Wendy's Co 10-Q for FY2025 Q1
Wendy's Co (WEN)
10-Q
2025-05-02
For: 2025-03-30
View Original
Added on
April 11, 2026
About this 10-Q
Wendy's Co filed this 10-Q on May 2, 2025, covering the quarter ended March 30, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $523.47M
- down 2.1% from $534.75M a year earlier
- Net income
- $39.23M
- down 6.6% from net income of $41.99M a year earlier
- Diluted EPS
- $0.19
- down 5.0% from $0.20 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended March 30, 2025
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ______________ to _______________
Commission file number: 1-2207
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(614 ) 764-3100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
There were 192,025,248 shares of The Wendy’s Company common stock outstanding as of April 25, 2025.
THE WENDY’S COMPANY AND SUBSIDIARIES
INDEX TO FORM 10-Q
| Page | |||||
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Par Value)
| March 30, 2025 | December 29, 2024 | ||||||||||
| ASSETS | (Unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts and notes receivable, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Advertising funds restricted assets | |||||||||||
| Total current assets | |||||||||||
| Properties | |||||||||||
| Finance lease assets | |||||||||||
| Operating lease assets | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets | |||||||||||
| Investments | |||||||||||
| Net investment in sales-type and direct financing leases | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Current portion of finance lease liabilities | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Advertising funds restricted liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term finance lease liabilities | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Deferred franchise fees | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Common stock held in treasury, at cost; | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
4
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts)
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Sales | $ | $ | |||||||||||||||||||||
| Franchise royalty revenue and fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Franchise support and other costs | |||||||||||||||||||||||
| Franchise rental expense | |||||||||||||||||||||||
| Advertising funds expense | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | |||||||||||||||||||||||
| Amortization of cloud computing arrangements | |||||||||||||||||||||||
| System optimization losses, net | |||||||||||||||||||||||
| Reorganization and realignment costs | ( | ||||||||||||||||||||||
| Impairment of long-lived assets | |||||||||||||||||||||||
| Other operating income, net | ( | ( | |||||||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Interest expense, net | ( | ( | |||||||||||||||||||||
| Investment loss, net | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | |||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
5
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ||||||||||||||||||||||
| Comprehensive income | $ | $ | |||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
6
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Thousands)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Common Stock Held in Treasury | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Balance at December 29, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||||||||||||||
Common stock issued upon exercises of stock options | ( | ||||||||||||||||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||||||||||||||
Common stock issued upon exercises of stock options | |||||||||||||||||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
7
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | |||||||||||
| Amortization of cloud computing arrangements | |||||||||||
| Share-based compensation | |||||||||||
| Impairment of long-lived assets | |||||||||||
| Deferred income tax | |||||||||||
| Non-cash rental expense, net | |||||||||||
| Change in operating lease liabilities | ( | ( | |||||||||
| Net receipt of deferred vendor incentives | |||||||||||
| System optimization losses, net | |||||||||||
| Distributions received from joint ventures, net of equity in earnings | |||||||||||
| Long-term debt-related activities, net | |||||||||||
| Cloud computing arrangements expenditures | ( | ( | |||||||||
| Changes in operating assets and liabilities and other, net | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Franchise development fund | ( | ( | |||||||||
| Dispositions | |||||||||||
| Notes receivable, net | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from long-term debt | |||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Repayments of finance lease liabilities | ( | ( | |||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Dividends | ( | ( | |||||||||
| Proceeds from stock option exercises | |||||||||||
| Payments related to tax withholding for share-based compensation | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net cash (used in) provided by operations before effect of exchange rate changes on cash | ( | ||||||||||
| Effect of exchange rate changes on cash | ( | ||||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
8
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of March 30, 2025, the results of our operations for the three months ended March 30, 2025 and March 31, 2024 and cash flows for the three months ended March 30, 2025 and March 31, 2024. The results of operations for the three months ended March 30, 2025 are not necessarily indicative of the results to be expected for the full 2025 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “Form 10-K”).
The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 17 for further information.
We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three-month periods presented herein contain 13 weeks. All references to years, quarters and months relate to fiscal periods rather than calendar periods.
Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.
(2) Revenue
Disaggregation of Revenue
The following tables disaggregate revenue by segment and source:
| Wendy’s U.S. | Wendy’s International | Global Real Estate & Development | Total | ||||||||||||||||||||
Three Months Ended March 30, 2025 | |||||||||||||||||||||||
| Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||||||
| Franchise royalty revenue | |||||||||||||||||||||||
| Franchise fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended March 31, 2024 | |||||||||||||||||||||||
| Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||||||
| Franchise royalty revenue | |||||||||||||||||||||||
| Franchise fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
9
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Contract Balances
The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:
| March 30, 2025 (a) | December 29, 2024 (a) | ||||||||||
Receivables, which are included in “Accounts and notes receivable, net” (b) | $ | $ | |||||||||
Receivables, which are included in “Advertising funds restricted assets” | |||||||||||
| Deferred franchise fees (c) | |||||||||||
_______________
(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.
(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”
(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $10,944 and $88,057 , respectively, as of March 30, 2025, and $11,024 and $88,387 , respectively, as of December 29, 2024.
Significant changes in deferred franchise fees are as follows:
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| Deferred franchise fees at beginning of period | $ | $ | |||||||||
Revenue recognized during the period | ( | ( | |||||||||
| New deferrals due to cash received and other | |||||||||||
| Deferred franchise fees at end of period | $ | $ | |||||||||
Anticipated Future Recognition of Deferred Franchise Fees
The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:
| Estimate for fiscal year: | |||||
| 2025 (a) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| $ | |||||
_______________
(a)Represents franchise fees expected to be recognized for the remainder of 2025, which includes development-related franchise fees expected to be recognized over a duration of one year or less.
10
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(3) Leases
Nature of Leases
The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. The Company also leases restaurant, office and transportation equipment. As of March 30, 2025, the nature of restaurants operated by the Company and its franchisees was as follows:
| March 30, 2025 | |||||
| Company-operated restaurants: | |||||
| Owned land and building | |||||
| Owned building and held long-term land leases | |||||
| Leased land and building | |||||
| Total Company-operated restaurants | |||||
| Franchisee-operated restaurants: | |||||
| Company-owned properties leased to franchisees | |||||
| Company-leased properties subleased to franchisees | |||||
| Other franchisee-operated restaurants | |||||
| Total franchisee-operated restaurants | |||||
| Total Company-operated and franchisee-operated restaurants | |||||
Company as Lessee
The components of lease cost are as follows:
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||
| Amortization of finance lease assets | $ | $ | |||||||||||||||||||||
| Interest on finance lease liabilities | |||||||||||||||||||||||
| Operating lease cost | |||||||||||||||||||||||
| Variable lease cost (a) | |||||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Total operating lease cost (b) | |||||||||||||||||||||||
| Total lease cost | $ | $ | |||||||||||||||||||||
_______________
(a)Includes expenses for executory costs of $10,394 and $10,221 for the three months ended March 30, 2025 and March 31, 2024, respectively, for which the Company is reimbursed by sublessees.
(b)Includes $30,652 and $31,718 for the three months ended March 30, 2025 and March 31, 2024, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,941 and $7,388 for the three months ended March 30, 2025 and March 31, 2024, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.
11
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Company as Lessor
The components of lease income are as follows:
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Sales-type and direct-financing leases: | |||||||||||||||||||||||
| Selling loss | $ | ( | $ | ( | |||||||||||||||||||
| Interest income (a) | |||||||||||||||||||||||
| Operating lease income | |||||||||||||||||||||||
| Variable lease income | |||||||||||||||||||||||
| Franchise rental income (b) | $ | $ | |||||||||||||||||||||
_______________
(a)Included in “Interest expense, net.”
(b)Includes sublease income of $42,784 and $42,783 recognized during the three months ended March 30, 2025 and March 31, 2024, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,197 and $10,089 for the three months ended March 30, 2025 and March 31, 2024, respectively.
(4) Investments
The following is a summary of the carrying value of our investments:
| March 30, 2025 | December 29, 2024 | ||||||||||
| Equity method investment | $ | $ | |||||||||
| Other investments in equity securities | |||||||||||
| $ | $ | ||||||||||
Equity Method Investment
Wendy’s has a 50 % share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). The Company has significant influence over this investee. Such investment is accounted for using the equity method, under which our results of operations include our share of the income of the investee in “Other operating income, net.”
12
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements:
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Equity in earnings for the period | |||||||||||
| Amortization of purchase price adjustments (a) | ( | ( | |||||||||
| Distributions received | ( | ( | |||||||||
Foreign currency translation adjustment included in “Other comprehensive income (loss)” | ( | ||||||||||
| Balance at end of period | $ | $ | |||||||||
_______________
(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21
Other Investments in Equity Securities
During the three months ended March 30, 2025, the Company recorded an impairment charge of $1,718 for the difference between the estimated fair value and the carrying value of an investment in equity securities. As a result, the carrying value of the investment was reduced to zero as of March 30, 2025.
(5) Long-Term Debt
Long-term debt consisted of the following:
| March 30, 2025 | December 29, 2024 | ||||||||||
| Class A-2 Notes: | |||||||||||
| $ | $ | ||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||
| Less amounts payable within one year | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
13
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Other Long-Term Debt
Wendy’s U.S. advertising fund has a revolving line of credit of $15,000 , which was established to support the Company’s advertising fund operations and bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.25 %. Borrowings under the line of credit are guaranteed by Wendy’s. During the three months ended March 30, 2025, the Company drew down $15,000 under the revolving line of credit, of which the Company repaid $8,500 in March 2025. As a result, as of March 30, 2025, the Company had outstanding borrowings of $6,500 under the revolving line of credit, which is included in “Advertising funds restricted liabilities.”
