Like a day-old burger, Wendy’s shares are no longer piping hot. The US’s third-largest burger chain has shed more than a quarter of its market value this year as sales growth slows and inflation takes a toll on profits. 

But one investor is betting that Wendy’s is ready to sizzle again. Nelson Peltz, the billionaire US activist investor, said this week he was considering a potential bid for the company. It helps that he already owns or controls nearly a fifth of the group’s stock through his investment firm Trian Fund Management and other affiliates.

Any attempt to take the business private would be facilitated by Peltz’s position as non-executive chair of Wendy’s board. Peter May, his right-hand man and president of Trian, is the vice-chair. Peltz’s son, Matthew, is also a board director.

Peltz’s history with Wendy’s runs deep. He first invested in 2005. In 2008, Triarc, Peltz’s investment arm, bought Wendy’s for more than $2bn in an all-stock deal and combined it with Arby’s. Wendy’s sold a majority of its stake in Arby’s in 2011 and exited the remaining holding in 2018.

It is not clear what Peltz hopes to do differently this time around. Wendy’s travails are not unique. Higher labour and commodity costs are driving up expenses across all fast-food chains. Low-income customers are tightening their belts. In the first quarter, Wendy’s reported a 1.1 per cent rise in US same-store sales. That is a dramatic slowdown from the 13.5 per cent increase in the prior-year period. 

Things Wendy’s could improve on, such as increasing digital sales and offering cheaper menu options, can be done without a take-private bid. Even after the recent sell-off, Wendy’s is not cheap. It is trading at around 19 times forward earnings, compared with 24 times at McDonald’s and KFC owner Yum Brands. Peltz may want to wait for shares to fall further before taking a bite.