"Project Fresh" is what Wendy's (WEN +0.57%) is officially calling its turnaround plan. Wendy's stock has been on the decline for quite some time. The company is taking aggressive action to right the ship. With earnings due on Feb. 13, investors are anxious to see if those efforts are actually working. Last quarter, global sales were down 2.6%, and adjusted earnings per share fell 4%.
NASDAQ: WEN
Key Data Points
The fast food chain began a downward spiral in late 2024, and it's continued to decline ever since. Over the past 12 months, Wendy's stock has fallen nearly 46%. For those who believe in the turnaround plan, Wendy's stock is currently extremely cheap. The stock is trading with a forward P/E ratio of around 9 and a price-to-sales ratio well under 1. Wendy's is hovering just above its 52-week low as of Feb. 9.
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Fast food and fast casual restaurants have suffered across the board since the beginning of the COVID-19 pandemic, as foot traffic has slowed and a work-from-home culture endures.
Wendy's turnaround plan has four main pillars: brand revitalization, system optimization, operational excellence, and capital allocation. Wendy's added new energy drinks, revamped its coffee offerings, and is leaning into chicken tenders. The 56-year-old restaurant chain admitted it is seeing more pressure on lower-income consumers, which is also hurting sales. Wendy's may close up to 300 franchises in the U.S.
Ultimately, I'm skeptical of the company's plan, or at least think it may take longer to see real improvements than company executives hope. There's also only so much Wendy's can control. If low and middle-income consumers continue to see their wallets tighten in the next year or longer, that won't do anything to help Wendy's comeback.
