Atlanta-based Wendy's/Arby's Group said it has made "substantial progress" on selling the Arby's side of the company, a move that would unwind a merger that was finalized less than three years ago. The company is talking to "several quality bidders," chief executive Roland Smith said on a conference call Tuesday.
Meanwhile, the company faces what it describes as a transition year. Its first quarter revenue grew 1.2 percent to $848 million. Sales at established stores in North America were flat at Wendy's, but sales at Arby's rose sharply and beat analysts' expectations. The parent company put Arby's up for sale earlier this year.
Arby's, where sales rose 5.5 percent at restaurants open at least a year, benefited from an everyday dollar value menu and a new "Angus Three Cheese & Bacon Sandwich," executives said.
Wendy's/Arby's shares rose 4 percent on the New York Stock Exchange, the steepest increase in more than two months.
But the parent company lost $1.4 million as the Wendy's brand struggled. That was a narrower loss than in the same period last year, when the company incurred a net loss of $3.4 million.
Wendy's/Arby's, the country's third-largest fast food chain, said its commodity costs would rise 5 to 6 percent for the rest of the year, faster than previously predicted. It will raise prices to offset higher costs for beef, bacon, fry oil and dairy ingredients, but did not say by how much.
Sales at Wendy's restaurants open at least a year were "sluggish," said analyst Sara Senatore of Sanford C. Bernstein. That implies continued market share loss to McDonald's, she said. Even the guidance for flat profit margins at company-operated Wendy's restaurants may prove overly optimistic, she said.
Wendy's expects to be serving its new breakfast items in about 1,000 restaurants by the end of the year. The brand is also introducing "Dave’s Hot ‘n Juicy cheeseburgers," new chicken sandwiches, a berry Frosty and a Berry Almond Chicken Salad.
