Restaurants

Combo meal success boosts Wendy's sales forecast

An ad for Wendy's 4 for $4 menu.
Source: Wendy's

Consumers aren't the only ones eating up the "4 for $4" combo meal at Wendy's. Nomura analysts just raised their same-store sales forecasts by 1 percent, thanks to that success.

"Based on our channel checks, we believe that Wendy's '4 for $4' bundled meal continues to prove popular, particularly in those geographic parts of the U.S. typically characterized as being 'higher cost-of-living' areas," Mark Kalinowski wrote in a recent research note.

In January, YouGov BrandIndex found that special combo deals did not significantly impact immediate sales for the major burger chains; Burger King, McDonald's and Wendy's only saw a little bump in consumer interest about a month after the deals rolled out.

Apparently, the appeal of a Jr. Bacon Cheeseburger, a small french fry, four chicken nuggets and a small soda for $4 is attracting more Wendy's customers.

Nomura says the fast-food chain has faced challenges in the last few years with budget-minded consumers. However, this bundle of menu items "appears to be doing well to solve this issue, with Wendy's arguably having more to gain from solving it than the average quick-service burger brand," Kalinowski said.

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Wendy's did not immediately respond to CNBC's request for comment.

Additionally, Nomura reports that the restaurant chain's early March sales have been favorable, another factor in its decision to boost same-store-sales projections to a 4.2 percent gain, up from an expected first-quarter bump of 3.2 percent.

Nomura has also increased its first-quarter same-store-sales projections for company-owned restaurants to a 3.5 percent gain, above the consensus number or 3.1 percent, and retains its "buy" rating of Wendy's stock.

While Wendy's has seen a strong boost from its combo meals, rival McDonald's "McPick 2 for $5" and "McPick 2 for $2" earned mixed reviews. Nomura retains its "buy" rating for the burger chain and has not altered its same-store-sales forecast of a 3.8 percent gain in the first quarter.

"While 'McPick 2 for $2' and 'McPick 2 for $5' were limited-time offers, they are both grounded in what our customers are looking for — choice and flexibility — and have long-term potential," McDonald's USA said, in a statement. "We'll continue to listen to our customers, and if this is something they like, it may be offered again in the future."

The current consensus number for the Golden Arches is a 4.2 percent bump in first quarter same-store sales, according to FactSet.

"At this point in time, it looks like McDonald's would need a robust March to get to these levels," Kalinowski wrote.

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