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Wendy's profit beats as new promotions attract more diners

Burger chain Wendy's Co raised its full-year profit forecast and reported higher-than-expected quarterly earnings, as new promotions such as its '4 for $4 meal' and renovated restaurants attracted more diners.

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A Wendy's sign and logo are shown at one of the company's restaurant in Encinitas, Calif. REUTERS/Mike Blake

Burger chain Wendy's Co raised its full-year profit forecast and reported higher-than-expected quarterly earnings, as new promotions such as its '4 for $4 meal' and renovated restaurants attracted more diners.

Shares of the company were down 0.7 percent in premarket trading on Tuesday.

Wendy's in October launched its '4 for $4 meal' which features a bacon cheeseburger, chickennuggets, fries and a drink. It added the Chicken BLT burger to the offer recently.

The company has also been investing in refurbishing its restaurants, rolling out self-order kiosks and a mobile ordering app to pull in more customers.

Wendy's said sales were also helped by a 27 percent rise in franchise revenue, driven by higher rental income, royalty revenue and franchise fees.

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The company is aiming to cut down the number of restaurants it operates to about 5 percent of its total restaurant count as part of a plan to move to a franchise-based model. Wendy's sold about 55 restaurants to franchisees during the first quarter.

The company also said on Tuesday an investigation into unusual payment card activity at some of its outlets was nearing completion, and less than 300 restaurants had been affected.

The Dublin, Ohio-based company's first-quarter sales at North American restaurants open for at least 15 months rose 3.6 percent, higher than the 3.3 percent increase estimated by analysts polled by research firm Consensus Metrix.

Wendy's raised its full-year 2016 adjusted profit forecast to 38-40 cents per share from 35-37 cents per share. Analysts on average expected full-year profit of 36 cents, according to Thomson Reuters I/B/E/S.

Revenue fell 16 percent to $378.8 million, but came in above the average analyst estimate of $352.1 million. The revenue decline was primarily because the company had 375 fewer company-owned restaurants.

On an adjusted basis, the company earned 11 cents per share, beating analysts' average estimate of 6 cents.

Related Topics: FOOD
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