Fast Food Restaurants

Wendy's International, Inc.

If number two tries harder, how hard does number three have to try? Wendy's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WEN)") else Response.Write("(NYSE: WEN)") end if %> trails McDonald's and Burger King for mind-share in the burger category of fast food, although its strategy of offering a more varied menu and higher quality burgers does set it apart. One little-known (to U.S. consumers) gem is the company's Tim Hortons franchise, Canada's second-largest fast food outlet and purveyors of some of that country's best donuts and coffee. Same-store sales growth of over 5% for over 1,300 franchisees at those units speaks to the popularity of the brand. In addition, Horton's is trying out new concepts like teaming up with Mobil gas stations.

What hurts Wendy's franchise, though, is an inconsistency in store conditions and service. There is something to be said for having room to improve, though, which is where some of the valuation parity with McDonald's may be coming from.

Latest Financials

Second quarter net income rose 16% to a record $57 million, or $0.42 a share. A year earlier, earnings totaled $49.3 million, or $0.38 cents a share. Revenue was up 9.8% to $540.2 million from $491.9 million, and systemwide sales in the latest quarter rose 15% to $1.56 billion from $1.36 billion.

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