Here is a look at 2Q guidance ahead of earnings on Thursday.


The trends at MCD are making it nearly impossible for any of the big (mature) hamburger chains to post better that expected results.  In addition, higher commodity prices (especially beef and pork) will make it difficult to maintain margins in 2H10.


The recent introduction of salads has been well received, but not enough move the needle at this point. 


The stock trades at a significant discount to its assets values, but being “hopeful” that the majority shareholders can create value (by spinning-off Arby’s) is not an investment process.  The $1 menu at Arby’s helped transactions, but will penalize margins for the time being.


I look forward to the day when Wendy’s can just be Wendy’s!



  • Wendy’s - To maintain or sequentially improve two-year average company-owned same-restaurant sales trends for the Wendy’s concept must see same-restaurant sales grow by at least 1.7% in 2Q.  Per StreetAccount, the Street estimates that company-owned same-restaurant sales for Wendy’s will come in at -0.1%, which would result in a 91 bp sequential decline in two-year average trends.
  • Arby’s - To maintain or sequentially improve two-year average company-owned same-restaurant sales trends for the Arby’s concept must see a same-restaurant sales number of at least -13.8% in 2Q.  Per StreetAccount, the Street estimates that company-owned same-restaurant sales for Arby’s will come in at -7.6%, which would imply a 310 bp sequential increase in two-year average trends.



  • For the year, we continue to expect positive same-store sales and further margin expansion at Wendy’s, and negative same-store sales at Arby’s but improving on a year-over-year basis.
  • Expecting adjusted EBITDA growth in the low to mid-single digits for 2010. This excludes the effect of the 53rd week in 2009 of approximately $14 million and incremental investment spending to expand breakfast menu in 2010.
  • We believe that the new salads will drive transactions and sales.
  • In 2010, we plan to remodel up to 100 company-owned Wendy’s restaurants
  • We will begin to introduce the new menu into our three existing breakfast markets in the second and third quarters, expanding in the fourth quarter (franchise and additional company markets) and finally a national rollout in 2011.
  • Internationally, we expect franchisees to open 35 to 45 new international Wendy’s restaurants.
  • We would expect the Wendy’s system unit growth to be flat this year.
  • For Arby’s we plan on having 75% of system as Pinnacle Image restaurants by the end of 2012 – stronger sales and margins.
  • On track to remodel 100 Arby’s company-owned restaurants in 2010.  Investing $100 million over the next three years.


Howard Penney

Managing Director

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