Wendy's (WEN) is set up for another challenging top-line quarter, with a slight Q1 US same store sales miss, though some directional improvement is anticipated, RBC Capital Markets said in a note Wednesday.
The brokerage said Q1 results will reflect whether management's turnaround plan is gaining traction in franchisee locations, as company-operated stores have been outperforming franchisees over the past couple of quarters. The key metric will be franchisee comp relative to company-operated, RBC said.
After the company updated its menu in 2025, the brokerage said it is looking for improved consumer value perceptions and higher traffic.
Wendy's plans to close 5% to 6% of total US stores, primarily in H1, focusing on its worst performing locations and expecting an impact on its global sales and full-year EBITDA, according to the note.
The company's international segment continues to grow, though driven by lower average unit volume markets like Latin America and Asia Pacific, which is dilutive to system sales, while flat population growth in Canada, which contributes about half of international sales, could pose a headwind to same-store-sales growth, the brokerage said.
RBC Capital Markets maintained a sector perform rating on Wendy's, with a price target of $8.
Shares of Wendy's were down 1.3% in Thursday trading.
Price: 7.01, Change: -0.09, Percent Change: -1.27
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