Wendy’s Co. has reduced its annual sales forecast following a decline in customer traffic during the second quarter, highlighting the impact of inflation on dining habits.
The company announced on Thursday that it now expects overall sales to grow between 3% and 5% this year, down from the previous estimate of up to 6%. During the second quarter, sales at stores open for at least 15 months grew more slowly than analysts had anticipated, and revenue fell short of expectations. As a result, Wendy’s shares dropped by 1% in early New York trading. Guggenheim Securities analyst Gregory Francfort had suggested earlier that investors might have already anticipated this adjustment.
Wendy’s has experienced a slowdown in growth in recent quarters, a trend also observed in other major chains like McDonald’s and Starbucks. To counter this, Wendy’s has been expanding its breakfast menu, aiming to improve franchisee profitability and increase sales through its app. New menu items include a Triple Berry Frosty milkshake and “saucy” chicken nuggets.
Despite a 4% increase in prices in the U.S. during the second quarter, customer traffic fell by about 2%, according to Chief Financial Officer Gunther Plosch. He noted that low-income diners are visiting less frequently, a trend seen across the industry, while wealthier customers are dining more often, possibly opting for less expensive options.
Wendy’s maintains its earnings per share forecast of at least $0.98, with second-quarter results aligning with market expectations.