Wendy’s navigated a pressured fast-food category in 2024 on three fronts—technology, innovation, and breakfast, the latter of which grew sales more than 6 percent, outpacing the segment. But it wasn’t difficult to locate the headline. Wendy’s saw its highest same-store sales performance since 2021 in October when comps rocketed 10 percent, year-over-year, thanks to a SpongeBob Collaboration that showed “what we can accomplish when we combine two iconic brands with multigenerational appeal,” CFO Ken Cook said.
At its peak, the nearly doubled-in-size Krabby Patty drove a 20 percent lift in same-store sales with increased traffic and average check. Comps leveled after, leading to a Q4 result of 4.1 percent on top of last year’s 0.9 percent growth. For the year, Wendy’s global same-store sales hiked 4.3 percent, giving the brand its 14th consecutive year of gains.
Wendy’s also slimmed its portfolio, as it hinted last quarter, in an effort to shed lower-performing units and bump AUVs. The chain closed a net of 78 restaurants in Q4 and 97 across the calendar to end with 5,933 U.S. stores compared to 6,030 this time a year-ago. Globally (international increased from 1,210 to 1,307), Wendy’s was flat—entering 2024 with 7,240 restaurants and leaving at the same figure.
These new openings are expected, in some cases, to generate twice the volumes of closures. Wendy’s said last quarter outdated restaurants were averaging $1.1 million per store (compared to the system’s $2.1 million) and generating operating margins well below the mean. Wendy’s said it’s providing operator incentives to develop higher-performing stores.
Naturally, SpongeBob isn’t going to round every marketing corner as Wendy’s braces for another winding year ahead. Multiple third-party forecasts, Cook said, for both food away from home and industry traffic, indicate spending will remain burdened and QSR burger category traffic projects flat to down 1 percent compared to last year. And this outlook does not include any impacts from potential tariffs.
The reality led Wendy’s to guide 2–3 percent global systemwide sales growth in 2025 and net unit expansion between the same range. That would give the company its most restaurant builds in the last 15 years. Management said previously it could envision “another couple thousand” domestic restaurants. Wendy’s plans to invest about $70 million through its “build-to-suit” program that enables operators to see a levered return in about three-and-half years. If a franchisee uses no incentives, it’s about a six-year return. Essentially, Wendy’s co-invests in new restaurants with franchisees in exchange for higher royalty and rent payments. The goal being to expand the pool of franchisees to build more restaurants.
CEO Kirk Tanner called the coming calendar for Wendy’s “foundational.” That’s true both from an asset standpoint and a systems one. One buzzing trend taking shape, though, concerns the drive-thru lane; a channel Wendy’s historically appreciates more than 70 percent of its sales.
Wendy’s FreshAI voice-enabled order taking technology, which launched in 2023 through an expanded partnership with Google Cloud, began in four corporate Ohio units and rolled to roughly 30 locations across two states. That number is now at nearly 100 locations, Tanner said. Additionally, Wendy’s implemented digital menuboards at more than 300 restaurants.
Tanner said voice-enabled AI is improving accuracy and driving labor efficiency. It’s going to expand to 500–600 locations this year.
“We have a lot of confidence,” Tanner said. “One thing I love about it, it continues to get better.”
Tanner said he personally puts the tech to test three or four times a week (there’s one close to the Dublin, Ohio, office). “And the experience is exceptional,” he said. “What I would tell you is it drives sales as well. It gives customers the opportunity to build their orders. It understands what to ask for and the accuracy definitely is improving.”
“And that experience,” Tanner added, “We want to be remarkable.”
Wendy’s said once it can prove results at 500, it will have a strong case for the rest of the fleet. “I think it’s definitely cutting edge,” he said.
Wendy’s plans to unveil more at its March 6 investor day.
At the top level of QSR, there are namely two chains pushing voice AI on the front lines—Wendy’s and Taco Bell. McDonald’s was an early tester—as far back as 2019 when it purchased conversational platform Apprente—but decided to bail out, for now, in June after results didn’t support wide-scale investment. McDonald’s partners with IBM.
Taco Bell, meanwhile, first shared progress publicly in July. At the time, Taco Bell offered voice AI ordering in more than 100 units across 13 states. In November, CFO Chris Turner provided another update, noting Taco Bell had processed more than two million successful orders and was featuring the system, supported by digital menuboards and Yum!’s proprietary Poseidon POS system, in roughly 300 U.S. locations. At that, Taco Bell had become the largest quick-service voice AI brand in the world.
The race to the title in 2025 is now on.
As for how customers are responding, it’s an evolving story. In QSR magazine’s 2024 Drive-Thru Report, partner InTouch Insight surveyed nearly 1,500 diners and asked how they feel about the notion. Forty-five percent reported “not liking the idea of it,” compared to 47 percent last year. However, when examining the data from demographic angles, 33 percent of respondents aged 18–44 reported “not liking the idea of it,” compared to 54 percent of those aged 45 and above.
