Wendy’s Buy Back Implemented to Boost Stock And Overall Value

Wendy’s plans to buy back $1.4 billion in shares by the end of 2016 in an effort to reach their long term goals.

Wendy’s has been making some changes to increase their profitability and value, and also decrease expenditures. One of those efforts is a plan to buy back a large number of share of stock.

Wendy’s began an $850 million buy back earlier this month, which is just the beginning of their buy back program, which they hope to complete by the end of 2016, according to a report in The Wall Street Journal.

We are confident our strong balance sheet, financial flexibility and cash flow will enable us to comfortably fund our growth initiatives while returning significant capital to shareholders,” Wendy’s CFO Todd Penegor said in an interview with Investors Business Daily.

In addition to the buy back, Wendy’s is also in the midst of selling most of its corporately owned restaurants to franchisees. The sale of the corporate restaurant locations has long been a desire of Wendy’s and is being made in an effort to minimize corporate expenditures and create a new corporate model.

Wendy’s has also unloaded their bakery business. Wendy’s has owned The New Bakery Co. since 1979, and recently sold it to the East Balt Bakery based out of Chicago, Illinois. Instead of baking and distributing their own breads and buns to franchise locations, Wendy’s has made the move to do away with The New Bakery Co., to minimize corporate overhead, and to allow flexibility in procuring specialty breads and buns closer to franchise locations.

Wendy’s sale of its bakery is an extension of their quest to revamp their business model. Wendy’s plans to sell approximately 380 of its restaurants by the end of 2015, and will continue with its franchise sales with an addition 260 locations to be sold in 2016, according to a report in the Zanesville Times Recorder.

Wendy’s is looking to move away from the fast-food feel that they have embodied for decades. Wendy’s is following the money trail, and with fast-food profits trending downward in recent years, and other markets showing profitability, Wendy’s is making changes in the hope of getting a piece of the action. The new focus for Wendy’s is to cater to consumers who frequent casual dining restaurants, like Chipotle.

In addition to a corporate remodel, Wendy’s is also testing new products in an effort to keep their menu fresh, catering to consumer’s changing desires. A new black bean burger is being tested in Wendy’s Columbus, Ohio market, and they can’t make enough of them to keep up with consumer demand.

“It’s too early to say where this may go, but we’ve been encouraged by the early consumer response,” Bob Bertini, Wendy’s spokesman in an interview with the Columbus Dispatch.

[Image courtesy of photo by Scott Olson/Getty Images]