Wendy’s reported lower sales at established restaurants in the third quarter and introduced Dave’s Way, a multi-year strategy aimed at bringing customers back, gaining market share and improving restaurant profitability. The plan includes changes to breakfast, menu and marketing tests, more digital initiatives, and adjustments to the restaurant portfolio.
The company also signed a preliminary agreement to acquire as many as 163 restaurants from franchisee Meritage Hospitality Group. The purchase is not final and remains subject to a definitive agreement, competing offers and court approval.
Key details
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Customer sales weakened, particularly in the U.S. Global systemwide sales, which include both company-operated and franchised restaurants, fell 5.9% to about $3.33 billion. U.S. systemwide sales declined 7.6%, while international sales rose 3.5%.
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Sales at existing restaurants also fell. Same-restaurant sales decreased 5.2% globally: down 5.7% in the U.S. and 2.2% internationally.
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Revenue was slightly lower, with earnings of $15.1 million. Third-quarter revenue was $547.0 million, down 0.5% from a year earlier. Adjusted revenue was $435.6 million, down 1.6%. Wendy’s reported diluted earnings per share of $0.08 and adjusted earnings per share of $0.13. Adjusted EBITDA was $113.4 million.
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Restaurant margins declined. The U.S. company-operated restaurant margin fell to 11.7% from 13.1% a year earlier. For the first nine months, that margin was 12.3%, compared with 14.7% in the same period of 2025.
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Dave’s Way puts traffic and profitability at the center of the company’s plans. Wendy’s said it has begun testing menu enhancements, working to improve marketing and accelerating digital business. The company said its global franchise system is aligned behind the strategy.
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Breakfast will vary by location. Wendy’s is revising its breakfast approach based on local conditions and test results that it said produced significant profit improvement. The CFO said the changes could unlock up to $200 million in restaurant-level EBITDA across the system; that is a potential systemwide benefit, not a reported increase in Wendy’s current earnings.
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The Meritage transaction is still conditional. Wendy’s signed a letter of intent with Meritage and its lenders to acquire up to 163 Wendy’s restaurants. A definitive agreement has not been reached, and the transaction could be displaced by better or higher offers and requires court approval. Meritage is also exploring a sale or recapitalization of its other markets.
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Wendy’s is pursuing other portfolio changes. The company said it plans to acquire some company-operated restaurants and transfer franchised restaurants to well-capitalized, high-performing operators, with the stated goal of strengthening franchisee economics.
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The restaurant count declined year over year. Wendy’s ended the quarter with 7,194 restaurants, compared with 7,363 a year earlier. It opened 43 restaurants during the quarter, but the net increase was 14. For the first nine months, it opened 141 restaurants and reported a net decline of 203, reflecting a net decrease of 258 in the U.S. partly offset by a net increase of 55 internationally.
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Cash generation provides resources for the strategy. Wendy’s reported approximately $413 million in cash. For the first nine months of 2026, operating activities provided $239.0 million in cash and free cash flow was $174.2 million.
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Marketing leadership is changing. Tariq Hassan was appointed chief marketing and customer growth officer.
Plain-English implications
Wendy’s is trying to address a clear operating challenge: sales at existing restaurants are falling, especially in the U.S., and U.S. company-operated margins are lower than a year ago. Dave’s Way combines customer-growth efforts with changes to the restaurant portfolio and breakfast strategy. The proposed Meritage purchase could add company-operated locations, but it remains conditional and is not yet a completed transaction.