The news comes after an important sales measure skidded 11 percent at the restaurant chain known for its roast beef sandwiches and curly fries. Revenue fell almost 7 percent as customers continued to skip its typically more expensive menu.
"We've lost a significant number of transactions and sales," CEO Roland Smith told investors during a conference call Thursday.
After failing to gain traction with its $5 meal deals, Arby's began testing its dollar menu last year. It plans to expand that menu to at all of its 3,700 locations in April. The menu includes a small roast beef or chicken sandwich as well as curly fries.
"We're going to need to compete in this dollar value menu area of our business," said Smith, who took over day-to-day leadership of the chain in January.
It also plans to remodel hundreds of restaurants over the next three years and launch a national advertising effort as it reinvigorates the brand.
But the company faces a tough road. The economy continues to suffer and unemployment rates remain disappointingly high. Meanwhile, the company acknowledged an all-out "value menu price war" among fast-food competitors makes it harder for Arby's to draw customers.
"The Arby's side of the business is a challenge right now," said Morningstar analyst R.J. Hottovy.
For the quarter that ended Jan. 3, the Atlanta company lost $13.6 million, or 3 cents per share. That compares with a loss of $393.2 million, or 84 cents per share, during the previous year.
Excluding those one-time costs, the company earned 7 cents per share. Its quarterly adjusted profit was 5 cents per share in 2008.
Revenue climbed 0.5 percent to $900.9 million.
Analysts surveyed by Thomson Reuters expected the company to earn 3 cents per share with revenue of $914.8 million.
The Wendy's brand continued to fare better than Arby's. There, sales in restaurants open at least a year fell 3 percent. And its revenue held steady.
For the full year, Wendy's/Arby's earned $5.1 million, or a penny per share. That compares with its 2008 loss of $479.7 million, or $1.24 per share, last year.
Its full-year revenue nearly doubled to $3.58 billion.
Wendy's/Arby's formed in late September 2008 when Arby's owner Triarc Cos. Inc. bought Wendy's in an all-stock deal valued at $2.34 billion.
The company's shares fell 22 cents, or 4.5 percent, to $4.72 in Thursday afternoon trading, after falling as low as $4.61 earlier in the session.