CEO: Wendy's has 'quality bidders' for Arby's

Wendy's/Arby's Inc is getting closer to selling its Arby's chain and has "several quality bidders", CEO Roland Smith said Tuesday.

Smith, in a first-quarter earnings call with analysts, said the bidders had completed "significant due diligence" and had come from a larger pool that had expressed interest. He didn't give details or a time line but said it is "in the best interest of the company to bring this process to closure as soon as possible."

Wendy's/Arby's Group Inc also plans to raise prices, following in the footsteps of competitors like McDonald's Corp. The company also cut its earnings outlook because of rising costs for beef and other ingredients.

The announcements came as the company reported a first-quarter loss and said revenue at Wendy's locations had stagnated.

In a statement, Smith called the run-up in beef prices "unprece-dented". He said the restaurant plans "prudent" price increases, meaning it doesn't want to raise prices so much that customers opt to eat at home instead.

Wendy's/Arby's also blamed the rising beef costs for its decision to lower its predictions for adjusted earnings for the year, to between US$330 million and US$340 million.

In March it had said it expected to make between US$345 million and US$355 million.

Wendy's/Arby's net loss of US$1.4 million, or break-even per share, was narrower than the loss of US$3.4 million, or one cent per share, in the same quarter last year.

Revenue rose about one per cent to US$848 million, beating analysts' expectations of US$820 million.

The improvement was driven by Arby's, which saw revenue increase five per cent, while Wendy's revenue declined less than one per cent.

Wendy's/Arby's had been trying to sell the Arby's brand at least since January.

Smith said the Arby's turnaround "is progressing nicely" and the company continues "to make progress with regards to our strategic alternatives process."

His statements on Wendy's were more enthusiastic. The company plans to introduce new products there this year, including a Berry Almond Chicken Salad, and continue expanding the number of locations that serve breakfast.

Unlike some rivals, Wendy's/Arby's still does most of its business domestically. Of its 10,200 locations, about 350 are franchise restaurants outside of North America. But the company is intent on expanding overseas, with plans in place for Singapore, Turkey, Argentina and elsewhere.

-AP