November 4, 2015 / 4:12 PM / 2 years ago

UPDATE 2-Burger chain Wendy's bigger menu adds spice to earnings

* Same-restaurant sales in North America rise 3.1 pct

* Company to sell more restaurants to franchisees

* Earnings per share forecast at high end of 31-33 cents

* Shares rise more than 5 pct (Adds details, background, share price)

By Nayan Das

Nov 4 (Reuters) - Burger chain Wendy’s Co reported better-than-expected quarterly same-restaurant sales, pulling in customers in North America with an expanded menu and refurbished restaurants.

Shares of Wendy’s rose more than 5 percent on Wednesday to their highest in nearly three months.

The third-largest U.S. burger chain has added more pork and chicken to its menu in recent months, bringing back the “Spicy Chicken Sandwich” and launching a new line of “Baconator” fries to accompany the burger of the same name.

To cut costs, the company is also shedding most of its restaurants in aggressive pursuit of the franchising model favored by fast-food rivals such as McDonald’s Corp and Restaurant Brands International Inc’s Burger King.

“Interest in the domestic restaurants that we intend to sell is high from existing and prospective franchisees,” said Todd Penegor, Wendy’s chief financial officer, who is set to inherit the top job from outgoing CEO Emil Brolick next year.

Though revenue is taking a hit from the sharp drop in number of restaurants owned, the transition to a more franchised model appears to be working.

Wendy’s said its full-year profit would be toward “the high end” of its previously issued range of 31-33 cents per share.

Total same-restaurant sales in North America, the company’s biggest market, rose 3.1 percent in the quarter ended Sept. 27, more than the 2.2 percent increase forecast by analysts, according to Consensus Metrix.

Dublin, Ohio-based Wendy’s has also rolled out new technology at some of its refurbished outlets, including self-ordering kiosks and mobile ordering applications.

The company owned 852 of the 6,487 Wendy’s outlets in North America at the end of the third quarter, or 13 percent. It said it was on track to sell about 540 restaurants by the end of next year, enough to reach its ownership target of just 5 percent.

McDonald’s owned 18 percent of its restaurants worldwide as of Sept. 30, while Burger King and its stablemate Tim Hortons are almost completely franchised.

Wendy’s third-quarter net income fell 67 percent to $7.6 million, or 3 cents per share. Excluding items, the company earned 9 cents per share, beating the average analyst estimate by a cent.

Shares of Wendy’s were up 4 percent at $9.81 on the Nasdaq in morning trading. They earlier touched $9.99, their highest since mid-August. (Reporting by Nayan Das in Bengaluru; Editing by Don Sebastian and Robin Paxton)

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