Wendy's Says Robust Economy Isn't Helping Low-Income Diners
Wendy's Says Robust Economy Isn't Helping Low-Income Diners
(Bloomberg) -- Low-income Americans aren’t frequenting fast-food chains as much, and that’s hurting Wendy’s Co.
“As you look at the income growth, it’s skewed significantly to higher-income households,” Wendy’s Chief Executive Officer Todd Penegor said on an earnings call Wednesday. “On the low-end you look at folks with rent and health-care costs rising that are eating into some of the headway that they’re making.”
Wendy’s shares tumbled on Wednesday after the chain reported late Tuesday a drop in North American same-store sales last quarter, missing estimates. Despite steep discounts at its restaurants -- and across the industry -- customer traffic and sales have weakened as low-income customers eat out less and spend less when doing so.
Penegor said about 40 percent of fast-food industry customers have household incomes of $45,000 or less a year, and that segment of the U.S. population isn’t benefiting from the “great tailwinds” in the economy. “Real wage growth is still not accelerating to the extent we had all hoped for.”
Even so, changes are afoot in some states. Arkansas and Missouri voters approved increases to their minimum wages on Tuesday that could help spur growth.
To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net
To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson, Jonathan Roeder
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