Wendy's (WEN) had a busy Thursday. The fast-food chain told an investor group led by Trian Partners that its unsolicited $1.4 billion takeover proposal wasn't good enough, then went out and beat Wall Street's third-quarter estimates anyway. Shares traded higher on the news, up about 1%.

The board's message was simple: the offer undervalued the company and its turnaround potential. CEO Bob Wright doubled down on that sentiment during the earnings call.

"I'm confident our best days are ahead of us," Wright said, pointing to early progress under the company's Dave's Way strategy.

Beating Estimates While Sales Slide

Revenue fell 0.5% year over year to $546.99 million, which still topped the $530.52 million analysts expected. Adjusted earnings came in at 13 cents per share, beating the 9-cent estimate but down sharply from 24 cents a year earlier.

The top-line beat doesn't tell the whole story. Global systemwide sales fell 5.9% to $3.3 billion. U.S. sales dropped 7.6%, while international sales grew 3.5%. U.S. same-restaurant sales declined 5.7%, and international same-restaurant sales fell 2.2%. Wendy's ended the quarter with 7,194 restaurants worldwide.

Margins Get Squeezed

U.S. company-operated restaurant margin narrowed 140 basis points to 11.7%, pressured by higher food and labor costs and weaker customer traffic. Operating profit fell 39% to $55.8 million. Net income dropped 65.9% to $15.1 million, and adjusted EBITDA declined 17.8% to $113.4 million.

The balance sheet shows $300.8 million in cash and cash equivalents, with long-term debt of $2.73 billion, excluding $29.8 million in current debt. Wendy's also declared a quarterly dividend of 7 cents per share, payable Dec. 15 to shareholders of record Dec. 1.

Dave's Way: The Turnaround Plan

Wendy's launched Dave's Way, a multiyear strategy focused on rebuilding customer traffic, improving profitability and expanding digital sales. One notable lever: making breakfast optional at U.S. restaurants. Wright said that move alone could generate up to $200 million in restaurant-level EBITDA across the system.

The company also signed a letter of intent to acquire up to 163 restaurants from Meritage Hospitality Group and its lenders, subject to approvals and final agreements. And Wendy's plans to roll out a fully refreshed menu experience in 2027, with improved ingredients and new offerings.

So the pitch to shareholders is essentially this: the buyout bid was too low, the quarter was better than feared, and the turnaround is just getting started. Whether the market buys that story for the long haul is the open question. For now, at least, Wendy's is betting on itself.