(Wendy's/Arby's sale to private-equity group Roark Capital Group report updated with further analysis and background.)
NEW YORK ( TheStreet) -- Wendy's/Arby's ( WEN) sale of its struggling Arby's chain to private-equity group Roark Capital Group shows that the fast-food restaurant operator is looking to deleverage its balance sheet and finally divest a brand that's been dragging on its financials for years.
The merger of Wendy's and Arby's occurred in 2008 under Peltz's leadership, and the company has tried to reinvigorate the brand -- most recently with a new advertising campaign labeling Arby's menu as "good mood food" -- but a meaningful turnaround has yet to materialize. Some efforts have paid off; in its recent quarterly report, Wendy's/Arby's said that same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- jumped 5.5% at Arby's, while ticking up just a 0.3% at its namesake Wendy's restaurants. Even so, Rostan suggested that investors should think separately about Wendy's, a well-respected burger chain, and Arby's, an underperformer. He expected that Arby's would be targeted by private-equity firms, noting that it previously had private-equity ownership.