Wendy’s is struggling as economic uncertainty weighs on consumers

Wendy’s has revised its sales outlook downwards due to increased competition and economic uncertainty impacting its customer base. The company’s interim CEO, Ken Cook, stated during a call with analysts that they now anticipate a 3% to 5% decline in full-year global sales, compared to previous projections of flat to a 2% decrease.

One of the main challenges Wendy’s is facing in 2025 is softer consumer demand, particularly among lower-income customers who typically frequent fast-food chains. According to Sara Senatore, a research analyst at Bank of America, the low-income consumer segment is under pressure, leading to a decrease in dining out activities. A study by Bankrate revealed that 44% of households earning less than $50,000 per year plan to spend less on dining out this year compared to last year.

Cook highlighted the dynamic consumer behavior and a more competitive environment as factors contributing to Wendy’s struggles. Although sales saw improvement in May and June with the introduction of new Frosty offerings, overall demand recovery was slower than expected. The company reported a 1.8% decline in sales to $3.7 billion in the second quarter compared to the previous year.

Consumer uncertainty and inflation concerns are affecting breakfast sales at Wendy’s, with more consumers choosing to eat at home. This trend is reflected in the weaker performance of breakfast compared to other meal times. In response to these challenges, Wendy’s is evaluating its pricing strategy using new data analytics capabilities.

In contrast, McDonald’s has seen a sales rebound among low-income consumers after expanding its value menu. CEO Chris Kempczinski attributed this success to the inclusion of value items like the $2.99 Snack Wrap, which are attracting customers back to its stores. Senatore noted that Wendy’s offers good value for price-conscious consumers but may need to improve its marketing efforts to compete effectively with McDonald’s.

Wendy’s Biggie Bag, which includes a junior bacon cheeseburger, small fries, four-piece chicken nuggets, and a soft drink for $5, is one of the value offerings the chain provides. Cook acknowledged the need to enhance their value marketing strategy to appeal to more customers.

Overall, Wendy’s is facing challenges in a competitive market where consumer behavior is evolving rapidly. By reassessing its pricing and value offerings, the company aims to regain momentum and attract a broader customer base in the coming months.

This article was contributed by The Associated Press and rewritten by Mary Cunningham, a reporter for CBS MoneyWatch, with experience at “60 Minutes” and CBS News.