Dive Brief:
- Trian Fund Management and its founder Nelson Peltz, owner of over 16% of Wendy’s stock, said the fast food chain is “currently undervalued,” in a Wednesday filing with the Securities and Exchange Commission.
- Peltz is considering either purchasing additional stocks that would allow him and Trian Management to control the company, or disposing of some or all of its shares.
- Wendy’s stock price has declined 60% in the past five years, from about $20 per share in 2021 to about $8 today.
Dive Insight:
Wendy’s board of directors responded to Trian Fund’s filing by saying that it regularly reviews strategic priorities and ways to boost shareholder value. If Trian Partners submits a proposal the board of directors “will carefully evaluate it, consistent with its fiduciary duties.”
“We are executing our Project Fresh turnaround plan with urgency to strengthen our U.S. business while continuing to deliver strong growth internationally,” the company said in a statement. “With an iconic brand, a great team, passionate franchisees, improved capabilities, and the right plan to deliver results, we are confident that we have all the ingredients necessary for long-term success.”
Wendy’s posted an 11% decline in same-store sales — its steepest drop in about six years — and is trying to improve franchisee profitability and other parts of the business through its Project Fresh initiative.
Wendy’s executives said during the company’s fourth quarter earnings call that it will focus on menu development this year, rolling out an improved chicken sandwich lineup. It will also focus on burger innovation. The chain is also in the midst of closing hundreds of underperforming restaurants, with 5% to 6% of its U.S. system set to shutter through the first half of this year.
The company has been without a permanent CEO since Kirk Tanner left last year.
Peltz is no stranger to Wendy’s; he previously served asWendy’s chair for 17 years until 2024, according to CNBC. Trian first invested in Wendy’s in 2005. In 2008, Peltz’s holding company, Triarc Companies, purchased Wendy’s in an all-stock deal when it also owned Arby’s. Triarc sold Arby’s to Roark Capital in 2011 to focus on Wendy’s. Peltz previously considered a takeover of Wendy’s in 2022, but ended up not pursuing the bid.
Activist investor activity has heated up in the restaurant sector as many chains have struggled to grow sales in recent quarters. Jack in the Box’s proxy battle with Biglari Holdings heated up in recent days as the two spar over the re-election of the brand’s board chair. Biglari also targeted Cracker Barrel last year after a failed re-brand led to traffic and sales declines.
