Earnings Preview: Wendy's/Arby's Group Inc.

CHICAGO - Wendy's/Arby's Group Inc. reports results for the third quarter on Thursday morning. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Fast food restaurants benefited early in the recession as diners swapped expensive meals at high-priced eateries for more casual value menus. But that success is fading as customers stop eating out altogether or opt to spend even less when they do.

That could spell trouble for Wendy's/Arby's Group Inc., which traditionally has charged more than many of its competitors.

Burger King Corp. has already said this continuing belt-tightening cut into its revenue and profit, and McDonald's Corp. hinted that sales at some of its restaurants open more than a year, an important industry measure, could dip in October.

Like its rivals, Wendy's/Arby's has been promoting its cheaper menu options. In July and August, Arby's sold its "BBQ Bacon Cheddar Roastburger" along with an order of french fries and a small drink for $5.

During the quarter, Arby's Restaurant Group, a subsidiary of the Atlanta company, said it signed agreements to open 47 new Arby's outlets in North America.

The agreements were signed with 11 new and seven existing franchisees during the first half of this year.

The new restaurants are planned for Kentucky, Texas, South Carolina, Michigan, New York, New Jersey, Hawaii, Colorado, California and across Canada.

Wendy's/Arby's formed last September when Arby's owner Triarc Cos. Inc. bought Wendy's in an all-stock deal valued at $2.34 billion

BY THE NUMBERS: Analysts polled by Thomson Reuters predict a profit of 6 cents per share on revenue of $916.8 million for the quarter. Because of the buyout, it's difficult to compare that forecast with last year's results.

ANALYST TAKE: SunTrust Robinson Humphrey analyst Christopher O'Cull told investors he believes an important restaurant performance measure of sales in locations open at least a year will fall. That's because more diners are eating at home, or spending less if they do dine out.

WHAT'S AHEAD: Analysts will be looking for any executive comment about how menu discounts by competitors are affecting Wendy's/Arby's sales.

STOCK PERFORMANCE: During the quarter, which began June 29, shares climbed 37 percent to end the period at $4.98. The stock has a 52-week range of $2.81 to $5.80.

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