DUBLIN, Ohio – Wendy's first-quarter net income fell 83 percent from year-ago results that included a big gain on the sale of an investment.
But the fast-food chain operator's adjusted earnings matched Wall Street's expectations. Wendy's also boosted its full-year earnings forecast, citing a refinancing benefit.
Wendy's has been working to position itself on the high-end of the fast-food sector by emphasizing the relative quality of its menu. The push comes as more people head to chains like Chipotle and Panera, which offer food perceived to be of better quality for slightly more money.
To transform its image, Wendy's is also investing heavily in remodeling its restaurants to have a modern, inviting look. For example, the new layouts include cozier seating areas, flat screen TVs and fireplaces. The Dublin, Ohio, company said Wednesday that it had opened 86 new and remodeled restaurants as of April 30. It still expects to remodel half of its company-run restaurants by 2015's end. Wendy's has more than 6,500 franchise and company-run restaurants in the U.S. and 27 countries and U.S. territories worldwide.
But Wendy's is undertaking an image makeover at a tough time for the restaurant industry, with competition growing and people being careful about where they spend their money. McDonald's and Burger King, for example, have been aggressively touting their deals to increase sales.
For the period ended March 31, Wendy's earned $2.1 million, or a penny per share. That's down from $12.4 million, or 3 cents per share, a year earlier.
The year-ago period included an $18 million, or 5 cents per share, gain on the sale of an investment.
Excluding certain items, earnings in the latest quarter came to 3 cents per share.
Revenue rose 2 percent to $603.7 million versus a year ago but fell short of the $615 million forecast of analysts polled by FactSet.
Revenue at company-run stores in North America rose 1 percent. The company said its results were impacted by bad weather during the period and shifts in the timing of the New Year and Easter holidays. At franchised stores, the metric edged up 0.6 percent.
This figure is a key gauge of a restaurant operator's performance because it strips out the impact of newly opened and closed locations.
Wendy's Co. now expects 2013 adjusted earnings of 20 cents to 22 cents per share, up from 18 cents to 20 cents per share. Wall Street predicts 19 cents per share.
Its shares fell 34 cents, or 5.6 percent, to $5.78 in morning trading Wednesday. They have traded in a 52-week range of $4.09 to $6.19.