Wendy's and Its ‘Nuggs’ Are Overcoming a Fast-Food Slump

  • Sales and earnings topped analysts’ estimates last quarter
  • Record-setting Twitter stunt brought wave of publicity

It looks like Wendy’s Co. can afford to give away a few chicken nuggets.

The fast-food chain, which granted an intrepid customer’s plea for free food this week, is coming off a quarter of surprisingly strong sales and earnings -- a sign Wendy’s is weathering a broader restaurant slump.

The results sent the shares up as much as 6.8 percent on Wednesday, the biggest rally since November 2015. Wendy’s also boosted its earnings forecast for the year, stoking investor optimism.

The outlook suggests that Wendy’s is holding its own in an industry rife with discounting and promotions. The company has attracted customers with its 4-for-$4 meal deal and other marketing efforts. In one unexpected bit of publicity, a Twitter user launched a crusade for free Wendy’s “nuggs” and managed to get his message retweeted more than 3.5 million times -- a record for the social-media platform. Wendy’s agreed to supply him with the nuggets on Tuesday.

Earnings from continuing operations amounted to 9 cents last quarter, beating the 8-cent average estimate. Revenue came in at $285.8 million, compared with a projection of $282.4 million.

Same-store sales -- a closely watched benchmark -- gained 1.6 percent in North America. The company also bumped its forecast for adjusted earnings before interest, tax, depreciation and amortization to $400 million to $406 million, up from no more than $404 million previously.

The stock climbed as high as $16.12 on Wednesday. Even before the jump, Wendy’s was up 12 percent this year.

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