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    MARKET EDGES

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We are removing WEN from the SHORT list and moving it to the LONG bench.

With MCD digging itself out of a deep hole, there are lots of moving parts in the restaurant industry these days.  While we have been critical of WEN not doing better when they had a chance to take share over the last three years, the lack of volatility in their sales trends are working out in their favor.

It appears that WEN has found the right balance of improving the asset base; franchisee optimization and now a marketing plan that is resonating with consumers.  As you can see from the table below WEN same-store sales trends have been improving on a 1, 3 and 5-year basis. 

WEN | REMOVING THE SHORT | GOING LONG - CHART 1

Despite our initial concerns about the impact that MCD might have, we believe WEN internals changes will lead to an acceleration of same-store sales trends over the next 12-months.  In the short run the company’s 4 for $4 will drive incremental sales above the consensus estimates for 4Q15.

WEN | REMOVING THE SHORT | GOING LONG - CHART 2

WEN | REMOVING THE SHORT | GOING LONG - CHART 3

More details to come. Please call or e-mail with any questions.

Howard Penney

Managing Director

Shayne Laidlaw

Analyst