DEL.ICIO.USMerging Wendy’s and Arby’s post 3Q losses
The Atlanta Journal-Constitution
Thursday, November 06, 2008
Wendy’s and Arby’s were hit by a difficult U.S. economy and large one-time restructuring charges in the final quarter before their merger, the new Wendy’s/Arby’s Group reported Thursday.
Triarc, parent company of Atlanta-based Arby’s, completed its acquisition of Wendy’s, based in Dublin, Ohio, in September to create the Wendy’s/Arby’s Group. The merger, though, was finalized the day after the end of the quarter, so separate results were reported Thursday.
- Wendy's revenue was down 1 percent to $1.84 billion, and revenue for Arby's parent Triarc was down 4 percent to $310 million. Wendy's posted a $5.8 million loss, and Triarc had a $12.1 million loss. Both companies said they took large one-time charges in the quarter.
- Wendy's same-store sales were down 0.2 percent at company operated restaurants. Same-store sales at franchised restaurants were up 0.2 percent. Arby's company same-store sales were down 7.2 percent. Franchised same-store sales were down 4 percent.
- Wendy's/Arby's Group said it expects to cut $60 million in general and administrative expenses in the next two to three years by eliminating duplicate corporate functions and streamlining supports services.
- Company plans to expand day-parts, or key dining periods, for both brands. Executives have previously said the breakfast day-part could be offered at more restaurants. Dual-concepts could be used outside the United States and high-cost U.S. real estate markets.
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Triarc third-quarter revenue fell 4 percent to $310 million in the third quarter. It had a net loss of $12.1 million, compared with a $3.7 million profit in the same quarter a year ago.
Triarc results in the most-recent quarter were pulled down by $14.1 million in pre-tax charges to write down the value of underperforming stores and assets being held for sale.
A company plane accounted for more than half of the charges. Triarc decided to put the plane up for sale after Triarc headquarters was moved from New York to Atlanta, where Arby’s already was located.
Wendy’s revenue fell 1 percent to $1.84 billion. It reported a net loss of $5.8 million in the quarter, compared with a $73.8 million profit in the third quarter of last year.
The Wendy’s results included $68.5 million in pre-tax charges for restructuring related to the merger and a special committee created to explore strategic options for the company.
Setting these one-time charges aside, Wendy’s and Arby’s would have posted a profit in the quarter, but their performance was still down or flat from the same period a year ago.
Arby’s same-store sales fell in the quarter primarily because of aggressive price discounts and coupons offered by competitors, the company said in a release. Wendy’s had flat same-store sales and faced higher food and wage costs, the company said.
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