(6) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:
•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.
•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.
Financial Instruments
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
| March 30, 2025 | December 29, 2024 | ||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | Fair Value Measurements | |||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | Level 1 | ||||||||||||||||||||||||
| Other investments in equity securities (a) | Level 2 | ||||||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||
| Series 2022-1 Class A-2-I Notes (b) | Level 2 | ||||||||||||||||||||||||||||
| Series 2022-1 Class A-2-II Notes (b) | Level 2 | ||||||||||||||||||||||||||||
| Series 2021-1 Class A-2-I Notes (b) | Level 2 | ||||||||||||||||||||||||||||
| Series 2021-1 Class A-2-II Notes (b) | Level 2 | ||||||||||||||||||||||||||||
| Series 2019-1 Class A-2-I Notes (b) | Level 2 | ||||||||||||||||||||||||||||
| Series 2019-1 Class A-2-II Notes (b) | Level 2 | ||||||||||||||||||||||||||||
| Series 2018-1 Class A-2-II Notes (b) | Level 2 | ||||||||||||||||||||||||||||
U.S. advertising fund revolving line of credit | Level 2 | ||||||||||||||||||||||||||||
| Level 2 | |||||||||||||||||||||||||||||
_______________
14
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(a)The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which is based on observable price changes in orderly transactions for a similar investment of the same issuer.
(b)The fair values were based on quoted market prices in markets that are not considered active markets.
The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.
Non-Recurring Fair Value Measurements
Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.
Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) the deterioration in operating performance of certain Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance. Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 12 for further information on impairment of our long-lived assets.
| Fair Value Measurements | |||||||||||||||||||||||
| March 30, 2025 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Held and used | $ | $ | $ | $ | |||||||||||||||||||
| Held for sale | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurements | |||||||||||||||||||||||
| December 29, 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Held and used | $ | $ | $ | $ | |||||||||||||||||||
| Held for sale | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(7) Income Taxes
The Company’s effective tax rate for the three months ended March 30, 2025 and March 31, 2024 was 28.6 % and 26.9 %, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21 % for the three months ended March 30, 2025 primarily due to state income taxes and the tax effects of our foreign operations.
15
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(8) Net Income Per Share
The calculation of basic and diluted net income per share was as follows:
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Weighted average basic shares outstanding | |||||||||||||||||||||||
Dilutive effect of stock options and restricted shares | |||||||||||||||||||||||
| Weighted average diluted shares outstanding | |||||||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
Basic net income per share for the three months ended March 30, 2025 and March 31, 2024 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 8,288 and 6,789 for the three months ended March 30, 2025 and March 31, 2024, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.
(9) Stockholders’ Equity
Dividends
During both the first quarter of 2025 and the first quarter of 2024, the Company paid dividends per share of $.25
Repurchases of Common Stock
In January 2023, our Board of Directors authorized a repurchase program for up to $500,000 of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”). During the three months ended March 30, 2025, the Company repurchased 8,182 shares under the January 2023 Authorization with an aggregate purchase price of $124,070 , of which $1,401 was accrued as of March 30, 2025, and excluding excise tax of $1,214 and commissions of $115 . As of March 30, 2025, the Company had $110,930 of availability remaining under the January 2023 Authorization. Subsequent to March 30, 2025 through April 25, 2025, the Company repurchased 3,843 shares under the January 2023 Authorization with an aggregate purchase price of $50,895 , excluding applicable excise tax and commissions.
During the three months ended March 31, 2024, the Company repurchased 392 shares under the January 2023 Authorization with an aggregate purchase price of $7,187 , of which $470 was accrued as of March 31, 2024, and excluding excise tax of $24 and commissions of $5 .
16
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Accumulated Other Comprehensive Loss
The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| Balance at beginning of period | $ | ( | $ | ( | |||||||
Foreign currency translation | ( | ||||||||||
| Balance at end of period | $ | ( | $ | ( | |||||||
(10) System Optimization Losses, Net
The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”). As of March 30, 2025, Company-operated restaurant ownership was approximately 5 % of the total system. While the Company has no plans to move its ownership away from approximately 5 % of the total system, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base and drive new restaurant development. During the three months ended March 30, 2025, the Company did not facilitate any Franchise Flips. During the three months ended March 31, 2024, the Company facilitated 11 Franchise Flips. Additionally, during the three months ended March 30, 2025, the Company completed the sale of two Company-operated restaurants to franchisees. No Company-operated restaurants were sold to or purchased from franchisees during the three months ended March 31, 2024.
Gains and losses recognized on dispositions are recorded to “System optimization losses, net” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs.” All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”
The following is a summary of the disposition activity recorded as a result of our system optimization initiative:
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Number of restaurants sold to franchisees | |||||||||||||||||||||||
| Proceeds from sales of restaurants | $ | $ | |||||||||||||||||||||
| Net assets sold (a) | ( | ||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||
| Loss on sales of restaurants, net | ( | ||||||||||||||||||||||
| Gain (loss) on sales of other assets, net (b) | ( | ||||||||||||||||||||||
| System optimization losses, net | $ | ( | $ | ( | |||||||||||||||||||
_______________
(a)Net assets sold consisted primarily of equipment.
(b)During the three months ended March 31, 2024, the Company received net cash proceeds of $26 , primarily from the sale of surplus and other properties.
17
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Assets Held for Sale
As of March 30, 2025 and December 29, 2024, the Company had assets held for sale of $3,727 and $2,833 , respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”
(11) Reorganization and Realignment Costs
The following is a summary of the initiatives included in “Reorganization and realignment costs:”
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Organizational Redesign Plan | $ | ( | $ | ||||||||||||||||||||
| Other reorganization and realignment plans | |||||||||||||||||||||||
| Reorganization and realignment costs | $ | ( | $ | ||||||||||||||||||||
Organizational Redesign
In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”). Additionally, in January 2024, the Board of Directors announced the appointment of Kirk Tanner as the Company’s new President and Chief Executive Officer, effective February 5, 2024. Mr. Tanner succeeded Todd A. Penegor, the Company’s previous President and Chief Executive Officer, who departed from the Company in February 2024. The Company expects to incur total costs of approximately $17,000 related to the Organizational Redesign Plan, including costs related to the succession of the President and Chief Executive Officer role. During the three months ended March 30, 2025, the Company recognized costs totaling $(950 ), which primarily included a reversal of a severance accrual. During the three months ended March 31, 2024, the Company recognized costs totaling $5,622 , which primarily included severance and related employee costs. The Company expects to incur additional costs aggregating approximately $600 , comprised primarily of share-based compensation. The Company expects costs related to the Organizational Redesign Plan to continue into 2026.
The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:
| Three Months Ended | Total Incurred Since Inception | ||||||||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||||||||
| Severance and related employee costs (a) | $ | ( | $ | $ | |||||||||||||||||||||||||
| Recruitment and relocation costs | |||||||||||||||||||||||||||||
| Third-party and other costs | |||||||||||||||||||||||||||||
| ( | |||||||||||||||||||||||||||||
| Share-based compensation (b) | |||||||||||||||||||||||||||||
| Total organizational redesign | $ | ( | $ | $ | |||||||||||||||||||||||||
_______________
(a)The three months ended March 30, 2025 includes a reversal of an accrual as a result of a change in estimate.
(b)Total incurred since inception primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.
18
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
As of March 30, 2025, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities.” The tables below present a rollforward of our accruals for the Organizational Redesign Plan.
Balance December 29, 2024 | Charges | Payments | Balance March 30, 2025 | ||||||||||||||||||||
| Severance and related employee costs | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Recruitment and relocation costs | ( | ||||||||||||||||||||||
| Third-party and other costs | |||||||||||||||||||||||
| $ | $ | ( | $ | ( | $ | ||||||||||||||||||
| Balance December 31, 2023 | Charges | Payments | Balance March 31, 2024 | ||||||||||||||||||||
| Severance and related employee costs | $ | $ | $ | ( | $ | ||||||||||||||||||
| Recruitment and relocation costs | ( | ||||||||||||||||||||||
| Third-party and other costs | ( | ||||||||||||||||||||||
| $ | $ | $ | ( | $ | |||||||||||||||||||
Other Reorganization and Realignment Plans
Costs incurred under the Company’s other reorganization and realignment plans were not material during the three months ended March 30, 2025 and March 31, 2024. The Company does not expect to incur any material additional costs under these plans.
(12) Impairment of Long-Lived Assets
The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications and (3) classifying surplus properties as held for sale.
The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Company-operated restaurants | $ | $ | |||||||||||||||||||||
| Surplus properties | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
(13) Supplemental Cash Flow Information
The following table includes supplemental non-cash investing and financing activities:
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| Supplemental non-cash investing and financing activities: | |||||||||||
| Capital expenditures included in accounts payable | $ | $ | |||||||||
| Finance leases | |||||||||||
19
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
The following table includes a reconciliation of cash, cash equivalents and restricted cash:
| March 30, 2025 | December 29, 2024 | ||||||||||
| Reconciliation of cash, cash equivalents and restricted cash at end of period: | |||||||||||
| Cash and cash equivalents | $ | 335,259 | $ | ||||||||
| Restricted cash | 34,644 | ||||||||||
| Restricted cash, included in Advertising funds restricted assets | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
(14) Guarantees and Other Commitments and Contingencies
Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.
