Wendy’s/Arby’s Group Inc. (WEN) opened its first international dual-branded Wendy’s and Arby’s restaurant in Dubai, UAE last month. This was an important milestone achieved by the company to fulfill its international expansion goal.
Wendy’s/Arby’s recently announced its growth plans in Turkey through its subsidiary Arby’s Restaurant Group, Inc. The subsidiary signed a development agreement with Tab Gida Sanayi ve Ticaret A.S. to open 100 restaurants over the next ten years in Turkey, out of which 50 will open in next five years. Tab Gida owns or sub-franchises more than 430 restaurants in Turkey; this is an important step for Wendy’s/Arby’s to fulfill its international growth objective.
We think the limited presence of Wendy’s/Arby’s in the international markets provides it with ample opportunities to enhance its reach. The company believes that there is room for more than 8,000 restaurants outside of North America. The less saturated developing markets offer Wendy’s/Arby’s an enormous growth opportunity, in our opinion.
The company competes with McDonald’s Corp. (MCD) and Yum! Brands, Inc. (YUM), and both the companies have a strong international presence.
Wendy’s/Arby’s reported first quarter 2010 earnings of 2 cents per share, surpassing the Zacks Consensus Estimate by a penny. The company achieved a 14.7% year-over-year growth in adjusted EBITDA in the first quarter, primarily as a result of positive same-store sales at Wendy’s and a 430-basis point increase in Wendy’s company-operated restaurant margin. Wendy’s/Arby’s also reaffirmed its fiscal year 2010 outlook.
Wendy’s/Arby’s was formed through the merger of Triarc, the franchisor of the Arby’s restaurant chain, and Wendy’s, the owner-operator-franchisor of the eponymous fast food chain. Wendy’s and Arby’s continue to operate independently, with Wendy’s headquartered in Dublin, Ohio and Arby’s in Atlanta, Georgia.
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