Question

Read the article and take a look at the filing (and letter linked within) to familiarize yourself with the news. In one paragraph, explain why this news is important to shareholders. After you have posted, you may feel free to read and respond to what others are saying (although not required). Please remember to keep the content of your posts respectful and constructive.

Questions you may want to consider:

• Where was the information originally sourced from? For example, was the information taken from an SEC filing, a press release, or some other source?
• Who might find the information in the article useful?
• Is there anything else going on in the business world right now that is related to this story?
• What are the business or economic implications?

ARTICLE BELOW:

"Wendy's Co. said it will bring back breakfast across its U.S. restaurants next year as fast-food chains compete to lure diners during more of the day.

The burger chain said Monday that it will spend $20 million to add more menu items and longer hours at its 5,813 domestic restaurants. Wendy's said it and its franchisees will hire some 20,000 workers to help roll out the expanded offerings.

Shares fell about 4% after hours to $21.01 when Wendy's said the investments had prompted it to adjust guidance for its current fiscal year. The company said it expects earnings per share adjusted for one-time items to decline between 3.5% and 6.5%, down from its previous forecast for growth of 3.5% to 7.0%.

Earlier

* McDonald's Tests Robot Fryers and Voice-Activated Drive-Throughs (June 20)

* McDonald's Makes Over All-Day Breakfast to Speed Up Wait Times (May 14)

Breakfast has become an increasingly competitive part of the day for major fast-food companies. McDonald's Corp. has pointed to competition in breakfast as a key area of concern. Guest growth in breakfast is starting to recover for McDonald's after a slide, the company has said, but progress remains slow.

"There's been a lot of new entrants into that space," McDonald's Chief Financial Officer Kevin Ozan said during a July call to discuss the company's most recent earnings report.

Wendy's currently sells breakfast items at about 300 restaurants after earlier efforts to expand nationwide were scrapped. The company abandoned a 2012 push into breakfast at more of its restaurants after a year. Too eclectic a mix of healthy and indulgent options as well as competition from McDonald's and Starbucks Corp. were seen as problems at the time, analysts said.

A Wendy's spokesperson said the company is confident in this launch. The new Wendy's morning menu features a bacon breakfast sandwich, a chicken biscuit and one of the chain's Frosty shakes made with coffee. Working those popular Wendy's items into breakfast foods will help the chain's menu stand out, Chief Executive Todd Penegor said on Monday."

Answer 1

In a press release issued by Wendy's, the company stated it will be serving breakfast across all its locations in the US. It also said that it will offer a wide choice for its customers. Currently Wendy's serves breakfast only at about 300 stores. The national rollout will entail a capital outlay of $ 20 million. This news will have the following implications for the shareholders, the customers , the employees and the business as a whole.

For the shareholders in the short term this may have a negative impact because of the higher fixed costs the company may have to incur initially until the breakfast is expanded to more stores only after which the benefits of economies of scale and operating leverage will kick in. In the longer term this move serves well for the shareholders as there will be a growth in revenue and the bottom line which will result in higher prices for Wendy's share due to increase in earnings per share. Markets will always reward shares of company's which are able to grow their earnings. This move is also beneficial to the customers who have now a greater choice and don't have to go through the hassle of preparing a breakfast. Breakfast is an important meal for consumers and more people make breakfasts at home than any other meal. Wendy's wants to tap in to this segment to drive growth going forward. This move also creates more employment opportunities which is beneficial to the economy and will lead to increased consumption. It will also have a positive cascading impact on other businesses.