Lease Guarantees
Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $100,858 as of March 30, 2025. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of March 30, 2025. In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner. The liability recorded for our probable exposure associated with these lease guarantees was not material as of March 30, 2025.
Letters of Credit
As of March 30, 2025, the Company had outstanding letters of credit with various parties totaling $28,985 . Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Variable Funding Senior Secured Notes, Class A-1. We do not expect any material loss to result from these letters of credit.
(15) Transactions with Related Parties
Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.
TimWen Lease and Management Fee Payments
A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $4,798 and $5,030 under these lease agreements during the three months ended March 30, 2025 and March 31, 2024, respectively, which has been recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $56 and $60 during the three months ended March 30, 2025 and March 31, 2024, respectively, which is included as a reduction to “General and administrative.”
Transactions with QSCC
Wendy’s has a purchasing co-op relationship structure with its franchisees that establishes Quality Supply Chain Co-op, Inc. (“QSCC”). QSCC manages, for the Wendy’s system in the U.S. and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and equipment under national agreements with pricing based upon total system volume. QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the U.S. and Canada.
20
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC. Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations. In addition, QSCC collects certain rebates, price variance and other recoveries, technology fees, convention fees and other funding from third-party vendors as part of the administration and management of the Wendy’s supply chain in the U.S. and Canada. Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend. Wendy’s recorded its share of patronage dividends of $3,096 during the three months ended March 31, 2024, of which $2,909 is included in “Other operating income, net” and $187 is included as a reduction of “Cost of sales.” There were no patronage dividends recorded during the three months ended March 30, 2025.
Transactions with Yellow Cab
Certain family members and/or affiliates of Mr. Nelson Peltz, our former Chairman and Chairman Emeritus, Mr. Peter May, our Senior Vice Chairman, and Mr. Matthew Peltz, our Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee that, as of March 30, 2025 owned and operated 89 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab. During the three months ended March 30, 2025 and March 31, 2024, the Company recognized $3,664 and $3,612 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities. In all transactions involving Yellow Cab, the Company’s standard franchisee recruiting and approval processes were followed, no modifications were made to the Company’s standard franchise agreements or related documents, and all deal terms and transaction documents were negotiated and executed on an arm’s-length basis, consistent with the Company’s comparable franchise transactions and relationships. As of March 30, 2025 and December 29, 2024, $1,156 and $1,132 , respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”
Transactions with AMC
In February 2023, Ms. Kristin Dolan, a director of the Company, was appointed as the Chief Executive Officer of AMC Networks Inc. (“AMC”). During the three months ended March 30, 2025 and March 31, 2024, the Company purchased approximately $300 and $500 , respectively, of advertising time from a subsidiary of AMC. The Company’s advertising spend with AMC was made in the ordinary course of business and approved on an arm’s-length basis, consistent with the Company’s comparable advertising decisions. As of March 30, 2025 and December 29, 2024, approximately $26 and $17 , respectively, was due to AMC for such advertising time, which is included in “Advertising funds restricted liabilities.”
(16) Legal and Environmental Matters
The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when we determine it is probable that a liability has been incurred and the loss is reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims due to various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.
21
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(17) Segment Information
Wendy’s U.S. revenue, significant segment expenses and segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) are as follows:
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| Wendy’s U.S. revenue | $ | $ | |||||||||
| Wendy’s U.S. expense | |||||||||||
| Cost of sales | |||||||||||
| Franchise support and other costs | |||||||||||
| Advertising fund expense (a) | |||||||||||
| General and administrative | |||||||||||
| Other segment items (b) | |||||||||||
| Wendy’s U.S. adjusted EBITDA | $ | $ | |||||||||
_______________
(a)Includes advertising fund expense of $2,325 for the three months ended March 31, 2024 related to the Company’s funding of incremental advertising. There was no funding of incremental advertising during the three months ended March 30, 2025.
(b)Other segment items for the three months ended March 30, 2025 primarily include lease buyout activity and professional fees. Other segment items for the three months ended March 31, 2024 primarily include professional fees.
Wendy’s International revenue, significant segment expenses and segment adjusted EBITDA are as follows:
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| Wendy’s International revenue | $ | $ | |||||||||
| Wendy’s International expense | |||||||||||
| Cost of sales | |||||||||||
| Advertising fund expense (a) | |||||||||||
| General and administrative | |||||||||||
| Other segment items (b) | |||||||||||
| Wendy’s International adjusted EBITDA | $ | $ | |||||||||
_______________
(a)Includes advertising fund expense of $159 and $162 for the three months ended March 30, 2025 and March 31, 2024, respectively, related to the Company’s funding of incremental advertising. In addition, includes other international-related advertising deficit of $1,153 and $150 for the three months ended March 30, 2025 and March 31, 2024, respectively.
(b)Other segment items for the three months ended March 30, 2025 and March 31, 2024 primarily include franchise support and other costs.
22
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Global Real Estate & Development revenue, significant segment expenses and segment adjusted EBITDA are as follows:
| Three Months Ended | |||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||
| Global Real Estate & Development revenue | $ | $ | |||||||||
| Global Real Estate & Development expense | |||||||||||
| Franchise rental expense | |||||||||||
| General and administrative | |||||||||||
| Other segment items (a) | ( | ( | |||||||||
| Global Real Estate & Development adjusted EBITDA | $ | $ | |||||||||
_______________
(a)Other segment items primarily include equity in earnings from our TimWen joint venture, franchise support and other costs and gains on sales-type leases. Equity in earnings from our TimWen joint venture was $2,252 and $2,522 for the three months ended March 30, 2025 and March 31, 2024, respectively.
The following table reconciles profit by segment to the Company’s consolidated income before income taxes:
| Three Months Ended | |||||||||||||||||||||||
| March 30, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Wendy’s U.S. | $ | $ | |||||||||||||||||||||
| Wendy’s International | |||||||||||||||||||||||
| Global Real Estate & Development | |||||||||||||||||||||||
| Total segment adjusted EBITDA | |||||||||||||||||||||||
| Unallocated franchise support and other costs | ( | ( | |||||||||||||||||||||
| Advertising funds surplus | |||||||||||||||||||||||
| Unallocated general and administrative (a) | ( | ( | |||||||||||||||||||||
| Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | ( | ( | |||||||||||||||||||||
| Amortization of cloud computing arrangements | ( | ( | |||||||||||||||||||||
| System optimization losses, net | ( | ( | |||||||||||||||||||||
| Reorganization and realignment costs | ( | ||||||||||||||||||||||
| Impairment of long-lived assets | ( | ( | |||||||||||||||||||||
| Unallocated other operating income, net | |||||||||||||||||||||||
| Interest expense, net | ( | ( | |||||||||||||||||||||
| Investment loss, net | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income before income taxes | $ | $ | |||||||||||||||||||||
_______________
(a)Includes corporate overhead costs, such as employee compensation and related benefits.
23
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(18) New Accounting Standards
Disaggregation of Income Statement Expenses
In November 2024, the Financial Accounting Standards Board (“FASB”) issued an amendment to expand disclosure requirements related to certain income statement expenses. The amendment requires disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements. We are currently evaluating the impact of the adoption of this guidance on our condensed consolidated financial statements.
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Introduction
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us,” or “our”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the related notes included elsewhere within this report and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “Form 10-K”). There have been no material changes as of March 30, 2025 to the application of our critical accounting policies as described in Item 7 of the Form 10-K. Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements and Projections” in “Part II. Other Information” of this report. You should consider our forward-looking statements in light of the risks discussed in “Item 1A. Risk Factors” in “Part II. Other Information” of this report and our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this report, the Form 10-K and our other filings with the Securities and Exchange Commission (the “SEC”).
The Wendy’s Company is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (formerly known as Wendy’s International, Inc). Wendy’s International, LLC is the indirect parent company of (1) Quality Is Our Recipe, LLC (“Quality”), which is the owner and franchisor of the Wendy’s restaurant system in the United States (the “U.S.”) and all international jurisdictions except for Canada, and (2) Wendy’s Restaurants of Canada Inc., which is the owner and franchisor of the Wendy’s restaurant system in Canada. As used herein, unless the context requires otherwise, the term “Company” refers to The Wendy’s Company and its direct and indirect subsidiaries, and “Wendy’s” refers to Quality when the context relates to the ownership or franchising of the Wendy’s restaurant system and to Wendy’s International, LLC when the context refers to the Wendy’s brand.
Wendy’s is primarily engaged in the business of operating, developing and franchising a system of distinctive quick-service restaurants serving high quality food. Wendy’s opened its first restaurant in Columbus, Ohio in 1969. Today, Wendy’s is the second largest quick-service restaurant company in the hamburger sandwich segment in the U.S. based on traffic and dollar share, and the third largest globally with 7,308 restaurants in the U.S. and 34 foreign countries and U.S. territories as of March 30, 2025.
Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring chicken sandwiches, which are prepared to order with the customer’s choice of toppings and condiments. Wendy’s menu also includes chicken nuggets, chili, french fries, baked potatoes, freshly prepared salads, soft drinks, Frosty® desserts and kids’ meals. In addition, Wendy’s restaurants sell a variety of promotional products on a limited time basis. Wendy’s also offers breakfast across the U.S. system and in Canada. Wendy’s breakfast menu features a variety of breakfast sandwiches such as the Breakfast Baconator® and sides such as seasoned potatoes.
The Company is comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Wendy’s International includes the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our TimWen real estate joint venture. In addition, Global Real Estate & Development earns fees from facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”) and providing other development-related services to franchisees. In this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Company reports on the segment profit for each of the three segments described above. The Company measures segment profit using segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”). Segment adjusted EBITDA excludes certain unallocated general and administrative expenses and other items that vary from period to period without correlation to
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the Company’s core operating performance. See “Results of Operations” below and Note 17 to the Condensed Consolidated Financial Statements contained in Item 1 herein for segment financial information.
The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31. All three-month periods presented herein contain 13 weeks. All references to years, quarters and months relate to fiscal periods rather than calendar periods.
Executive Overview
Our Business
As of March 30, 2025, the Wendy’s restaurant system was comprised of 7,308 restaurants, with 5,958 Wendy’s restaurants in operation in the U.S. Of the U.S. restaurants, 387 were operated by the Company and 5,571 were operated by a total of 205 franchisees. In addition, at March 30, 2025, there were 1,350 Wendy’s restaurants in operation in 34 foreign countries and U.S. territories. Of the international restaurants, 1,337 were operated by a total of 110 franchisees and 13 were operated by the Company in the United Kingdom (the “U.K.”).
The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants. Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of March 30, 2025.
Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and consumer spending levels, general economic and market trends and weather.
Wendy’s strategic framework includes providing fresh, famous food to consumers, delivering an exceptional customer experience through operational excellence and expanding the Company’s footprint across the globe. Our opportunities to execute on this framework for long-term profitable growth include (1) driving same-restaurant sales and share growth, (2) accelerating digital growth, (3) improving restaurant profitability and (4) driving global unit growth.
Key Business Measures
We track our results of operations and manage our business using the following key business measures:
•Same-Restaurant Sales – We report same-restaurant sales commencing after new restaurants have been open for 15 continuous months and as soon as reimaged restaurants reopen. Restaurants temporarily closed for more than one week are excluded from same-restaurant sales. This methodology is consistent with the metric used by our management for internal reporting and analysis. The table summarizing same-restaurant sales below in “Results of Operations” provides the same-restaurant sales percent changes.
•Company-Operated Restaurant Margin – We define Company-operated restaurant margin as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs. Cost of sales excludes certain costs that support restaurant operations that are not allocated to individual restaurants, which are included in “General and administrative.” Cost of sales also excludes depreciation and amortization expense and impairment of long-lived assets. Therefore, as Company-operated restaurant margin as presented excludes certain costs as described above, its usefulness may be limited and may not be comparable to other similarly titled measures of other companies in our industry.
Company-operated restaurant margin is influenced by factors such as price increases, the effectiveness of our advertising and marketing initiatives, featured products, product mix, fluctuations in food and labor costs, restaurant openings, remodels and closures and the level of our fixed and semi-variable costs.
•Systemwide Sales – Systemwide sales includes sales by both Company-operated restaurants and franchised restaurants. Franchised restaurants’ sales are reported by our franchisees and represent their revenues from sales at franchised Wendy’s restaurants. The Company’s consolidated financial statements do not include sales by franchised restaurants to their customers. The Company’s royalty and advertising funds revenues are computed as percentages of
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sales made by Wendy’s franchisees. As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty and advertising funds revenues and profitability.
The Company calculates same-restaurant sales and systemwide sales growth on a constant currency basis. Constant currency results exclude the impact of foreign currency translation and are derived by translating current year results at prior year average exchange rates. The Company believes excluding the impact of foreign currency translation provides better year over year comparability.
Same-restaurant sales and systemwide sales exclude sales from Argentina due to that country’s highly inflationary economy. The Company considers economies that have had cumulative inflation in excess of 100% over a three-year period as highly inflationary.
The Company believes its presentation of same-restaurant sales, Company-operated restaurant margin and systemwide sales provide a meaningful perspective of the underlying operating performance of the Company’s current business and enables investors to better understand and evaluate the Company’s historical and prospective operating performance. The Company believes that these metrics are important supplemental measures of operating performance because they highlight trends in the Company’s business that may not otherwise be apparent when relying solely on GAAP financial measures. The Company believes investors, analysts and other interested parties use these metrics in evaluating issuers and that the presentation of these measures facilitates a comparative assessment of the Company’s operating performance. With respect to same-restaurant sales and systemwide sales, the Company also believes that the data is useful in assessing consumer demand for the Company’s products and the overall success of the Wendy’s brand.
First Quarter Financial Highlights
•Global systemwide sales decreased 1.1% to $3.39 billion in the first quarter of 2025 compared with $3.45 billion in the first quarter of 2024;
•Revenues decreased 2.1% to $523.5 million in the first quarter of 2025 compared with $534.8 million in the first quarter of 2024;
•Global same-restaurant sales decreased 2.1%, U.S. same-restaurant sales decreased 2.8% and international same-restaurant sales increased 2.3% compared with the first quarter of 2024. On a two-year basis, global same-restaurant sales decreased 1.2%;
•Global Company-operated restaurant margin was 14.3% in the first quarter of 2025, a decrease of 40 basis points compared with the first quarter of 2024; and
•Income before income taxes decreased 4.4% to $54.9 million in the first quarter of 2025 compared with $57.5 million in the first quarter of 2024.
Digital
Wendy’s long-term growth opportunities include accelerating consumer-facing digital platforms and technologies. Over the past several years, the Company has invested significant resources to focus on consumer-facing technology, including enhancements to Wendy’s mobile apps and loyalty programs and establishing delivery arrangements with third-party vendors for Wendy’s U.S. and Canadian restaurants. The Company is also continuing to make digital investments and is partnering with key technology providers to help execute our digital, restaurant technology and enterprise technology initiatives and support our technology innovation and growth. The Company’s digital business has continued to grow and digital sales increased from approximately 16.8% of global systemwide sales during the first quarter of 2024 to approximately 20.3% during the first quarter of 2025.
New Restaurant Development
Wendy’s long-term growth opportunities include expanding the Company’s footprint across the globe. To promote new restaurant development, the Company has provided franchisees with certain incentive programs for qualifying new and existing restaurants, in addition to our build to suit development fund. In addition, the Company has development agreements in place
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with a number of franchisees that contractually obligate such franchisees to open additional Wendy’s restaurants over a specified timeframe. During the three months ended March 30, 2025, Wendy’s added 68 net new restaurants across the system.
Results of Operations
The tables included throughout this Results of Operations section set forth in millions the Company’s condensed consolidated results of operations for the first quarter of 2025 and 2024.
| First Quarter | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Sales | $ | 219.5 | $ | 225.3 | $ | (5.8) | |||||||||||||||||||||||||||||
| Franchise royalty revenue and fees | 145.1 | 146.6 | (1.5) | ||||||||||||||||||||||||||||||||
| Franchise rental income | 58.5 | 58.0 | 0.5 | ||||||||||||||||||||||||||||||||
| Advertising funds revenue | 100.4 | 104.9 | (4.5) | ||||||||||||||||||||||||||||||||
| 523.5 | 534.8 | (11.3) | |||||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of sales | 188.2 | 192.1 | (3.9) | ||||||||||||||||||||||||||||||||
| Franchise support and other costs | 16.6 | 14.7 | 1.9 | ||||||||||||||||||||||||||||||||
| Franchise rental expense | 30.7 | 31.8 | (1.1) | ||||||||||||||||||||||||||||||||
| Advertising funds expense | 101.5 | 107.4 | (5.9) | ||||||||||||||||||||||||||||||||
| General and administrative | 68.2 | 63.8 | 4.4 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | 36.5 | 35.5 | 1.0 | ||||||||||||||||||||||||||||||||
| Amortization of cloud computing arrangements | 4.2 | 3.5 | 0.7 | ||||||||||||||||||||||||||||||||
| System optimization losses, net | 0.1 | 0.1 | — | ||||||||||||||||||||||||||||||||
| Reorganization and realignment costs | (0.7) | 5.7 | (6.4) | ||||||||||||||||||||||||||||||||
| Impairment of long-lived assets | 1.4 | 2.0 | (0.6) | ||||||||||||||||||||||||||||||||
| Other operating income, net | (6.3) | (3.0) | (3.3) | ||||||||||||||||||||||||||||||||
| 440.4 | 453.6 | (13.2) | |||||||||||||||||||||||||||||||||
| Operating profit | 83.1 | 81.2 | 1.9 | ||||||||||||||||||||||||||||||||
| Interest expense, net | (31.5) | (30.5) | (1.0) | ||||||||||||||||||||||||||||||||
| Investment loss, net | (1.7) | — | (1.7) | ||||||||||||||||||||||||||||||||
| Other income, net | 5.0 | 6.8 | (1.8) | ||||||||||||||||||||||||||||||||
| Income before income taxes | 54.9 | 57.5 | (2.6) | ||||||||||||||||||||||||||||||||
| Provision for income taxes | (15.7) | (15.5) | (0.2) | ||||||||||||||||||||||||||||||||
| Net income | $ | 39.2 | $ | 42.0 | $ | (2.8) | |||||||||||||||||||||||||||||
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| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | % of Total Revenues | 2024 | % of Total Revenues | ||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales | $ | 219.5 | 41.9 | % | $ | 225.3 | 42.1 | % | |||||||||||||||||||||||||||||||||||||||
Franchise royalty revenue and fees: | |||||||||||||||||||||||||||||||||||||||||||||||
| Franchise royalty revenue | 121.7 | 23.2 | % | 125.7 | 23.5 | % | |||||||||||||||||||||||||||||||||||||||||
| Franchise fees | 23.4 | 4.5 | % | 20.9 | 3.9 | % | |||||||||||||||||||||||||||||||||||||||||
| Total franchise royalty revenue and fees | 145.1 | 27.7 | % | 146.6 | 27.4 | % | |||||||||||||||||||||||||||||||||||||||||
Franchise rental income | 58.5 | 11.2 | % | 58.0 | 10.8 | % | |||||||||||||||||||||||||||||||||||||||||
Advertising funds revenue | 100.4 | 19.2 | % | 104.9 | 19.7 | % | |||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 523.5 | 100.0 | % | $ | 534.8 | 100.0 | % | |||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | % of Sales | 2024 | % of Sales | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||||||||||||||||||||||||||
| Food and paper | $ | 67.7 | 30.8 | % | $ | 69.1 | 30.7 | % | |||||||||||||||||||||||||||||||||||||||
| Restaurant labor | 70.8 | 32.3 | % | 73.6 | 32.7 | % | |||||||||||||||||||||||||||||||||||||||||
Occupancy, advertising and other operating costs | 49.7 | 22.6 | % | 49.4 | 21.9 | % | |||||||||||||||||||||||||||||||||||||||||
| Total cost of sales | $ | 188.2 | 85.7 | % | $ | 192.1 | 85.3 | % | |||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | % of Sales | 2024 | % of Sales | ||||||||||||||||||||||||||||||||||||||||||||
| Company-operated restaurant margin: | |||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 31.5 | 14.8 | % | $ | 33.5 | 15.3 | % | |||||||||||||||||||||||||||||||||||||||
| Global | 31.3 | 14.3 | % | 33.2 | 14.7 | % | |||||||||||||||||||||||||||||||||||||||||
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The table below presents certain of the Company’s key business measures, which are defined and further discussed in the “Executive Overview” section included herein.
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Key business measures: | |||||||||||||||||||||||
U.S. same-restaurant sales: | |||||||||||||||||||||||
| Company-operated | (1.2) | % | (0.8) | % | |||||||||||||||||||
| Franchised | (2.9) | % | 0.7 | % | |||||||||||||||||||
Systemwide | (2.8) | % | 0.6 | % | |||||||||||||||||||
| International same-restaurant sales (a) | 2.3 | % | 3.2 | % | |||||||||||||||||||
Global same-restaurant sales: | |||||||||||||||||||||||
| Company-operated | (1.2) | % | (0.9) | % | |||||||||||||||||||
| Franchised (a) | (2.2) | % | 1.1 | % | |||||||||||||||||||
| Systemwide (a) | (2.1) | % | 0.9 | % | |||||||||||||||||||
| Systemwide sales (b): | |||||||||||||||||||||||
| U.S. Company-operated | $ | 212.7 | $ | 219.5 | |||||||||||||||||||
| U.S. franchised | 2,703.4 | 2,774.5 | |||||||||||||||||||||
U.S. systemwide | 2,916.1 | 2,994.0 | |||||||||||||||||||||
| International Company-operated | 6.8 | 5.9 | |||||||||||||||||||||
| International franchised (a) | 466.4 | 448.1 | |||||||||||||||||||||
| International systemwide (a) | 473.2 | 454.0 | |||||||||||||||||||||
| Global systemwide (a) | $ | 3,389.3 | $ | 3,448.0 | |||||||||||||||||||
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(a)Excludes Argentina due to the impact of that country’s highly inflationary economy.
(b)During the first quarter of 2025 and 2024, global systemwide sales decreased 1.1% and increased 2.6%, respectively, U.S. systemwide sales decreased 2.6% and increased 1.7%, respectively, and international systemwide sales increased 8.9% and 8.8%, respectively, on a constant currency basis.
| First Quarter | |||||||||||||||||||||||||||||
| U.S. Company-operated | U.S. Franchised | International Company-operated | International Franchised | Systemwide | |||||||||||||||||||||||||
| Restaurant count: | |||||||||||||||||||||||||||||
Restaurant count at December 29, 2024 | 381 | 5,552 | 13 | 1,294 | 7,240 | ||||||||||||||||||||||||
| Opened | 8 | 20 | — | 46 | 74 | ||||||||||||||||||||||||
| Closed | — | (3) | — | (3) | (6) | ||||||||||||||||||||||||
| Net (sold to) purchased by franchisees | (2) | 2 | — | — | — | ||||||||||||||||||||||||
Restaurant count at March 30, 2025 | 387 | 5,571 | 13 | 1,337 | 7,308 | ||||||||||||||||||||||||
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| Sales | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Sales | $ | 219.5 | $ | 225.3 | $ | (5.8) | |||||||||||||||||||||||||||||
The decrease in sales during the first quarter of 2025 was primarily due to (1) net closures of Company-operated restaurants of $3.9 million and (2) a 1.2% decrease in Company-operated same-restaurant sales of $2.0 million. Company-operated same-restaurant sales decreased due to a decrease in traffic, partially offset by higher average check.
| Franchise Royalty Revenue and Fees | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Franchise royalty revenue | $ | 121.7 | $ | 125.7 | $ | (4.0) | |||||||||||||||||||||||||||||
| Franchise fees | 23.4 | 20.9 | 2.5 | ||||||||||||||||||||||||||||||||
| $ | 145.1 | $ | 146.6 | $ | (1.5) | ||||||||||||||||||||||||||||||
Franchise royalty revenue during the first quarter of 2025 decreased $4.0 million primarily due to a 2.2% decrease in global franchise same-restaurant sales. Franchise same-restaurant sales during the first quarter of 2025 decreased due to a decrease in traffic, partially offset by higher average check.
The increase in franchise fees during the first quarter of 2025 was primarily due to higher fees for providing information technology services to franchisees.
| Franchise Rental Income | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Franchise rental income | $ | 58.5 | $ | 58.0 | $ | 0.5 | |||||||||||||||||||||||||||||
The increase in franchise rental income during the first quarter of 2025 was primarily due to the impact of amending certain existing leases of $1.1 million, partially offset by the impact of terminating certain existing leases of $0.3 million.
| Advertising Funds Revenue | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Advertising funds revenue | $ | 100.4 | $ | 104.9 | $ | (4.5) | |||||||||||||||||||||||||||||
The decrease in advertising funds revenue during the first quarter of 2025 was primarily due to (1) a net decrease in franchise same-restaurant sales in the U.S. and Canada of $2.6 million and (2) net closures of U.S. restaurants of $1.1 million.
| Cost of Sales, as a Percent of Sales | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Food and paper | 30.8 | % | 30.7 | % | 0.1 | % | |||||||||||||||||||||||||||||
| Restaurant labor | 32.3 | % | 32.7 | % | (0.4) | % | |||||||||||||||||||||||||||||
| Occupancy, advertising and other operating costs | 22.6 | % | 21.9 | % | 0.7 | % | |||||||||||||||||||||||||||||
| 85.7 | % | 85.3 | % | 0.4 | % | ||||||||||||||||||||||||||||||
The increase in cost of sales, as a percent of sales, during the first quarter of 2025 was primarily due to (1) higher commodity costs, (2) a decrease in traffic and (3) an increase in restaurant labor rates. These impacts were partially offset by (1) higher average check and (2) labor efficiencies.
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| Franchise Support and Other Costs | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Franchise support and other costs | $ | 16.6 | $ | 14.7 | $ | 1.9 | |||||||||||||||||||||||||||||
The increase in franchise support and other costs during the first quarter of 2025 was primarily due to (1) an increase in costs associated with the Company’s build to suit development fund and (2) an increase in other miscellaneous costs for providing services to franchisees.
| Franchise Rental Expense | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Franchise rental expense | $ | 30.7 | $ | 31.8 | $ | (1.1) | |||||||||||||||||||||||||||||
The decrease in franchise rental expense during the first quarter of 2025 was primarily due to the impact of terminating certain existing leases.
| Advertising Funds Expense | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Advertising funds expense | $ | 101.5 | $ | 107.4 | $ | (5.9) | |||||||||||||||||||||||||||||
On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue. The decrease in advertising funds expense during the first quarter of 2025 was primarily due to (1) the same factors as described above for “Advertising Funds Revenue” and (2) a decrease in the recognition of the Company breakfast advertising spend in excess of advertising funds revenue when compared to the prior year.
| General and Administrative | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Employee compensation and benefits | $ | 38.5 | $ | 34.6 | $ | 3.9 | |||||||||||||||||||||||||||||
| Other, net | 29.7 | 29.2 | 0.5 | ||||||||||||||||||||||||||||||||
| $ | 68.2 | $ | 63.8 | $ | 4.4 | ||||||||||||||||||||||||||||||
The increase in general and administrative expenses during the first quarter of 2025 was primarily due to higher employee compensation and benefits.
| Depreciation and Amortization (exclusive of amortization of cloud computing arrangements shown separately below) | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Restaurants | $ | 22.8 | $ | 22.5 | $ | 0.3 | |||||||||||||||||||||||||||||
| Technology support, corporate and other | 13.7 | 13.1 | 0.6 | ||||||||||||||||||||||||||||||||
| $ | 36.5 | $ | 35.5 | $ | 1.0 | ||||||||||||||||||||||||||||||
The increase in depreciation and amortization during the first quarter of 2025 was primarily due to depreciation and amortization for technology investments.
| Amortization of Cloud Computing Arrangements | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Amortization of cloud computing arrangements | $ | 4.2 | $ | 3.5 | $ | 0.7 | |||||||||||||||||||||||||||||
The increase in amortization of cloud computing arrangements during the first quarter of 2025 was primarily due to amortization of assets associated with the Company’s digital investments.
