U.S. burger chain Wendy's reported better-than-expected quarterly profit and sales, helped by higher franchise revenue.
The company, like a few other fast-food restaurant operators, is focused on refranchising its restaurants in order to insulate from wavering commodity and labor costs.
Wendy's said franchisee royalty and franchisee rental revenue, which accounts for about 48 percent of the company's net sales, rose 29 percent to $159.5 million in the second quarter.
The Dublin, Ohio-based also said it expects net franchise rental income of about $100 million to $105 million in the year.
Same-restaurant revenue from North America, the company's biggest market, rose 3.2 percent in the quarter. Analysts on average had expected a 3.10 percent rise, according to research firm Consensus Metrix.
The company's revenue fell 16.3 percent to $320.34 million, but beat the average analyst expectation of $301.7 million, according to Thomson Reuters I/B/E/S.
The company swung to a net loss of $1.85 million or 1 cent per share, in the quarter ended July 2, compared with a profit of $26.48 million, or 10 cents per share, a year earlier.
The latest quarter included a $41.1 million loss related to acquiring and selling some restaurants.
Excluding certain items, the company earned 15 cents per share, beating the average analyst estimate of 13 cents.
The company's shares were up 1.8 percent at $15.50 before the bell on Wednesday.