Fast-food chains extending a hand to franchisees slammed by the fast-growing coronavirus pandemic. Wendy's said Thursday it's deferring rent and easing royalty and marketing fee payments for franchisees. Restaurant operators have been hit hard as customers stay home and governments force restaurants to switch to drive-through, take-out and delivery.
Wendy's is extending payment terms for royalties and marketing funds by 45 days for the next three months. It's also deferring base rent payments by 50% during that period.
It's joining other fast-food operators like Dunkin' Brands to provide some relief to its franchisees. McDonald's is also considering reducing some payments including rent.
Wendy's also reported that same-store sales last week plummeted about 20%. And although it saw sales of its newly launched breakfast menu rise about 15% in the first week of March, it now plans to scrap additional marketing spending on that menu this year.
Over at McDonald's, CNBC reports the Golden Arches is pulling its all-day breakfast menu to simplify operations so it can focus on serving the most popular items. The introduction of that all-day menu five years ago was one of the key factors in its turnaround.
Shares of Wendy's and McDonald's rose in early trading Thursday.
Fast-food chain Wendy's Co WEN.O/web/apps/quotewebapi?RIC=WEN.O said on Thursday it would defer rent and ease royalty and marketing fee payments for franchisees, amid growing pressure in the restaurant industry due to coronavirus-related outlet closures. The Ohio-based restaurant chain also reported same-store sales growth of only 2.8% so far in the first quarter and withdrew its forecasts, suspended share buybacks as the company prepares to battle the financial fallout of the pandemic.The U.S. restaurant industry is likely to be among the most severely hurt by the outbreak, as scared customers cook at home instead of dining out and governments force restaurants to shut dining rooms and switch to drive-thru, delivery and take-out only. The company said same-restaurant sales in the week ended March 22 fell about 20%. Analysts had anticipated a 4% growth in same-store sales for the quarter ending March, as the restaurant chain was expected to benefit from the launch of a breakfast menu earlier this month. The breakfast launch saw sales rise about 15% in the first week of March. However, Wendy's said on Thursday it now plans to scrap any additional marketing spend on its breakfast menu this year. The company joins a list of fast-food operators, who are providing some relief to its franchisees. Dunkin' Brands Group Inc DNKN.O/web/apps/quotewebapi?RIC=DNKN.O last week vowed to ease royalty payments, while McDonald's Corp MCD.N/web/apps/quotewebapi?RIC=MCD.N is considering a reduction in some payments, including rent for franchisees. (Full Storyreuters://REALTIME/verb=NewsStory/ric=nL1N2BC2K2)"This is an unprecedented time, and we are focused on the actions where we can make a positive difference," Wendy's Chief Executive Officer Todd Penegor said. (Full Storyreuters://REALTIME/verb=NewsStory/ric=nPn7fvwrXa)Wendy's said it would extend payment terms for royalties and marketing funds by 45 days for the next three months and also defer base rent payments on properties owned by the company and leased to franchisees by 50% over the next three months.As seen across the globe, Wendy's is also seeing a surge in its delivery business and drive-thru services. It said that in the United States, the services saw a "significant increase", especially through last week.