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| System Optimization Losses, Net | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| System optimization losses, net | $ | 0.1 | $ | 0.1 | $ | — | |||||||||||||||||||||||||||||
System optimization losses, net for the first quarter of 2025 were primarily comprised of losses on the sale of restaurants. System optimization losses, net for the first quarter of 2024 were comprised of losses on the sale of surplus and other properties. See Note 10 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information.
| Reorganization and Realignment Costs | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Organizational Redesign Plan | $ | (1.0) | $ | 5.6 | $ | (6.6) | |||||||||||||||||||||||||||||
| Other reorganization and realignment plans | 0.3 | 0.1 | 0.2 | ||||||||||||||||||||||||||||||||
| $ | (0.7) | $ | 5.7 | $ | (6.4) | ||||||||||||||||||||||||||||||
During the first quarter of 2025, the Company recognized costs under the Organizational Redesign Plan of ($1.0) million, which primarily included a reversal of a severance accrual as a result of a change in estimate. During the first quarter of 2024, the Company recognized costs under the Organizational Redesign Plan of $5.6 million, which primarily included severance and related employee costs. See Note 11 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the Organizational Redesign Plan.
| Impairment of Long-Lived Assets | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Impairment of long-lived assets | $ | 1.4 | $ | 2.0 | $ | (0.6) | |||||||||||||||||||||||||||||
The decrease in impairment of long-lived assets during the first quarter of 2025 was primarily due to lower impairment charges resulting from the deterioration in operating performance of certain Company-operated restaurants.
| Other Operating Income, Net | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Claim settlement | $ | 4.0 | $ | — | $ | 4.0 | |||||||||||||||||||||||||||||
| Other, net | 2.3 | 3.0 | (0.7) | ||||||||||||||||||||||||||||||||
| $ | 6.3 | $ | 3.0 | $ | 3.3 | ||||||||||||||||||||||||||||||
The increase in other operating income, net during the first quarter of 2025 was primarily due to the settlement of a claim.
| Interest Expense, Net | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Interest expense, net | $ | 31.5 | $ | 30.5 | $ | 1.0 | |||||||||||||||||||||||||||||
The increase in interest expense, net during the first quarter of 2025 was primarily due to lower interest income as a result of amending certain sales-type and direct financing leases.
| Investment Loss, Net | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Investment loss, net | $ | 1.7 | $ | — | $ | 1.7 | |||||||||||||||||||||||||||||
During the first quarter of 2025, the Company recorded a loss of $1.7 million due to impairment charges for the difference between the estimated fair value and the carrying value of an investment in equity securities.
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| Other Income, Net | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Other income, net | $ | 5.0 | $ | 6.8 | $ | (1.8) | |||||||||||||||||||||||||||||
The decrease in other income, net during the first quarter of 2025 was primarily due to a decrease in interest income, reflecting lower balances of cash equivalents.
| Provision for Income Taxes | First Quarter | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 54.9 | $ | 57.5 | $ | (2.6) | |||||||||||||||||||||||||||||
Provision for income taxes | (15.7) | (15.5) | (0.2) | ||||||||||||||||||||||||||||||||
Effective tax rate on income | 28.6 | % | 26.9 | % | 1.7 | % | |||||||||||||||||||||||||||||
The effective tax rates for the first quarter of 2025 and 2024 were impacted by variations in income before income taxes, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items. The increase in the effective tax rate for the first quarter of 2025 compared with the first quarter of 2024 was primarily due to (1) a one-time adjustment to our deferred income taxes related to prior periods, (2) an increase in the tax effects of our foreign operations and (3) an increase in state income taxes.
Segment Information
See Note 17 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s segments.
Wendy’s U.S.
| First Quarter | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Sales | $ | 212.7 | $ | 219.5 | $ | (6.8) | |||||||||||||||||||||||||||||
| Franchise royalty revenue | 104.4 | 108.9 | (4.5) | ||||||||||||||||||||||||||||||||
| Franchise fees | 20.7 | 17.8 | 2.9 | ||||||||||||||||||||||||||||||||
| Advertising fund revenue | 91.8 | 96.7 | (4.9) | ||||||||||||||||||||||||||||||||
| Total revenues | $ | 429.6 | $ | 442.9 | $ | (13.3) | |||||||||||||||||||||||||||||
| Segment profit | $ | 121.0 | $ | 125.8 | $ | (4.8) | |||||||||||||||||||||||||||||
The decrease in Wendy’s U.S. revenues during the first quarter of 2025 was primarily due to (1) a decrease in same-restaurant sales and (2) net closures of restaurants. Same-restaurant sales decreased during the first quarter of 2025 primarily due to a decrease in traffic, partially offset by higher average check.
The decrease in Wendy’s U.S. segment profit during the first quarter of 2025 was primarily due to (1) higher general and administrative expense and (2) lower revenues.
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Wendy’s International
| First Quarter | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Sales | $ | 6.8 | $ | 5.9 | $ | 0.9 | |||||||||||||||||||||||||||||
| Franchise royalty revenue | 17.3 | 16.8 | 0.5 | ||||||||||||||||||||||||||||||||
| Franchise fees | 2.0 | 1.9 | 0.1 | ||||||||||||||||||||||||||||||||
| Advertising fund revenue | 8.6 | 8.2 | 0.4 | ||||||||||||||||||||||||||||||||
| Total revenues | $ | 34.7 | $ | 32.8 | $ | 1.9 | |||||||||||||||||||||||||||||
| Segment profit | $ | 9.4 | $ | 10.7 | $ | (1.3) | |||||||||||||||||||||||||||||
The increase in Wendy’s International revenues during the first quarter of 2025 was primarily due to net new restaurant development.
The decrease in Wendy’s International segment profit during the first quarter of 2025 was primarily due to higher advertising fund expenses.
Global Real Estate & Development
| First Quarter | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Franchise fees | $ | 0.6 | $ | 1.1 | $ | (0.5) | |||||||||||||||||||||||||||||
| Franchise rental income | 58.5 | 58.0 | 0.5 | ||||||||||||||||||||||||||||||||
| Total revenues | $ | 59.1 | $ | 59.1 | $ | — | |||||||||||||||||||||||||||||
| Segment profit | $ | 24.7 | $ | 24.1 | $ | 0.6 | |||||||||||||||||||||||||||||
Global Real Estate & Development revenues during the first quarter of 2025 were flat compared with the first quarter of 2024, primarily due to higher franchise rental income driven by the same factors as described above for “Franchise Rental Income,” offset by a decrease in franchise fee revenue driven by lower development-related fees.
The increase in Global Real Estate & Development segment profit during the first quarter of 2025 was primarily due to lower franchise rental expense driven by the same factors as described above for “Franchise Rental Expense.”
Liquidity and Capital Resources
As of March 30, 2025, cash, cash equivalents and restricted cash totaled $389.0 million. In addition, the Company maintains a revolving financing facility, which allows for the drawing of up to $300.0 million. Based on current levels of operations, the Company expects that available cash and cash flows from operations will provide sufficient liquidity to meet operating cash requirements for the next 12 months.
We currently believe we have the ability to pursue additional sources of liquidity if needed or desired to fund operating cash requirements or for other purposes. However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.
Stock Repurchases
In January 2023, our Board of Directors authorized a repurchase program for up to $500.0 million of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”). During the three months ended March 30, 2025, the Company repurchased 8.2 million shares under the January 2023 Authorization with an aggregate purchase price of $124.1 million, of which $1.4 million was accrued as of March 30, 2025, and excluding excise tax of $1.2 million and commissions of $0.1 million. As of March 30, 2025, the Company had $110.9 million of availability remaining under the January 2023 Authorization. Subsequent to March 30, 2025 through April 25, 2025, the Company repurchased 3.8 million shares under the January 2023 Authorization with an aggregate purchase price of $50.9 million, excluding applicable excise tax and commissions.
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Dividends
On March 17, 2025, the Company paid a quarterly cash dividend per share of $.25, aggregating $49.4 million. On May 2, 2025, the Company announced a dividend of $.14 per share to be paid on June 16, 2025 to stockholders of record as of June 2, 2025. If the Company pays regular quarterly cash dividends for the remainder of 2025 at the same rate as declared in the second quarter of 2025, the Company’s total cash requirement for dividends for the remainder of 2025 would be approximately $80.7 million based on the number of shares of its common stock outstanding at April 25, 2025. The Company currently intends to continue to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.
Long-Term Debt, Including Current Portion
Wendy’s U.S. advertising fund has a revolving line of credit of $15.0 million, which was established to support the Company’s advertising fund operations. During the three months ended March 30, 2025, the Company drew down $15.0 million under the revolving line of credit, of which the Company repaid $8.5 million in March 2025. As a result, as of March 30, 2025, the Company had outstanding borrowings of $6.5 million under the revolving line of credit.
