The Wendys 2025 Q3 Earnings EPS Falls 8% as Net Income Declines 11.9%

The Wendy's (WEN) reported mixed results in Q3 2025, with a 3% revenue decline and a 11.9% drop in net income. While the company beat EPS estimates, it lowered full-year guidance due to U.S. sales challenges.

Revenue

Wendy’s total revenue fell to $549.52 million in Q3 2025, down 3% year-over-year. Domestic sales were a drag, with U.S. same-restaurant sales declining 4.7%. International growth, however, offset some losses, with global systemwide sales rising 8.6%. Segment-wise, franchise royalty revenue and fees totaled $152.01 million, while sales and advertising funds revenue contributed $233.15 million and $107.01 million, respectively. Franchise rental income added $57.34 million, reflecting a diversified but shrinking revenue base.

Earnings/Net Income

The company’s net income dropped to $44.25 million, a 11.9% decrease from the prior year, while EPS fell to $0.23, an 8% decline. These results underscored persistent operational challenges, particularly in the U.S.

Post-Earnings Price Action Review

Wendy’s stock experienced a volatile post-earnings reaction, with an 8.47% single-day drop despite a 5.04% weekly rebound. The stock’s underperformance reflected investor skepticism about U.S. turnaround efforts, despite strong international growth. Analysts noted the dividend yield of ~6.2% as a potential draw, but the company’s P/E ratio of 9.34 and heavy debt load (debt-to-equity of 28.74) weighed on sentiment.

Additional News

1. Dividend Announcement: Wendy’s declared a $0.14 quarterly dividend, implying a 6.2% yield and a payout ratio of 53.3%. This marked a modest increase (~0.2% annually) over three years.

2. Strategic Restructuring: Interim CEO Ken Cook outlined plans to close 200–350 underperforming U.S. locations by 2026, prioritizing AUV growth over expansion.

3. Product Innovation: The launch of “Tendys” chicken tenders saw robust demand, signaling a pivot to revitalize the brand’s chicken category.

Guidance

Wendy’s reaffirmed FY2025 EPS guidance of $0.82–$0.89, below analyst expectations of ~$0.99. The company projected global systemwide sales declines of 3–5% and net unit growth of 2–3%, emphasizing international expansion and operational efficiency under “Project Fresh.”

CEO Commentary

Ken Cook highlighted international progress but acknowledged U.S. challenges, including competition and consumer pressure. The CEO expressed confidence in long-term momentum from initiatives like Tendys and system optimization, though near-term execution remains critical.