The Wendy‘s Company: Challenges Run Deep for New Leadership as Intensity Grows to Improve US Quick Service Economics

Research evidence excerpt

J P M O R G A N

North America Equity Research

11 August 2026

The Wendy's Company

Challenges Run Deep for New Leadership as Intensity

Grows to Improve US Quick Service Economics

Underweight

WEN, WEN US

Price (10 Aug 26):$7.30

▲Price Target (Dec-27):$7.00

Prior (Dec-26):$6.00

New Wendy’s CEO Bob Wright- in seat since May 21 - and CFO/CSO Steve

Cirulis - in seat since June 23 - hosted their first earnings call. Predictably, focus

is on improving brand customer level performance and underlying unit level

economics. This is the natural goal for any business but one increasingly difficult

for a brand now slipping in overall US global QSR share and without an at-scale

international business on which to depend. Wendy’s has become a fully leveraged

business at 5.0x (6.2x incl capital leases) net debt/ebitda with US AUVs of ~$1.9m

that generally support continued operations but not unit expansion. Despite this,

US unit count is down ~4% or 243 units y/y thus lessening valuable brand pretense.

Turnarounds are absolutely possible in the US restaurant industry - examples are

many - but we instead wait to hear of more concrete plans to underwrite the

likelihood of success.

Restaurants

Rahul Krotthapalli AC

(1-212) 622-2408

John Ivankoe

(1-212) 622-6487

Christabel Rocha

(1-212) 622-9184

J.P. Morgan Securities LLC

Key Changes (FYE Dec)

Dividend is now reduced to 7c/quarter from a high of 25c/quarter in 1Q25

and vs 14c through 2Q26 - expected to track slightly above the typical 5560% payout ratio for F26 - implying a ~45c implied EPS outlook. Our

model has included a string of below expectations results and once again

includes a lowering of 2H26 US. July traffic trends were said to remain at down

12.5% - similar to 2Q26 which reported down 7.2% US comps benefitting from

higher check from an underwhelming Minions & Monsters LTO (from traffic

standpoint). G&A is expected to be $150-155m in 2H26 (4Q with 14w). We

model down ~6% 2H26 US comps for overall F26 comps at down 6.6%.

International comps at down 2.3% include the drag from high AUV 450-store

(30%+ mix) Canada market reporting down ~MSD trends.

We value the company at 6.75% F29 FCF yield discounted back at 8% for

…