There was a clear split between generations in terms of acceptance and preference for AI technology.
But mostly, there was a lot of intrigue and not a lot of actual experience. Only 19 percent of those surveyed said they’d tried AI-enabled voice technology to automate drive-thru order taking. Yet 61 percent of those who did said they enjoyed the experience.
Simply, there’s a bevy of theoretical data that needs to shift to more concrete points.
“It’s something that we’re really excited about,” Tanner said. “It’s got a bright future, and we’re moving forward.”
As for other happenings, Q4 growth at Wendy’s, in addition to SpongeBob, was supported by LTOs such as the Salted Caramel Frosty and Mushroom Bacon Cheeseburger. Breakfast sales rose more than 4 percent, year-over-year.
Wendy’s grew its digital mix 130 basis points, quarter-over-quarter, to 19 percent of sales globally. Tanner said the lift generated insights the company will use to boost customer experience and provide more relevant in-app offers for guests. Global digital sales increased nearly 40 percent over 2023 and loyalty member expansion rose 25 percent. The program now touts more than 46 million members.
Wendy’s U.S. same-store sales for all of 2024 inched 1.4 percent, lapping 3.7 percent expansion from 2023. International climbed 2.8 percent on top of 8.1 percent. Globally, comps upped 1.5 percent, year-over-year, against 2023’s 4.3 percent.
Tanner said Wendy’s maintained or grew dollar and traffic share in the QSR burger category in every quarter.
The brand featured new LTO Frosty flavors each season and invested in its mobile app to accelerate loyalty growth.
Speaking to breakfast—a channel Wendy’s hopes to drive margin improvement through—Tanner said the category will continue to receive a higher share of total advertising dollars compared to its percentage of sales.
“We expect the next stage of growth in breakfast to be driven by product innovation,” he said, “which we will share more about later this year.”
Wendy’s breakfast business grew roughly 300 basis points faster than the category, as mentioned, and its potential makes it a priority, Tanner said. That’s why the company will continue investing in awareness and providing outside dollars compared to the rest of its offerings.
“But we’ll have to do other things, and we have plans to do just that,” he said. “We have to innovate.”
Also expect more chicken and beverages in 2025, which is a promise Tanner floated last year, too. The former CEO of Pepsi’s North American beverages said in Q3 the company would add more drink options to meet modern preferences, without divulging further details. But there’s a visible profit opportunity and the chance to amplify Wendy’s Coke-powered Freestyle platform that focuses on choice and isn’t as widespread in some competitors. Wendy’s expanded its partnership with the beverage giant in 2025—a move that would enable it to grow the category exponentially, Tanner said. Freestyle and its 100-plus drink options also deliver Coke’s portfolio in full and zero sugar.
“Value” as a central theme isn’t going anywhere, either. Wendy’s navigated this rush recently from a different angle, given its Biggie Bag platform was already an established architecture it could innovate around versus, say, McDonald’s adding in a $5 deal. “At Wendy’s value starts with quality,” Tanner said. “Our iconic Biggie Bag is uniquely Wendy’s, delivering industry-leading quality at attractive price points. We have plans to further strengthen our value leadership position through continuous innovation and the strategic expansion of our Biggie Bag platform.”
He added Wendy’s would deepen loyalty connections and attract trial through exclusive, limited-time deals on the app. More partnerships and promotions are on deck as well (in the vein of SpongeBob). One near-term example being the Thin Mints Frosty in partnership with Girl Scouts.
“We look at the menu in three distinct areas,” Tanner said. “One, our core portfolio, our core menu. We expect that to grow. We have to invest in that. You’ll see innovation off that, pure innovation, things like Saucy Nuggs that we did last year, you’ll see us innovate and we’ll share those details as well.”
“And then last, value,” he continued. “We have to have a relevant value. We think we have an amazing proposition that’s really based in quality on value, especially with our Biggie Bag platform. We think we have the highest quality in the industry as far as value and buy starts with quality at Wendy’s.”
Operationally, Tanner said, Wendy’s invested in field resources to provide enhanced support o franchisees and drive restaurant-level margins. U.S. company-operated margins were 16.5 percent in Q4, a 300 basis-point increase over last year thanks to sales leverage from higher check and customer count growth, as well as productivity savings. It’s expected to be about 16 percent in 2025.
Some of corporate breakfast advertising spend will be redeployed to field operations to improve customer experience across all dayparts and drive efficiency.
Cook said Wendy’s expects to reach its 15th consecutive year of global growth as it gets to the other side of weather challenges that have bogged down the larger industry to start the year. Growth and traffic should improve throughout the calendar.
