ATLANTA Triarc Cos. Inc., brand parent to the 3,694-unit Arby’s chain and the pending acquirer of Wendy’s International Inc., said first quarter operating profit at its restaurant division rose 18.4 percent from a year ago on increased sales at corporate locations and positive same-store sales at franchised units.
At Arby’s, operating profit for the quarter ended March 30 totaled $8.1 million, versus operating profit of $6.8 million a year ago.
Total sales at corporate locations increased 5.7 percent to $281.6 million, driven by an acquisition of 50 formerly franchised units. Franchise revenues rose 8.1 percent to $21.3 million.
Same-store sales decreased 1.6 percent at corporate locations but increased 1.4 percent at franchised units, the company reported. Triarc said sales were hurt by a decline in customer traffic, which it blamed on the soft U.S. economy. Triarc also pointed to price discounting by competitors and temporary store closings at Arby’s corporate location because of severe winter weather in the Midwest. Those challenges were offset by menu price hikes and increased advertising, especially in franchised markets, Triarc said.
Looking ahead, Triarc said it would “significantly increase” national advertising spending to focus on “the unique qualities and benefits of Arby’s food.” New product offerings, which it did not identify, as well as an increased emphasis on value and affordability are expected to drive sales in the future, the company reported.
Triarc’s first quarter consolidated results took a nose dive on an investment loss of $68.1 million from its sale of asset management division Deerfield and Co. LLC. Triarc posted a net loss of $67.5 million, or 73 cents per share, versus a year-ago profit of $7.1 million, or 8 cents per share.
Consolidated revenue totaled $302.9 million in the latest quarter, up from $302.0 million a year ago.
Triarc and Wendy’s are expected to file a joint proxy statement for shareholders in the coming weeks. The deal, valued at $2.34 billion, is expected to close in the current second quarter.
“We are very excited about the Wendy’s merger and the many opportunities it presents," Roland Smith, Triarc's CEO, said in a statement. “We believe there are significant opportunities to drive incremental cash flow by re-energizing the Wendy’s brand, improving its operations and margins at company-owned stores, and right-sizing the combined company’s corporate structure.”