Except as described above, there were no material changes to the Company’s debt obligations since December 29, 2024. The Company was in compliance with its debt covenants as of March 30, 2025. See Note 5 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.
Cash Flows from Operating, Investing and Financing Activities
The table below summarizes our cash flows from operating, investing and financing activities for the first three months of 2025 and 2024:
| First Quarter | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | 85.4 | $ | 100.0 | $ | (14.6) | |||||||||||
| Investing activities | (21.5) | (20.8) | (0.7) | ||||||||||||||
| Financing activities | (179.3) | (72.6) | (106.7) | ||||||||||||||
| Effect of exchange rate changes on cash | 0.8 | (2.3) | 3.1 | ||||||||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (114.6) | $ | 4.3 | $ | (118.9) | |||||||||||
Operating Activities
Cash provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities. Cash provided by operating activities was $85.4 million and $100.0 million in the first three months of 2025 and 2024, respectively. The change was primarily due to the timing of payments for marketing expenses of the national advertising funds.
Investing Activities
Cash used in investing activities was $21.5 million and $20.8 million in the first three months of 2025 and 2024, respectively. The change was primarily due to an increase in expenditures associated with the Company’s franchise development fund of $1.1 million.
Financing Activities
Cash used in financing activities was $179.3 million and $72.6 million in the first three months of 2025 and 2024, respectively. The change was primarily due to an increase in repurchases of the Company’s common stock of $115.5 million, partially offset by a net increase in cash provided by long-term debt activities of $6.5 million, reflecting the impact of the draw on the Company’s U.S. advertising fund revolving line of credit.
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General Inflation, Commodities and Changing Prices
Inflationary pressures on labor directly impacted our consolidated results of operations during the three months ended March 30, 2025, and we anticipate continued labor inflation throughout the remainder of 2025. We attempt to manage any inflationary costs and commodity price increases through selective menu price increases, product mix and focused execution of operational excellence. Delays in implementing such menu price increases and competitive pressures may limit our ability to recover such cost increases in the future. Inherent volatility experienced in certain commodity markets, such as those for beef, chicken, eggs, pork, cheese and grains, could have a significant effect on our results of operations and may have an adverse effect on us in the future. The extent of any impact will depend on our ability to manage such volatility through product mix and selective menu price increases.
Seasonality
Wendy’s restaurant operations are moderately seasonal. Wendy’s average restaurant sales are normally higher during the summer months than during the winter months. Because our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As of March 30, 2025 there were no material changes from the information contained in the Company’s Form 10-K for the fiscal year ended December 29, 2024.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The management of the Company, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 30, 2025. Based on such evaluations, the Chief Executive Officer and Chief Financial Officer concluded that as of March 30, 2025, the disclosure controls and procedures of the Company were effective at a reasonable assurance level in (1) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and (2) ensuring that information required to be disclosed by the Company in such reports is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the internal control over financial reporting of the Company during the first quarter of 2025 that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, the management of the Company, including its Chief Executive Officer and Chief Financial Officer, does not expect that the control system can prevent or detect all error or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies or procedures.
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PART II. OTHER INFORMATION
Special Note Regarding Forward-Looking Statements and Projections
This Quarterly Report on Form 10-Q and oral statements made from time to time by representatives of the Company may contain or incorporate by reference certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “may,” “believes,” “plans,” “expects,” “anticipates,” “intends,” “estimate,” “goal,” “upcoming,” “outlook,” “guidance” or the negation thereof, or similar expressions. In addition, all statements that address future operating, financial or business performance, strategies or initiatives, future efficiencies or savings, anticipated costs or charges, future capitalization, anticipated impacts of recent or pending investments or transactions and statements expressing general views about future results or brand health are forward-looking statements within the meaning of the Reform Act. Forward-looking statements are based on our expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Our actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by our forward-looking statements. Many important factors could affect our future results and cause those results to differ materially from those expressed in or implied by our forward-looking statements. Such factors include, but are not limited to, the following:
•the impact of competition or poor customer experiences at Wendy’s restaurants;
•adverse economic conditions or disruptions, including in regions with a high concentration of Wendy’s restaurants;
•changes in discretionary consumer spending and consumer tastes and preferences;
•impacts to our corporate reputation or the value and perception of our brand;
•the effectiveness of our marketing and advertising programs and new product development;
•our ability to manage the impact of social or digital media;
•our ability to protect our intellectual property;
•food safety events or health concerns involving our products;
•our ability to deliver global sales growth and maintain or grow market share across our dayparts;
•our ability to achieve our growth strategy through new restaurant development;
•our ability to effectively manage the acquisition and disposition of restaurants or successfully implement other strategic initiatives;
•risks associated with leasing and owning significant amounts of real estate, including environmental matters;
•risks associated with our international operations, including our ability to execute our international growth strategy;
•changes in commodity and other operating costs;
•shortages or interruptions in the supply or distribution of our products and other risks associated with our independent supply chain purchasing co-op;
•the impact of increased labor costs or labor shortages;
•the continued succession and retention of key personnel and the effectiveness of our leadership and organizational structure;
•risks associated with our digital commerce strategy, platforms and technologies, including our ability to adapt to changes in industry trends and consumer preferences;
38
•our dependence on computer systems and information technology, including risks associated with the failure or interruption of our systems or technology or the occurrence of cyber incidents or deficiencies;
•risks associated with our securitized financing facility and other debt agreements, including compliance with operational and financial covenants, restrictions on our ability to raise additional capital, the impact of our overall debt levels and our ability to generate sufficient cash flow to meet our debt service obligations and operate our business;
•risks associated with our capital allocation policy, including the amount and timing of equity and debt repurchases and dividend payments;
•risks associated with complaints and litigation, compliance with legal and regulatory requirements and an increased focus on environmental, social and governance issues;
•risks associated with the availability and cost of insurance, changes in accounting standards, the recognition of impairment or other charges, changes in tax rates or tax laws and fluctuations in foreign currency exchange rates;
•conditions beyond our control, such as adverse weather conditions, natural disasters, hostilities, social unrest, health epidemics or pandemics or other catastrophic events;
•risks associated with our predominantly franchised business model; and
•other risks and uncertainties affecting us and our subsidiaries referred to in our Annual Report on Form 10-K filed with the SEC on February 21, 2025 (see especially “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and in our other current and periodic filings with the SEC.
All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that we currently deem immaterial may become material, and it is impossible for us to predict these events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q as a result of new information, future events or developments, except as required by federal securities laws, although we may do so from time to time. We do not endorse any projections regarding future performance that may be made by third parties.
Item 1. Legal Proceedings.
The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when we determine it is probable that a liability has been incurred and the loss is reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims due to various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur, and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.
Item 1A. Risk Factors.
In addition to the information contained in this report, you should carefully consider the risk factors disclosed in our Form 10-K, which could materially affect our business, financial condition or future results. Except as described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the first quarter of 2025:
Issuer Repurchases of Equity Securities
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (2) | ||||||||||
| December 30, 2024 through February 2, 2025 | 394,456 | $15.09 | 385,410 | $229,200,345 | ||||||||||
| February 3, 2025 through March 2, 2025 | 5,907,406 | $15.19 | 5,815,820 | $140,934,023 | ||||||||||
| March 3, 2025 through March 30, 2025 | 1,994,135 | $15.16 | 1,980,740 | $110,929,598 | ||||||||||
| Total | 8,295,997 | $15.18 | 8,181,970 | $110,929,598 | ||||||||||
(1)Includes 114,027 shares of common stock reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award. The shares were valued at the fair market value of the Company’s common stock on the vesting or exercise date of such awards, as set forth in the applicable plan document.
(2)In January 2023, our Board of Directors authorized a repurchase program for up to $500.0 million of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible.
Subsequent to March 30, 2025 through April 25, 2025, the Company repurchased 3.8 million shares under the January 2023 Authorization with an aggregate purchase price of $50.9 million, excluding applicable excise tax and commissions.
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Item 6. Exhibits.
| EXHIBIT NO. | DESCRIPTION | ||||
| 10.1 | |||||
| 31.1 | |||||
| 31.2 | |||||
| 32.1 | |||||
| 101 | The following financial information from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2025 formatted in Inline eXtensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements. | ||||
| 104 | The cover page from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2025, formatted in Inline XBRL and contained in Exhibit 101. | ||||
_______________
| * | Filed herewith. | ||||
| ** | Identifies a management contract or compensatory plan or arrangement. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE WENDY’S COMPANY (Registrant) | |||||
| Date: May 2, 2025 | By: /s/ Kenneth Cook | ||||
| Kenneth Cook | |||||
| Chief Financial Officer | |||||
| (On behalf of the registrant) | |||||
| Date: May 2, 2025 | By: /s/ Suzanne M. Thuerk | ||||
| Suzanne M. Thuerk | |||||
| Chief Accounting Officer | |||||
| (Principal Accounting Officer) | |||||
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EXHIBIT 10.1
THE WENDY’S COMPANY
LONG-TERM PERFORMANCE UNIT AWARD AGREEMENT
(this “Agreement”)
The Wendy’s Company (the “Company”), pursuant to the provisions of The Wendy’s Company 2020 Omnibus Award Plan (the “Plan”), hereby irrevocably grants to the Participant stated below an Award (the “Award”) of __________ Performance Units (the “Units”), on _____________, 20___ (the “Award Date”), as specified below:
| Participant: | ______________________ | ||||
| Performance Period: | December 30, 2024 to January 2, 2028 | ||||
Each Unit represents the right to receive not more than two (2) shares of Common Stock, subject to the achievement of the performance goals described in this Agreement. The attained percentages (as defined below for each applicable performance goal) for the Global System Sales Growth performance goal described in Section 1 and for the Global Company-Operated Restaurant Margin Acceleration performance goal described in Section 2 will be averaged and the resulting average attained percentage will be further adjusted based on the achievement of the Relative Total Shareholder Return Performance Modifier (the “Relative TSR Performance Modifier”) as described in Section 3. Capitalized terms used and not otherwise defined in this Agreement shall have the respective meanings assigned to them under the Plan.
