LOS ANGELES – Wendy's International Inc. (WEN) Thursday said sales at restaurants open at least 15 months fell more than expected in the second quarter as customers were spooked by an incident in which a woman claimed to have found a human finger in a bowl of the chain's chili.
The woman, Anna Ayala (search), has been charged with grand theft for the millions of dollars the company lost as a result of negative publicity after the claim at a San Jose, Calif., Wendy's. She has denied that she planted the finger.
The No. 3 U.S. hamburger chain also warned that beef prices would be higher than expected in the third quarter.
Same-store sales at Wendy's company-owned U.S. hamburger restaurants fell 4.6 percent in the second quarter ended July 3. Three Wall Street analysts had expected same-store sales, a key retail measure, to be flat to up 1 percent at the chain.
Sales at franchised Wendy's restaurants in the United States fell 3.9 percent, the company said.
"We are still recovering from the San Jose incident, especially on the West Coast," Chief Executive Jack Schuessler said in a statement.
The incident cut U.S. same-store sales by 2 percent to 2.5 percent, Wendy's said.
For the third quarter, Wendy's said beef prices (search) are expected to be about 18 percent higher than last year at $1.55 a pound. Wendy's has been hard-hit by a run-up in beef costs in the last year, which the company said was brought on by small cattle herds combined with strong consumer demand for beef.
Wendy's shares were down 7 cents at $46.31 in morning trade Thursday on the New York Stock Exchange (search).
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox