By Tonya Garcia, MarketWatch
Wendy’s Co. says disruptions in the beef supply caused by the coronavirus pandemic have had an impact on its menu, with some items available only on a limited basis.
“It is widely known that beef suppliers across North America are currently facing production challenges,” the quick-service restaurant said in a statement sent to MarketWatch this week.
“We continue to supply hamburgers to all of our restaurants, with deliveries two or three times a week, which is consistent with normal delivery schedules. However, some of our menu items may be temporarily limited at some restaurants in this current environment. We’re working diligently to minimize the impact to our customers and restaurants, and continue to work with our supplier partners to monitor this closely.”
There have been concerns about meat shortages nationwide, with Costco Wholesale Corp. /zigman2/quotes/201191698/composite COST +0.21% announcing on its website that shoppers will be temporarily restricted to three fresh meat item purchases among beef, pork and poultry products.
And Kroger Co. /zigman2/quotes/206215053/composite KR +2.08% is imposing limits on the amount of pork and ground beef shoppers can buy at select stores.
“At Kroger, we feel good about our ability to maintain a broad assortment of meat and seafood for our customers because we purchase protein from a diverse network of suppliers,” a company spokesperson said in a statement sent to MarketWatch. “There is plenty of protein in the supply chain; however, some processors are experiencing challenges.”
Meat plants, including some run by Tyson Foods Inc. /zigman2/quotes/201117502/composite TSN +5.29% , have had to shut temporarily due to COVID-19. President Trump issued an executive order for plants to remain open.
Stifel analysts examined a random sampling of Wendy’s /zigman2/quotes/204070192/composite WEN +1.66% menus and found that 5% to 10% presented a chicken-only menu.
“While we believe this is a transient issue, we expect impacts to the system’s beef supply will be a flash point during the earnings call and further interruptions could lead to share price volatility in the near-term,” analysts led by Chris O’Cull wrote in a report published before first-quarter earnings were announced on Wednesday.
“Unlike other major burger chains, Wendy’s uses ‘fresh, never frozen’ beef, which we believe gives it outsized exposure to recent disruptions.”
Still, analysts were bullish, rating Wendy’s stock buy with a $22 price target.
“We continue to believe the company is well-positioned to grow the breakfast day-part as states begin to ease restrictions, providing a structural same-restaurant sales tailwind and expect the current environment has only accelerated the growth of its digital platform,” the report said.