Wendy’s Co (WEN) Enters Brazil Through Joint Venture

Advertisement

Wendy’s Co (NASDAQ:WEN) is headed to Sao Paulo, Brazil, in a joint venture with Infinity Services and Starboard Value as Rio de Janeiro readies to host the Summer Olympics in August.

WEN stockThe move comes as Wendy’s is suffering a sales slump in the U.S., its largest market, and while Brazil is in a recession. WEN stock is down a grueling 4% on the double whammy of the news and “Brexit” pain.

Still, the fast-food industry in Brazil is worth somewhere in the ballpark of $25 billion as of 2015, with McDonald’s Corporation (MCD) taking the lion’s share of the market.

Wendy’s Chief Operations Officer Bob Wright cites Brazil as one of its “key global markets” with “considerable potential.” The company will unveil two restaurants in Sao Paulo in July, which is in line with Wendy’s strategy of targeting emerging markets for growth, planning to launch several more restaurants in Brazil over time.

Its partner in the venture, Infinity Services, has brought other restaurants to Brazil in the past, while Starboard is a current Wendy’s franchisee, operating 182 Wendy’s restaurants across nine U.S. states.

As stated in the press release:

“We choose São Paulo for the Wendy’s introduction because it is the main financial and gastronomic capital of the country. Our initial objective is to create flagship restaurant locations, establish the Wendy’s brand and then, longer-term, start thinking about potential partnerships with local groups in other areas of Brazil.”

Wendy’s shareholders could really use a long-term catalyst, as revenues have continued to decline on an annual basis for years.

More immediately, WEN stock crashed below its 50- and 200-day moving averages over the past couple of months, sending the stock price down by about 16% since May 10.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/06/wen-stock-brazil-wendys/.

©2024 InvestorPlace Media, LLC