Wendy's/Arby's Group Inc reported a stronger-than-expected quarterly results but said it will spend more to jump-start growth at its restaurants in 2010, and its shares fell nearly 4 percent in premarket trading.

The No. 3 U.S. fast-food chain, formed after Arby's owner Triarc bought Wendy's International Inc for just over $2 billion in September 2008, also said same-store sales improved in January versus the fourth quarter as both Wendy's and Arby's focused on value-priced menus.

Investors remain cautious about the company, which is working to turn around its brands at a time when discounting is rampant and unemployment is rising.

Same-store sales should rise at Wendy's this year, but fall at Arby's as it works on improvements, the company said. Plans for 2010 include expanding Wendy's breakfast program to more markets and significantly remodeling Arby's locations.

Spending behind such initiatives, along with weak economic conditions, will lead to modest adjusted growth in earnings before interest, taxes, depreciation and amortization in 2010, President and Chief Executive Roland Smith said in a statement.

If the economy improves, the company expects to return to adjusted EBITDA growth in the mid teen percentage range in 2011.

Capital expenditures are expected to rise nearly 62 percent to $165 million this year, including investments in 12 new Wendy's restaurants and the remodeling of 100 company-owned restaurants at each brand.

SYSTEMWIDE SALES FELL IN FOURTH QUARTER

The company's fourth-quarter net loss narrowed to $13.6 million, or 3 cents per share, from $393.2 million, or 84 cents per share, a year earlier.

Excluding charges, Wendy's/Arby's earned 7 cents a share, ahead of the analysts' average forecast of 3 cents, according to Thomson Reuters I/B/E/S.

Consolidated fourth-quarter revenue from the 10,000-plus restaurant chain rose 0.5 percent to $900.9 million, below the $914.8 million analysts had expected.

Systemwide sales at established Wendy's restaurants in North America fell 3 percent, weakened by the removal of breakfast from about 300 restaurants. Arby's North America system-wide same-store sales plunged 11 percent.

Things started to pick up in January, as Wendy's promoted items such as 99-cent spicy chicken nuggets and Arby's expanded its $1 value menu to more than 2,500 restaurants.

January same-store sales at North American company-operated locations rose 0.3 percent at Wendy's and fell 7.4 percent at Arby's, the company said.

Wendy's/Arby's shares were down 4 percent to $4.75 in trading before the market opened.

The company said it has already repurchased about $120.2 million worth of its shares under a $200 million authorization.

(Reporting by Jessica Wohl in Chicago and Lisa Baertlein in Los Angeles; Editing by Lisa Von Ahn and Derek Caney)

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