The fast-food chain was surprised by the economic downturn and said that its 100 Days of Summer promotion was too complex, more than offsetting strong sales of its Frosty dessert.

Wendy’s reported earnings on Friday and the results were negative. Same-store sales in the U.S. declined 3.6%, and the company’s projections for the rest of the year didn’t exactly spur confidence in a quick recovery.

And this came even as the chain’s Frosty innovations appear to be working marvelously. Sales of the product increased 30% last quarter after Wendy’s introduced several new options for its popular dessert. Everything else, however, appears to be selling less.

Wendy’s is hardly alone. Limited-service chains have reported a string of sometimes shockingly negative sales results. And even chains we once thought untouchable, like Chipotle Mexican Grill, are on the defensive.

Wendy’s executives on Friday revealed that they were surprised by the way the year turned out. The company entered 2025 expecting a better environment, much like many others did. But poor weather in January and February created problems. And then consumer confidence fell in March.

“The consumer environment looks much different today than we anticipated,” Wendy’s Interim CEO Ken Cook said at the outset of the company’s second-quarter earnings call Wednesday.

The company’s recent results, he said, reflect “dynamic consumer behavior and a more challenging competitive environment.”

Cook said that Wendy’s built a platform based on an improving environment this year. When that didn’t happen, the company looked at its “inventory of tested marketing” ideas, but they were not confident that anything in there would work in this environment.

The company put together its 100 Days of Summer promotion with a variety of deals and offers along with collaborations. The program “looked great on paper,” Cook said. And some parts of that promotion did work, such as Frosty giveaways and other promotions with the treat. But other programming did not.

The promotion proved to be too complex both for customers and operators. “We can’t throw more programming at restaurants or customers than we have the capacity to deliver,” Cook said.

A collaboration with the spicy snack Takis in particular fell flat. The company introduced a Takis Fuego Meal in June. It did well in the first week and then struggled. By July, same-store sales were down 5% to 6%.

The quarter accentuated challenges, both for Wendy’s and for the industry at large. The chain’s same-store sales were far weaker than those from rivals McDonald’s (2.5%) and Burger King (1.5%). Its breakfast sales in particular were weak, which is difficult for a chain that is still working to build that business.

Wendy’s CEO Kirk Tanner resigned surprisingly last month, with Cook hired as interim CEO. But the company also hired a new U.S. president, Pete Suerken, who had overseen the Wendy’s supply chain co-op. Longtime Wendy’s executive Abigail Pringle left. The news involving both Tanner and Pringle left the company reeling.

The company does have strategies in place to fix ailing sales, starting more immediately with the introduction of chicken tenders along with a selection of six sauces. It is also about to release a collaboration with the Netflix series Wednesday that will include a “Meal of Misfortune,” including a 10-piece nuggets and a “Raven’s Blood” Frosty.

Wendy’s is also pushing into beverages and this week launched new energy drinks. It announced a new cold brew formulation as well, to take advantage of growing demand for cold coffee. In September it plans to release a new hot coffee blend. Those efforts could boost sales in the morning.

All that said, investors appeared to buy into Cook’s argument that the company has a strategy for improvement. After initially declining following the earnings report, Wendy’s stock is up 2.5% Friday morning.

Source https://www.restaurantbusinessonline.com/financing/frosty-could-not-save-wendys-last-quarter

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