(Reuters) – Wendy’s Co said on Wednesday its new breakfast menu was doing well and estimated current-quarter same-store sales to improve as lockdowns across the country ease, allowing the burger chain to open more stores, sending its shares up 7%.
The company also cut its quarterly divided to shore up its finances to deal with the hit from the COVID-19 pandemic.
U.S. same-store sales in the week ended April 12 declined about 25% and were down about 2.1% in the first week of May during the current quarter, the company said.
However, first-quarter U.S. same-store sales were flat, including a 7.7% fall in March, largely helped by a boost in its recently launched breakfast category, which included versions of its popular burger Baconator and drink Frosties.
“Our U.S. breakfast launch in early March exceeded our initial expectations and the breakfast daypart continues to perform well in today’s environment, which is encouraging,” Chief Executive Officer Todd Penegor said.
Like most restaurants, Wendy’s has taken a hit as stay-at-home, social-distancing and lockdown orders kept customers from dining out, limiting its sales to delivery, drive-thru and take aways.
It closed hundreds of restaurants, only weeks after launching its breakfast menu for the fourth time, hoping to take share in the competitive segment as customers are more loyal to their morning routine.
Restaurants are beginning to slowly open doors as lockdowns lift, while practicing social distancing and taking safety measures, hoping customers come back and boost dine-in sales.
“We are impressed that the exit rate for April… and that in the most recent week comps across the U.S. system have returned almost to flat,” Stephens analyst James Rutherford said in a note.
Net income fell to $14.4 million, or 6 cents per share, in the quarter ended March 31, from $31.9 million, or 14 cents per share.
Excluding one-time items, the company earned 9 cents per share, a cent lower than Wall Street expectations, according to IBES data from Refinitiv.
The company lowered its dividend to 5 cents payable on June 15. For the first quarter, Wendy’s paid a dividend of 12 cents per share.
(Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli)