Wendy's (NASDAQ:WEN) Reports Upbeat Q3, Stock Soars

Fast-food chain Wendy’s (NASDAQ:WEN) reported Q3 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 3% year on year to $549.5 million. Its non-GAAP profit of $0.24 per share was 22.9% above analysts’ consensus estimates.

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"Third quarter results were in line with our expectations, reflecting continued strength in our international business with 8.6% systemwide sales growth, the addition of 54 new restaurants globally and adjusted EBITDA growth," said Ken Cook, Interim CEO.

Company Overview

Founded by Dave Thomas in 1969, Wendy’s (NASDAQ:WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $2.21 billion in revenue over the past 12 months, Wendy's is a mid-sized restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale.

As you can see below, Wendy’s sales grew at a sluggish 4.7% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts).

This quarter, Wendy’s revenue fell by 3% year on year to $549.5 million but beat Wall Street’s estimates by 3.1%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last six years. This projection doesn't excite us and indicates its menu offerings will see some demand headwinds.

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Restaurant Performance

Number of Restaurants

The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.

Wendy's opened new restaurants quickly over the last two years, averaging 1.4% annual growth, faster than the broader restaurant sector.

When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.

Note that Wendy's reports its restaurant count intermittently, so some data points are missing in the chart below.

Same-Store Sales

A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing restaurants and is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Wendy’s demand within its existing dining locations has barely increased over the last two years as its same-store sales were flat. Wendy's should consider improving its foot traffic and efficiency before expanding its restaurant base.

In the latest quarter, Wendy’s same-store sales fell by 3.7% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.

Key Takeaways from Wendy’s Q3 Results

We were impressed by how significantly Wendy's blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 6.7% to $9.41 immediately after reporting.

Indeed, Wendy's had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.