Wendy's Q2 Earnings Call: Mixed Bag with International Growth, U.S. Challenges, and Strategic Focus

Wendy's Q2 earnings call revealed mixed sentiment, with robust international growth, successful Frosty innovation, and expanded global footprint, but US sales declined by 3.6% due to a competitive environment. The company is focusing on improving execution and leveraging new data capabilities to address these issues. Despite challenges, Wendy's generated $109.5 million of free cash flow and returned over $262 million to shareholders through dividends and share repurchases.

Wendy's Co. (NASDAQ: WEN) reported mixed results for the second quarter of 2025, reflecting both robust international growth and operational challenges in the US market. The company's earnings call highlighted key performance metrics and strategic initiatives aimed at addressing these issues.

Financial Highlights

- Cash on Balance Sheet: Over $315 million.
- Adjusted EBITDA: Over $0.5 billion annually; $146.6 million for Q2 2025.
- Free Cash Flow: $109.5 million in the first half of 2025.
- Net Unit Growth: 118 new restaurants opened in the first half of 2025; on track for 2%-3% net new unit growth for the full year.
- International Systemwide Sales Growth: 8.7% in Q2 2025.
- US Same-Restaurant Sales: Declined 3.6% in Q2 2025.
- Global Systemwide Sales: Declined 1.8% in Q2 2025.
- Earnings Per Share (EPS): $0.29 for Q2 2025.
- Shareholder Returns: Over $88 million returned in Q2 2025; $262 million returned in the first half of 2025.
- Company-Operated Restaurant Margin: 16.2% in the US for Q2 2025.
- Adjusted Revenue: $449.6 million in Q2 2025.

Key Observations

Wendy's opened 118 new restaurants in the first half of 2025, maintaining its target of 2% to 3% net new unit growth for the year. International business showed strong performance with systemwide sales growth of 8.7% and adjusted EBITDA growth of 23.9%. Investments in operational excellence are yielding positive results, with improved customer satisfaction scores in both traditional and digital channels.

US topline results and outlook for the rest of the year were below initial expectations due to a challenging consumer and competitive environment. Global systemwide sales declined by 1.8%, driven by a decrease in US same-restaurant sales. US same-restaurant sales were down 3.6%, with a notable decline in traffic. The 100 days of summer programming was too complex, leading to execution challenges and mixed results.

Strategic Initiatives

Wendy's is focusing on improving execution and leveraging new data capabilities to address these issues. For the second half of the year, Wendy's is focusing on chicken and beverage innovations, supported by new data analytics capabilities. The company is also strengthening its partnership with franchisees, aiming to move from a good to a great relationship.

Outlook

- Global Systemwide Sales: Expected to decline 3%-5%.
- Adjusted EBITDA: Expected between $505 million and $525 million.
- Adjusted EPS: Expected between $0.82 and $0.89.

Despite challenges, Wendy's generated $109.5 million of free cash flow and returned over $262 million to shareholders through dividends and share repurchases.

References

[1] https://finance.yahoo.com/news/wendys-co-wen-q2-2025-070422368.html
[2] https://www.ainvest.com/news/permian-resources-q2-2025-earnings-strategic-downturn-playbook-paying-strong-free-cash-flow-aggressive-shareholder-returns-2508/