(Reuters) - U.S burger chain Wendy's Co (WEN.O) warned that full-year sales growth at established restaurants could fall short of its expectations, as more Americans prefer to eat at home encouraged by a drop in grocery prices.
Shares of the company, which also reported a lower-than-expected quarterly profit, were down 3.1 percent at $13.89 on Thursday. They fell as much as 6.7 percent earlier.
"We are guiding (North American comparable sales) to a range of 2-3 percent for the next year, slightly lower than previous guidance of 3 percent," Chief Financial Officer Gunther Plosch said at Wendy's investor day.
Chief Executive Todd Penegor said in August he was confident that Wendy's would grow at its long-term guidance of about 3 percent.
Wendy's also said restaurant margins would be flat this year, as the company expected wages to rise 4 percent and due to its investments in sourcing smaller, juicier chicken.
Grocers, convenience stores and supermarket chains are passing lower prices of produce, poultry and beef to consumers, taking diners away from Wendy's and other U.S. restaurant operators.
Profits at restaurant chains have also been dented by higher minimum wages and rising healthcare costs.
Restaurant chains have tried to offset the impact by raising menu prices, but this has further pushed away diners.
Wendy's reported a 66 percent drop in net income to $28.9 million, or 11 cents per share, for the fourth-quarter ended Jan.1, partly hurt by a fall in investment income.
Excluding items, the company earned 8 cents per share, missing analysts' average estimate by 1 cent, according to Thomson Reuters I/B/E/S.
Same-restaurant sales rose 0.8 percent in the quarter, above the 0.6 percent increase expected by analysts polled by research firm Consensus Metrix.
The rise was likely helped by demand for the company's '4 for $4' value meal.
Revenue fell 33 percent to $309.9 million, mainly due to fewer company-owned restaurants in the quarter. But that still edged past analysts' average estimate of $308.5 million.
The company also set a new $150 million share repurchase program and raised its quarterly dividend to 7 cents per share from 6.5 cents.
Reporting by Abhijith Ganapavaram in Bengaluru; Editing by Anil D'Silva, Savio D'Souza and Sriraj Kalluvila