Wendy’s Turnaround Won’t Be Easy. Earnings, and the Stock, Tell the Story.

Wendy’s U.S. sales declined nearly 5%. (Brandon Bell / Getty Images)

Key Points

• Wendy’s reported adjusted earnings of 24 cents per share, exceeding the 20-cent consensus, despite a 3% revenue decline to $550 million.
• Global sales fell 2.6%, driven by a nearly 5% decrease in the U.S., while international markets grew 8.6% due to new restaurants.
• The company plans to close hundreds of underperforming restaurants.

Wendy’s stock is telling two stories.

Shares rose early on Friday as better-than-expected financial results and news of a plan to close hundreds of restaurants raised hope that the fast-food chain’s turnaround effort is gaining traction. But the gains vanished by early afternoon, highlighting the challenge the burger chain faces.

The stock was trading at $8.68, for a loss of 1.8%, after rising as high as $10.12.

For the three months through September, Wendy’s posted adjusted earnings of 24 cents per share. That beat the Wall Street consensus call for 20 cents but was a penny lower than in the same quarter a year earlier.

Revenue slipped 3% to $550 million, while investors expected $535 million.

Sales globally fell 2.6%, dragged down by a nearly 5% decline in the U.S. Overseas markets grew 8.6%, helping to offset that weakness, because of new restaurants and strong same-store sales growth.

Demand for Wendy’s burgers, chicken sandwiches, and Frosty desserts remains strong across overseas, the chain said. Still, international markets only account for a small share of Wendy’s restaurants.

Part of the problem in the U.S. is that Wendy’s and other fast-food chains have been squeezed by higher costs and fierce competition. Many Americans, especially people with less money, are dining out less often. Wendy’s revenue has fallen year over year for three consecutive quarters.

Uncertainty about leadership has hurt investor sentiment as well. Former CEO Kirk Tanner stepped down in July after taking the top job at Hershey . CFO Ken Cook has been serving as the interim CEO while the company looks for a permanent successor. Year to date, the stock has fallen 44%.

Wendy’s is trying hard to get back on its feet. Last month, the company launched Project Fresh, a turnaround plan meant to modernize its restaurants, simplify operations, and improve the customer experience.

The company says it wants to make its brand more relevant to younger customers. This year, it introduced menu items like chicken tenders and expanded its beverage offering to include cold-brew coffee and energy drinks.

Management is also shifting capital allocation away from opening new restaurants toward initiatives that make existing stores more profitable. The company is cutting waste, streamlining its menu, and investing in technology to make restaurant operations faster and more efficient.

Cook, the interim CEO, said Friday that the company plans to shut down hundreds of consistently underperforming restaurants across the country. “These actions will strengthen the system and enable franchisees to invest more capital and resources in their remaining restaurants,” he said.

The key test is whether Wendy’s can win back traffic in its home market and convince diners that its food and service are worth coming back for. It is a challenge because bigger rivals such as McDonald’s have more money to spend on marketing, technology, and promotion deals.

Cook acknowledged that the U.S. market is still challenging but said recent efforts are beginning to show results. In the third quarter, company-owned stores, where the turnaround initiatives have taken place, outperformed franchise locations by four percentage points in same-restaurant sales, he said.

The company also made progress with its digital operations and delivery business. Measures such as customer satisfaction and App store ratings increased in 2025. Rates of order cancellations, missing items, and refunds declined.

“These improvements are the direct result of enhancements we’ve made to the customer experience, from the welcome journey in our app, to using geolocation data to help with pickup location accuracy to DoorDash delivery scales to improve order accuracy,” Cook said on the earnings call.

“We’re proud of this progress and are scaling these initiatives across the system to generate higher average unit volume, and deliver an even better customer experience,” he said.

Write to Evie Liu at evie.liu@barrons.com