Here’s How Wendy’s New CEO Plans to Beef Up Revenue

The Wendy’s Co. (NYSE:WEN) returned to profit in the first quarter as it recorded a large gain on the sale of an investment, but the fast food company has cut its 2012 forecast, citing higher ingredient costs that are hurting profits across the industry.

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For the quarter ended April 1, Wendy’s reported net income of $12.4 million, or 3 cents per share, compared to a net loss of $1.4 million, or breakeven results, in the year-ago period. Excluding one-time items, earnings were 1 cent per share.

Wendy’s has been trying to reinvent itself as a higher-end burger chain since CEO Emil Brolick was hired last September. The company has been investing heavily in updating its restaurants and introducing new menu items.

Wendy’s said Tuesday it expected adjusted earnings from continuing operations in the range of $320 million to $335 million, down from the previous forecast of $335 million to $345 million, saying it is in a “transition year.”

In the first quarter, Wendy’s revenue rose 2 percent to $593.2 million, up slightly from $592.5 million in the year-ago period, but falling short of Wall Street’s consensus estimates of $608.1 million.

Revenue at company-run restaurants in North American open at least 15 months, and renovated restaurants reopened at least three months, rose 0.8 percent in the quarter. That figure increased 0.7 percent for franchise restaurants.

However, margins at company-run restaurants fell on higher costs for ingredients, particularly for fresh beef. Wendy’s promotion of the “W” cheeseburger also cut into margins.

Wendy’s shares are trading down 5.54 percent this morning.

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