargiulo of Bernstein asked about change management, the pacing and sequencing of the turnaround, and when traffic could realistically turn positive. A: CEO Robert Wright declined to pinpoint a traffic inflection date but said the actions taken since Q2 have begun to influence the trajectory, citing the improvement from a negative 7% trend to negative 5.7% U.S. same-restaurant sales. He said lunch through late-night dayparts are performing better than the reported figure, with breakfast a drag. He identified quick-impact prioritiesnew media placement, promotional activity, fresh-never-frozen messaging, and the $7.99 combowhile noting a menu rebuild takes time, which is why the refreshed menu is targeted for 2027. He emphasized the strategy is operations-driven and largely funded within existing marketing, G&A, and staffing budgets.

Q: Margaret-May Binshtok of Wolfe Research asked for quarter-to-date trend detail and whether marketing will shift in Q4 and into 2027. A: CEO Robert Wright said rest-of-day sales excluding breakfast are running meaningfully better than the reported 5.7% decline, calling it an encouraging early signal, though he stressed it is early work with new Chief Marketing and Customer Growth Officer Tariq Hassan less than three months into the job. CFO Steve Cirulis added that the company is not providing guidance, but that the pace exiting Q3 carried into October and is ahead of the negative 7% trend previously expected, helped by the $7.99 offer, media reallocation, and an upcoming holiday platform.

Q: Brian Bittner of Oppenheimer asked whether Wendy's plans to permanently keep the 163 Meritage restaurants in the company portfolio or act as a broker, and about their unit economics. A: CEO Robert Wright said the LOI covers restaurants in and around markets where Wendy's already has company presence, making them logical to bring in-house, while the remaining Meritage markets are better suited to franchisees. He called it potentially the largest franchise-to-company acquisition in the company's history and said the math is attractive: the company trades at a higher multiple than franchise transactions, it can leverage existing field G&A to drive the turnaround, and any future refranchising could generate a gain. He said this is a business move, not brokerage, and that Wendy's will have a say in which operators receive the other restaurants.

Q: Christopher Carril of KeyBanc asked how Wendy's will balance U.S. turnaround investment with international white space opportunities. A: CEO Robert Wright credited international president EJ Wunsch with structuring the division around distinct market phasesentry, development, and growtheach requiring different operations, marketing, and development capabilities. He said the roughly 1,400-restaurant international segment is growing, with 84 new openings year to date through Q3 and 30 in the quarter, and that the company will keep announcing deals and updating investors on growth hotspots while acknowledging market disruptions when they occur.

Q: Jim Salera of Stephens asked what guest feedback indicates is most importantmenu and ingredient quality, value price points, or innovationand how that shapes the 2027 rollout sequence. A: CEO Robert Wright said traffic and top-line trends are the first read, but the company is also tracking leading indicators such as brand awareness, share of voice, and sentiment studies, which show customers responding positively to fresh-never-frozen messaging and the $7.99 Dave's Single Combo. He said Wendy's is building a scorecard from restaurant-level customer feedback aggregated with online reviews and social commentary to get a faster, sharper read on the guest experience, and that tested ingredient upgrades are receiving strong customer feedback though they are not yet in the field.

Q: Arian Razai of Guggenheim asked where Wendy's will invest beyond franchisee acquisitions and whether the company will shoulder an outsized share of near-term investment to accelerate change. A: CFO Steve Cirulis said the turnaround is not capital-intensive and pointed to more than $400 million in cash, over $170 million of free cash flow year to date, an untapped roughly $300 million revolver, and about $50 million of annual flexibility from last quarter's dividend decision. He said each initiative goes through the Strategic Activation Office with a business case outlining expected impact, timing, and required investment,

For the complete transcript of the earnings call, please refer to the full earnings call transcript .