Meanwhile, Wendy's Tim Horton's chain, which has a March IPO planned, fared well. The chain's nearly 300 US units posted a 6.7% rise, and its 2,800 Canadian units rose 5.8%. "We'll be smaller, we'll be more focused and we're already evolving our comprehensive plan," said Jack Schuessler, Wendy's chairman and chief executive officer, about the Tim Horton's spin-off during a conference call about the sales results.

The company closed 40 company-owned Wendy's and four Baja Fresh units during the quarter, which ended Jan. 1. It has also sold 175 real estate units, generating $169 million in cash, including a $119-million deal that closed earlier in the week. Wendy's executives plan to sell 25 more units in the current quarter.

Part of the company's comprehensive plan involves slowing down the development of new restaurants in the coming years. Wendy's also plans to sell 250 to 400 restaurants to franchisees during the next one to three years.

Late last month the company started a national advertising push plugging its 99-cent super value menu items. In 2006 Wendy's executives are also rolling out new sandwiches and salads, as well as testing breakfast in restaurants later in the year.