Why Wendy's Might Soon Have New Owners

Fast food burger giant Wendy's may have been the focus of some recent controversy, but that doesn't appear to be slowing it down. CNN reports on Tuesday, May 24, Wendy's chairman Nelson Peltz expressed interest in selling the company to or merging it with Trian Partners, his management fund.

Currently the largest shareholder of the company, the group owns 19% of the entire Wendy's franchise, per NBC. Now, it says, Trian Partners is considering purchasing the rest. The news outlet reports the group filed an amended 13D/A with the Securities and Exchange Commission, explaining the document is typically filed shortly after purchasing 5% or more of company stock. Following this announcement, The Wendy's Company stock ("WEN" on the Nasdaq) saw an 11% rise on Wednesday.

In an official press release, Wendy's responded to news of the recent filing, saying it plans on prioritizing opportunities for maximizing stockholder value. The company says its board will "carefully review" any proposals submitted by Trian.

The sale might be motivated by increased company profits. Todd Penegor, Wendy's president and CEO, reported early this month that the company opened 90 new restaurants during the first quarter of 2022 and is on track to reach its goal of 5 to 6% net growth by the end of this year. The 7,000-location strong chain's first-quarter report also shared global sales increased by $1 million from 2021.

For Wendy's, higher labor costs, inflation, and increasing commodity expenses since the start of the COVID-19 pandemic have driven up overall operating costs and decreased profit margins, according to CNN. But it seems these rising expenses are offset by an increase in consumer demand. In 2020 — peak-pandemic — Wendy's rose to become the second-largest fast food chain in the U.S. after McDonald's, per Forbes, ousting Burger King from its spot. A recent analysis of the global fast food industry by Vantage Market Research projects that, following current trends, the fast food market worldwide will see steady growth of 4.2% every year before reaching over $675 billion in the year 2028.

According to TODAY, fast food franchises like Wendy's that offer breakfast might have a leg up on the competition in the coming months, as folks are returning to the office for work. R.J. Hottovy, head of research at retail analytics company Placer.ai, told the news outlet, "It's as competitive as it's ever been in breakfast." Wendy's reintroduced its breakfast menu in 2020, and competitors like Taco Bell and McDonald's have been rolling out a series of promotional breakfast deals to keep up with the crowd. The Wendy's sale might be happening at an opportune moment for shareholders to cash in on an already-popular, rapidly growing consumer market trend.