Associated Press reported Wendy’s—struggling with rising
beef prices and failing restaurants—received a buyout offer.
Hmmm. The fast
feeder’s longtime White advertising agency is VML, part of the WPP network that recently secured Wendy’s US media business. So, it’s
arguably a triumvirate of losers.
Plus,
Wendy’s recently hired a new CMO, which could spell OMFG for VML and
WPP.
Maybe WPP
should bid on Wendy’s and add it to the portfolio of services. Such a move
would offer employment opportunities to the thousands targeted for layoffs.
Wendy’s, struggling with beef prices and growing competition, gets a
buyout offer
By Dee-Ann Durbin
Wendy’s shares jumped more than
14% Wednesday after noted investor Nelson Peltz made an offer to buy the chain,
which has been struggling with high beef prices
and aging stores.
Peltz’s Trian Fund Management
and several partners are offering Wendy’s $7.35 per share in cash, or a premium
of nearly 19% over the stock’s closing price on Tuesday, in a deal that would
take the company private. The offer values Wendy’s at $1.4 billion.
Wendy’s, which is based in
Dublin, Ohio, confirmed receipt of the unsolicited proposal in a statement
Wednesday and said its board has formed an independent committee to evaluate
it. At the end of last year, Wendy’s had 5,969 restaurants in the U.S. and 1,428
outlets in 38 countries.
Wendy’s, founded in 1969 by
Dave Thomas and named after his daughter, is known for its square burgers and
Frosty desserts. The fast-growing chain introduced the drive-thru window in
1970 and went public in 1976. In the 1980s, as it jockeyed for sales with
McDonald’s and Burger King, Wendy’s launched salad bars and ran its iconic
“Where’s the beef?” ad campaign.
But as the fast-food market
grew even more competitive and rival burger-focused chains like In-N-Out and
Five Guys expanded, Wendy’s fell behind. Wendy’s share of U.S. burger chain
sales fell from 11.5% in 2019 to 10.4% last year, according to Technomic, a
market research company.
In recent years, inflation has also hurt Wendy’s and other U.S.
fast-food chains, who have seen traffic from lower-income consumers fall as
they raised prices to combat rising labor, food and packaging costs.
Wendy’s said Wednesday it is
moving “with urgency” to rebuild its menu with a focus on quality and improve
marketing and store operations. Wendy’s hired Bob Wright, who formerly led
Potbelly, as its president and CEO in May. He’s the fourth CEO to lead the
company since 2024.
Wendy’s has been closing outdated U.S. restaurants so it
can focus on its more profitable locations. The company closed 240 restaurants
in 2024 and said earlier this year that it planned to shutter up to 358
locations in 2026.
Then, last month, one of the
largest U.S. franchisees for Wendy’s filed for
bankruptcy protection after the chain tried to terminate its franchise
agreement. Michigan-based Meritage Hospitality Group operates 314 Wendy’s
restaurants in 15 states.
In a letter to the company’s
board of directors, Peltz said going private “will deliver the best outcome for
the broader stakeholder base.”
“Wendy’s sits at a critical
juncture,” Peltz wrote. “The external environment has become increasingly
challenging given the significant pressures on the U.S. consumer, economic
uncertainty, persistent commodity inflation and intensifying competition, particularly
within the QSR (quick service restaurant) burger category.”
Peltz has invested in companies
from Procter & Gamble and Disney to DuPont. According to a regulatory
document filed Wednesday, Trian’s stake in Wendy’s totals 16.3%.
Peltz considered a take-private
bid for Wendy’s in 2022 but told the company in January 2023 that he had
decided against it, citing its improved business momentum, according to TD
Cowen analyst Andrew Charles.
Charles said an independent
special committee is expected to evaluate the proposal and both parties have
entered into a confidentiality arrangement.
“In our view, a take-private
makes sense as Wendy’s turnaround is likely to be prolonged given the
challenged state of the lower-income consumer and soft state of the quick
service burger category,” Charles wrote Wednesday in a note to investors.
Wendy’s is scheduled to report
its quarterly financial results next week. Analysts expect the company to post
earnings of 9 cents per share on sales of $531 million, according to FactSet.
Shares rose 93 cents to $7.07
Wednesday. They have fallen 26% since the start of this year.