Franchisees beef up sales for US burger chain Wendy's

The burger chain swung to a quarterly loss, but its adjusted earnings and revenue beat Wall Street's estimates. VIDEO: REUTERS

UNITED STATES (REUTERS) - US burger chain Wendy's Co reported better-than-expected quarterly profit and sales, helped by higher franchise revenue.

The company, like a few other fast-food restaurant operators, is focused on refranchising its restaurants in order to insulate from wavering commodity and labour costs.

Wendy's said franchisee royalty and franchisee rental revenue, which accounts for about 48 per cent of the company's net sales, rose 29 per cent to US$159.5 million (S$217.5 million) in the second quarter.

The Dublin, Ohio-based also said it expects net franchise rental income of about US$100 million to US$105 million in the year.

Same-restaurant revenue from North America, the company's biggest market, rose 3.2 per cent in the quarter. Analysts on average had expected a 3.10 per cent rise, according to research firm Consensus Metrix.

The company's revenue fell 16.3 per cent to US$320.34 million, but beat the average analyst expectation of US$301.7 million, according to Thomson Reuters.

The company swung to a net loss of US$1.85 million or US1 cent per share, in the quarter ended July 2, compared with a profit of US$26.48 million, or US10 cents per share, a year earlier.

The latest quarter included a US$41.1 million loss related to acquiring and selling some restaurants.

Excluding certain items, the company earned US15 cents per share, beating the average analyst estimate of US13 cents.

The company's shares were up 1.8 per cent at US$15.50 before the bell on Wednesday.