Wendy’s Thin Mints Frosty couldn’t overcome a skittish consumer

Wendy’s same-store sales fell 2.8% last quarter. | Photo: Shutterstock.

Wendy’s introduction of a Thin Mints Frosty performed exactly the way company executives hoped it would, generating sales growth in the U.S. in February and into March and helping the brand overcome a tough start to the year, driven by bad weather.

But the enthusiasm for the cookie-flavored treat was not enough to overcome a consumer suddenly worried about inflation and the state of the economy. Traffic slowed in March, executives told analysts. The result was a 2.8% decline in same-store sales in the quarter. 

“As the month progressed, consumer confidence deteriorated, leading to a reduction in demand,” CFO Ken Cook said.

The result led Wendy’s to lower its sales outlook for the year, largely citing economic challenges. The company said it expects global systemwide sales growth to be down 2% to flat for the full year. That would assume absolute sales declines in the U.S., given the chain’s improving performance in international markets. Wendy’s domestic system sales rose 2.2% last year.

The lowered outlook came just weeks after company executives expressed confidence in their potential performance this year at the Wendy’s “Investor Day” presentation in early March.

“Given the uncertainty around industry demand going forward, we grounded our full-year outlook into what we were seeing over the past several weeks,” Cook said. 

Wendy’s is hardly alone. Chains of all kinds are reporting weak quarters, as weather and then consumer weakness hurt traffic. Burger chains appear to be particularly bad off. Jack in the Box reported a 4.4% decline in same-store sales. McDonald’s said the key metric dropped 3.6% in the U.S. last quarter.

Yet these numbers are coming on top of weak results of a year ago. Both McDonald’s and Wendy’s reported same-store sales of less than 1% a year ago. Jack in the Box reported a 2.5% decline a year ago. 

For the year, the burger chain universe generated just 1.4% total sales growth. 

But Wendy’s believes it has plans that could improve those results later this year, including a series of marketing and operational changes along with new technology.

The Dublin, Ohio-based chain plans a “100 Days of Summer” campaign that will feature new menu collaborations, such as one with the spicy snack Takis, along with value offers. 

The company is also planning operational improvements. It is investing in resources and training to improve the way restaurants are run. Field teams will double the number of visits they make to each restaurant each year to conduct assessments and help provide specific improvements. 

The company is also continuing to roll out AI voice-activated order taking, which is on track to be in 500 of the chain’s locations by the end of the year. 

Operational improvements also feature a focus on accuracy. The company is adding menu item label printers and smart delivery scales. The labels will ensure every sandwich is customized the way customers want it. The scales ensure they receive every item. Accuracy has improved at the restaurants that have these tools, CEO Kirk Tanner said. 

Wendy’s is also working with operators to improve profitability. The company has implemented a system to collect franchisee restaurants’ profit-and-loss statements every month. 

Similar to the operations changes, the goal is to provide information so franchisees can use the insights to improve store-level profitability. “It all goes back to the fundamentals we’re driving,” Tanner said. “Restaurant-level economics, driving the top line and lowering the build costs, we’re focused on all those things.” 

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