https://www.wsj.com/articles/wendys-will-undergo-organizational-redesign-11673618665?mod=hp_lead_pos4
Wendy’s Co. said Friday that two executives were departing the burger chain amid a broader organizational overhaul that could include staff reductions and new investments.
Trian Fund Management LP, Wendy’s largest shareholder, also said Friday that it was putting on hold its push for potential strategic alternatives for the company. The activist hedge-fund firm said in May that it intended to explore a potential transaction involving Wendy’s, either alone or with third parties, that could include an acquisition, merger or other deal.
Trian said Friday that Wendy’s business momentum supported a new capital-allocation plan instead. Wendy’s said it was doubling its dividend and increasing its stock-buyback program.
The company announced preliminary fourth-quarter results Friday, which showed same-store sales grew nearly 6% in the U.S. in the three months ended Jan. 1, compared with the previous year’s period. Wendy’s said it opened 38 U.S. restaurants and closed 41 domestic locations during the quarter.
As the U.S. economy shows signs of softening, consumer demand has generally held up at fast-food restaurants, though companies have noted a pullback in spending among lower-income diners. Wendy’s said Friday that more customers are turning to the chain’s restaurants seeking deals.
“We continue to see a consumer who is a little more strapped,” Wendy’s Chief Executive Todd Penegor said during an investor call Friday.
Wendy’s shares rose nearly 6% to $23.08 in 4 p.m. trading Friday.
Wendy’s said it is re-evaluating some of its newer investments given the current economic trajectory, and plans to better tie together its U.S. and global operations. The company said it is scaling back an earlier test to build to-go only locations with startup Reef Global Inc. and will focus on building traditional units instead. Mr. Penegor said Wendy’s is also looking at its headcount.
As part of the reorganization, the Dublin, Ohio-based fast-food company said Leigh Burnside, its chief accounting officer and U.S. chief financial officer, is stepping down to become the financial chief of a different restaurant company.
U.S. President and Chief Commercial Officer Kurt Kane is also departing after his position was eliminated in what the company called a “broader redesign of its organizational structure” that is aimed at keeping general and administrative costs low in the years ahead. The company will pay Mr. Kane compensation for termination without cause, it said in a filing.
Wendy’s plans to determine further organizational changes in the next 45 days to help reduce costs and boost its efficiency, Mr. Penegor said.
Other U.S. companies this month have announced cost reductions and restructuring plans as an economic downturn looms. McDonald’s Corp. said last week that it planned to make “difficult” decisions about potential changes to its corporate staffing levels by April, as part of a broader strategic plan for the burger giant.
Wendy’s said Friday that its revenue for the fourth quarter is expected to hit $536.5 million, up from $473.2 million last year and above analyst expectations of $518.3 million, according to FactSet.
Wendy’s said Friday that it is doubling its quarterly cash dividend to 25 cents a share. The increase will kick in when the first quarter’s dividends are paid out in March, the company said.
The company’s board also canceled a $250 million share-repurchase program, which had been slated to end next month, and replaced it with a $500 million repurchase plan due to expire in February 2027.
Trian co-founder Nelson Peltz said Friday that the new capital-allocation strategy would support the company’s long-term growth plans.
After Trian announced its push for Wendy’s to explore potential strategic alternatives last spring, some investors had hoped for a sale of the company, sending Wendy’s stock higher. Deals have slowed in the past year as interest rates have risen, financing has tightened and a recession hangs over the U.S.
Mr. Peltz’s Trian is a longtime investor in the chain. The activist investor recently made headlines for a planned proxy fight against Walt Disney Co.