The Wendy's Co Class A WEN

Wendy's Navigates Struggling Low-Income Consumers Ably but Is Set for Another Tough Year in 2024

Wendy's is the second-largest QSR burger chain in the U.S. behind wide-moat McDonald's, sporting a value proposition built around fresh and craveable products at competitive price points. The banner has benefited from a resurgence over the last few years, driven by the renewed launch of its breakfast platform, store reimaging, and strong value positioning. Stable same-store sales growth and reasonably competitive cash-on-cash returns have underpinned high-single-digit U.S. revenue growth since 2018, with the firm prioritizing menu development, augmented digital capabilities, and a renewed international push as its three key growth drivers moving forward. We continue to view international expansion as the least likely of the firm's initiatives to bear material fruit, but note that sizable development agreements in Asia-Pacific suggest that Wendy's brand could prove strong enough to make a small foray in emerging international markets—though we still view success as unlikely in those where both wide-moat McDonald's and Burger King already maintain a strong position.