What happened

Wendy's (NASDAQ:WEN) stock was running 6% higher in morning trading Wednesday after the company reported first-quarter earnings.

Although the fast-food chain missed analyst expectations -- albeit with results better than what could have been -- the market is giving Wendy's a pass.

The exterior of a Wendy's restaurant.

Image source: Wendy's.

So what

The coronavirus pandemic upended all business, but restaurants were among the first establishments ordered closed when the COVID-19 outbreak hit in earnest. Fortunately, restaurants with takeout and delivery capabilities could continue serving customers. Wendy's reported 96% of its global footprint and 99% of the 5,865 restaurants in the U.S. remained open through the early days of the pandemic.

Systemwide sales grew 1% in the first quarter compared to 3.3% a year ago, with comparable sales down 0.2% versus a 1.4% gain last year. That's actually a pretty strong showing in the midst of a global pandemic and after McDonald's (NYSE:MCD) saw sales tumble 6% on a 3.4% drop in comps.

Wendy's did better in the U.S., with sales up 1% and comps flat, and while it resulted in a $40 million use of free cash flow for the period, that was influenced by a near-$25 million settlement in a lawsuit. Absent that, Wendy's says free cash flow would have been approximately $4.3 million.

Now what

Wendy's does face a new challenge with a meat shortage looming, which is leading the restaurant to begin removing burgers from its menu.