Wendy’s seemed to be hitting on all cylinders early last quarter. The chain’s Krabby Patty Kollab, a collaboration with the Nickelodeon program Spongebob Squarepants, sent sales to levels unseen since the postpandemic recovery period.
Things haven’t gone quite so well since. Those sales have largely followed normal industry patterns into this year, which suddenly don’t look all that hot.
The Dublin, Ohio-based fast-food chain said it expects same-store sales to decline in the first quarter, and not just because of some bad weather—though that clearly isn’t helping matters. “We do expect [same-store sales] to be down year-over-year in the first quarter,” CFO Kenneth Cook told analysts on Thursday. “We’ve started the year facing some overall industry headwinds, exacerbated by significant weather events across the country.”
The results put a damper on what had been some strong, late-year results for the chain. Wendy’s reported 4.1% same-store sales growth in the U.S., thanks to 10% growth in October, the best month the chain had since 2021. Customers both visited more frequently and spent more when they did visit.
The company generated more sales in the morning. It is also getting more business from digital orders.
The chain outdistanced primary rivals McDonald’s (down 1.4%) and Burger King (1.5%), leading many to wonder whether Wendy’s lured some customers scared off by McDonald’s E. coli incident.
Wendy’s painted a bullish picture on the rest of 2025. “So, proud that we achieved our 14th consecutive year of [same-restaurant sales] growth in 2024,” Cook said. “And [we] fully expect to make 2025 the 15th consecutive year.”
In addition, the company handed a large dose of red meat to an investor community in the form of cash. The company will send $325 million back to shareholders this year in the form of dividends and share buybacks, a $40 million increase compared with 2024. “We believe that cash belongs to shareholders,” Cook said.
That helped take some of the edge off early-year sales concerns and drove Wendy’s stock 2.5% higher on Thursday.
Nevertheless, after the collaboration ended, Wendy’s sales returned to typical quick-service industry patterns in November and December, executives said, and then winter came.
Wendy’s results adds to evidence that lower-income consumers continue to shy away from eating out with the frequency necessary to drive consistent traffic growth at fast-food and family-dining chains.
Earlier this week, McDonald’s signaled these challenges, with CEO Chris Kempczinski noting that, “the overall market remains pretty muted.”
Denny’s, the family-dining chain, watched its same-store sales turn starkly south in February, down 5%.
To be sure, weather is playing a role. A series of snowstorms has ravaged much of the country. In January, fires burned much of Los Angeles. All that keeps people from eating out as often, and it makes early-year numbers noisy.
“There’s always a lot of noise, especially when you’re in the early part of Q1 with weather, and it’s a little bit hard to get a read,” Josh Kobza, CEO of Burger King owner Restaurant Brands International, said this week.
But a certain segment of the consumer is clearly holding back. The University of Michigan Consumer Sentiment index declined in February for the second straight month, to its lowest rate since June. The Conference Board’s Consumer Confidence Index also declined for the second straight month.
Wendy’s commentary suggests that the environment has turned difficult, following some late-2024 optimism for a comeback.
Yet the chain’s executives believe things should improve. “The good news is we expect Q1 to be the trough,” Cook said. “We expect our growth rate to improve as we move throughout the year.”
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