Wendy's Co: A Recipe for Success in 2025

Wendy's Co (WEN) recently reported its fourth quarter and full-year 2024 results, providing a glimpse into the company's strategic focus and future outlook. With a strong performance driven by breakfast, innovation, and technology, Wendy's is well-positioned to maintain its 14th consecutive year of same-restaurant sales growth. Here's a closer look at the key factors contributing to Wendy's success and the company's plans for 2025.



Breakfast Innovation and Growth:

Wendy's breakfast sales grew over 6% in 2024, outpacing the QSR burger category. This growth was driven by increased awareness and impactful innovation, such as the Frosty-ccino and breakfast burrito. The morning daypart contributed to U.S. growth, with sales up over 4% compared to the prior year. Wendy's has successfully expanded its breakfast menu and improved marketing efforts to attract more customers during the morning hours.

Innovative Limited-Time Offerings (LTOs) and Partnerships:

Wendy's collaboration with Paramount, celebrating SpongeBob's 25th anniversary, drove an impressive 20% lift in same-restaurant sales at its peak. Innovative LTOs, such as the Salted Carmel Frosty and Mushroom Bacon Cheeseburger, also contributed to growth in the quarter. These partnerships and LTOs showcase Wendy's approach to innovation on its core offerings, supported by strong marketing and execution capabilities.



Digital Mix and Loyalty Program:

Wendy's digital mix grew 130 basis points from the prior quarter to 19% globally in Q4 2024. This increase in digital mix has generated valuable insights, which the company uses to enhance the customer experience and provide more relevant in-app offers for customers. Global digital sales grew nearly 40% year over year, and loyalty member growth was up 25% from a year ago, with over 46 million reward members enrolled.

International Expansion and Net Unit Growth:

Wendy's achieved 11% systemwide sales growth on a constant currency basis in Q4 2024, led by strong net unit growth internationally. The company opened 113 new restaurants in the fourth quarter and 276 new restaurants across the globe in 2024. International systemwide sales grew 9% and same-restaurant sales grew 2.8% in 2024, contributing to overall sales performance.



Updated Capital Allocation Policy and 2025 Outlook:

Wendy's updated its capital allocation policy and announced a new target dividend payout ratio of 50% to 60% of adjusted earnings. The company plans to repurchase up to $200 million of its shares in 2025, reflecting its commitment to returning capital to shareholders. Wendy's also provided guidance for 2025, expecting adjusted earnings per share to grow in the low single digits and adjusted EBITDA to grow in the mid-single digits.

In conclusion, Wendy's Co's strategic focus on breakfast, innovation, and technology has driven its 14th consecutive year of same-restaurant sales growth. With a strong performance in 2024 and an updated capital allocation policy, Wendy's is well-positioned to maintain its growth momentum in 2025. The company's plans to increase its dividend payout ratio and repurchase shares demonstrate its commitment to returning capital to shareholders, while its focus on international expansion and digital engagement highlights its potential for future growth. As an investor, keeping an eye on Wendy's Co is a smart move for those seeking steady growth and a solid dividend.