Wendy’s gave an update Thursday on the financial effects of the COVID-19 pandemic, including a notable drop in sales and exponential growth in drive thru.
Wendy’s reported that same-store sales in the U.S. and Canada were up 2.8 percent through March 22. In the week ending March 22, comp sales dropped by 20 percent. In January and February, comp sales were up 4 percent.
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Drive thru has grown to 90 percent of sales and digital business has grown to 4.3 percent compared to 2.5 percent the prior year.
Before the COVID-19 pandemic, Wendy’s launched its breakfast menu on March 2, boosting sales by 15 percent in the first week of the month. Due to the strong performance of breakfast, the company said it will remove its incremental breakfast marketing spend investment in 2020 and support franchisees in other ways. However, the brand still intends to apply “media pressure” to the morning daypart to boost breakfast and sales for the rest of the day.
To mitigate the negative effects for franchisees, the brand said it is extending deadlines for royalties and marketing funds by 45 days for the next three months. It’s also deferring rent on the properties that it owns by 50 percent over the next three months and extending its Image Activation and new restaurant development requirements by one year. Wendy’s has spoken to franchise lenders and is working through different options to support franchisees, as well.
The company has temporarily closed 235 units—46 in the U.S. and 189 internationally—which represents about 3.5 percent of the system. Wendy’s has closed all dining rooms except where it is necessary or where drive-thru or a pick-up window isn’t available. Carryout services at certain restaurants will continue on a case-by-case basis.
The brand said it hasn’t experienced any issues with the supply chain. It also added Postmates as a third-party delivery provider in addition to DoorDash and Grubhub in the U.S.
Wendy’s drew down $120 million from its credit facility, and now has more than $340 million cash on hand. All share repurchases have been suspended, and the company withdrew its 2020 financial guidance. Wendy’s stock has risen about 35 percent in the past week.
In light of COVID-19, the company implemented a paid sick leave policy that grants up to 14 days of pay if an employee at a company-owned store is experiencing challenges as a result of the virus.
In an effort to protect customers and employees, Wendy’s is increasing daily restaurant deep cleaning procedures across the system, restricting travel for employees, reinforcing food safety procedures and hand washing requirements, and staying in close contact with public health experts.
“This is an unprecedented time, and we are focused on the actions where we can make a positive difference. To that end, we have taken several precautionary steps to advance public health goals, maintain essential access to high quality food, support our franchisees, and safeguard our team members and customers from the spread of COVID-19,” said president and CEO Todd Penegor in a statement. “As we navigate any challenges we face, we’ll do it the Wendy’s Way; with a focus on taking care of our people, customers and supporting our franchise partners as we navigate through this very challenging and historic time together.”
