WENDY'S PRESIDENT-COO RESIGNS SUDDENLY

Tom Mueller's Departure Follows Weak Sales

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CHICAGO (AdAge.com) -- Wendy's International stunned analysts today with the announcement that Tom Mueller resigned as president and chief operating officer of the struggling burger chain, effective immediately.
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Mr. Mueller, a former Burger King executive, joined Wendy’s in 1998 as senior vice president for special projects before leading the North American business. Earlier this year, he added stewardship of its international division.

Chairman-CEO Jack Schuessler
"We thank Tom for his dedicated service to Wendy's and wish him all the best in the future," Chairman-CEO Jack Schuessler said in a statement. Mr. Schuessler will oversee the president’s function until the chain finds a replacement. Mr. Schuessler held the post from 1997 to 2000.

The announcement comes ahead of the 9,700-unit chain’s late October franchisee convention. While the company didn’t provide a reason for the announcement, analysts pointed to the marketer's still-weak sales.

“We believe Tom's departure is an indication of deteriorating two-year sales trends, and decreasing support within the franchisee community,” David Palmer, a restaurant analyst for UBS Investment Research, wrote in a note this afternoon. “Sales trends have worsened in recent months when easier sales comparisons are considered, and we believe September has been ugly to date. We estimate that Wendy's U.S. same-store sales may have declined as much as minus 9% in the first half of September.”

Turnaround efforts
On July 29, the marketer announced a series of efforts to improve Wendy's operating and financial performance after months of pressure from an activist hedge fund to make changes to improve shareholder value. The company said it would spin off a portion of its Tim Horton’s donut chain, sell selected real estate to franchisees, close underperforming Wendy's restaurants, rebalance Wendy's U.S. and Canadian store mix, and slow new-store development.

“We find this announcement surprising, and do not believe this bodes well for the company’s near-term prospects,” Andrew Barish, a restaurant analyst for Banc of America Securities, said in a note to investors.

Analysts expect the chain to continue to struggle for the near-term and are bracing for another sales dip when the company announces its third-quarter results Oct. 5.

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