1.Global Systemwide Sales Growth.
(a)Calculation of Attained Percentage. The attained percentage for the Global Systemwide Sales Growth performance goal is calculated based on the Company’s Global Systemwide Sales Growth (as defined below) for the Performance Period compared to the Global Systemwide Sales Growth Target established by the Committee for the Performance Period as shown in the chart below (with the Threshold, Above Threshold, Target, Above Target and Maximum Global Systemwide Sales Growth amounts to be set forth on a separate exhibit which will be provided to the Participant (the “Target Exhibit”)). For purposes of clarity, the Global Systemwide Sales Growth performance targets are annual goals that are determined by the Compensation and Human Capital Committee at the beginning of the Performance Period and the percentage results based on the performance measured against these annual targets are averaged at the conclusion of the Performance Period to determine the attained percentage, subject to adjustment as described in Section 3.
Company Global Systemwide Sales Growth | Global Systemwide Sales Growth Performance Goal Attained Percentage | |||||||
| Maximum | 200.0% | |||||||
| Above Target | 150.0% | |||||||
| Target | 100.0% | |||||||
| Above Threshold | 50.0% | |||||||
| Threshold | 0% | |||||||
Linear interpolation shall be used to determine the attained percentage in the event the Company’s Global Systemwide Sales Growth falls between the (i) Threshold and Above Threshold, (ii) Above Threshold and Target, (iii) Target and Above Target or (iv) Above Target and Maximum performance levels shown in the chart above. The Company’s Global Systemwide Sales Growth will be determined as set forth in Section 1(b) below.
(b)Calculation of Global Systemwide Sales Growth. The Company’s “Global Systemwide Sales Growth” is defined as the increase in systemwide sales for (i) fiscal 2025 versus fiscal 2024, (ii) fiscal 2026 versus fiscal 2025 and (iii) fiscal 2027 versus fiscal 2026, in each case including sales by both Company-operated restaurants and franchised restaurants across the Wendy’s system, including both the U.S. and International. For International restaurants, local currency sales are converted to a constant foreign exchange rate. The constant currency approach excludes the impact of foreign currency translation by translating sales results using average exchange rates for the immediately preceding fiscal year. Any market that is deemed to be highly inflationary for external reporting purposes (i.e., cumulative inflation in excess of 100% over a three-year period) will have its sales contributions excluded from the calculation.
2.Global Company-Operated Restaurant Margin Acceleration.
(a)Calculation of Attained Percentage. The attained percentage for the Global Company-Operated Restaurant Margin Acceleration performance goal is calculated based on the Company’s Global Company-Operated Restaurant Margin Acceleration (as defined below) for the Performance Period compared to the Global Company-Operated Restaurant Margin Acceleration Target established by the Committee for the Performance Period as shown in the chart below (with the Threshold, Above Threshold, Target, Above Target and Maximum Global Company-Operated Restaurant Margin Acceleration amounts to be set forth on the Target Exhibit). For purposes of clarity, the Global Company-Operated Restaurant Margin Acceleration performance targets are annual goals that are determined by the Compensation and Human Capital Committee at the beginning of the Performance Period and the percentage results based on the performance measured against these annual targets are averaged at the conclusion of the Performance Period to determine the attained percentage, subject to adjustment as described in Section 3.
2
Company Global Company-Operated Restaurant Margin Acceleration | Global Company-Operated Restaurant Margin Acceleration Performance Goal Attained Percentage | |||||||
| Maximum | 200.0% | |||||||
| Above Target | 150.0% | |||||||
| Target | 100.0% | |||||||
| Above Threshold | 50.0% | |||||||
| Threshold | 0% | |||||||
Linear interpolation shall be used to determine the attained percentage in the event the Company’s Global Company-Operated Restaurant Margin Acceleration falls between the (i) Threshold and Above Threshold, (ii) Above Threshold and Target, (iii) Target and Above Target or (iv) Above Target and Maximum performance levels shown in the chart above. The Company’s Global Company-Operated Restaurant Margin Acceleration will be determined as set forth in Section 2(b) below.
(b)Calculation of Global Company-Operated Restaurant Margin Acceleration. The Company’s “Global Company-Operated Restaurant Margin Acceleration” is defined as the increase in sales from all Company-operated restaurants (including both U.S. and International) less cost of sales divided by sales from Company-operated restaurants for (i) fiscal 2025 versus fiscal 2024, (ii) fiscal 2026 versus fiscal 2025 and (iii) fiscal 2027 versus the higher of (a) fiscal 2026 or (b) the Global Company-Operated Restaurant Margin percentage set forth on the Target Exhibit. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs. Cost of sales excludes certain costs that support restaurant operations that are not allocated to individual restaurants, which are included in “General and administrative.” Cost of sales also excludes depreciation and amortization expense and impairment of long-lived assets.
3.Relative TSR Performance Modifier.
(a)Earning of Award. The attained percentages determined under Sections 1 and 2 will be averaged and the average attained percentage will be adjusted up or down by not more than 25% based on the Company TSR Percentile Ranking (as defined below) for the Performance Period based on the following chart:
| Company TSR Percentile Ranking | Relative TSR Performance Modifier to Total Units Earned | |||||||
| ≥ 75th | 125.0% | |||||||
| 50th | 100.0% | |||||||
| < 25th | 75.0% | |||||||
Linear interpolation shall be used to determine the Relative TSR Performance Modifier in the event the Company TSR Percentile Ranking falls between the (i) 25th and 50th percentiles or (ii) 50th and 75th percentiles listed in the above chart. The Company TSR Percentile Ranking will
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be determined as set forth in Section 3(c) below. For purposes of clarity, in no event will the adjusted attained percentage exceed 200%.
(b)Calculation of TSR. “TSR” means total stockholder return, which shall be calculated as follows:
“TSR” = Change in Stock Price + Dividends Paid
Beginning Stock Price
Beginning Stock Price
(i)Beginning Stock Price shall mean the average of the Closing Prices for each of the twenty (20) trading days immediately prior to the first trading day of the Performance Period;
(ii)Ending Stock Price shall mean the average of the Closing Prices for each of the last twenty (20) trading days of the Performance Period;
(iii)Change in Stock Price shall equal the Ending Stock Price minus the Beginning Stock Price;
(iv)Dividends Paid shall mean the total of all dividends paid on one (1) share of Common Stock during the Performance Period, provided that dividends shall be treated as though they are reinvested;
(v)Closing Price shall mean the last reported sale price on the applicable stock exchange or market of one (1) share of Common Stock for a particular trading day; and
(vi)In all events, TSR shall be adjusted to give effect to any stock dividends, stock splits, reverse stock splits and similar transactions.
(c)Calculation of Company TSR Percentile Ranking. The Company shall determine (i) the Company’s TSR for the Performance Period and (ii) the TSR for the Performance Period of each company that was included in the Russell 3000 Restaurant Index as of the last day of the Performance Period. The Company TSR Percentile Ranking shall mean the percentage of TSRs of the companies included the Russell 3000 Restaurant Index as of the last day of the Performance Period that are lower than the Company’s TSR for the Performance Period.
4.Form and Timing of Payments Under Award.
(a)Following the end of the Performance Period, the Committee shall determine whether and the extent to which the Company’s Global Systemwide Sales Growth and Global Company-Operated Restaurant Margin Acceleration, as well as the Relative TSR Performance Modifier (if any and based on the Company TSR Percentile Ranking) (collectively, the “Performance Goals”) have been achieved for the Performance Period and shall determine the number of shares of Common Stock, if any, issuable to the Participant with respect to the level of
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achievement of the Performance Goals; provided that with respect to any Award, the Committee shall have certified the achievement of the Performance Goals. The Committee’s determination with respect to the achievement of the Performance Goals shall be based on the Company’s financial statements and other relevant information, subject to any adjustments made by the Committee in accordance with this Section 4.
(b)Notwithstanding satisfaction, achievement or completion of the Performance Goals (or any adjustments thereto as provided below), the number of shares of Common Stock issuable hereunder may be reduced or eliminated by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine. The Committee shall have the right to adjust or modify the calculation of the Performance Goals as permitted under the Plan.
(c)The Units earned pursuant to this Award shall be paid out to the Participant in shares of Common Stock as soon as reasonably practicable following the Committee’s determination, but in no event later than March 15, 2028. For the avoidance of doubt, fractional shares of Common Stock shall be rounded down to the nearest whole number without any payment therefor.
5.Change in Control.
(a)In the event a Change in Control occurs during the Performance Period, then immediately before such Change in Control, any unvested outstanding Units shall be converted (without proration for the percentage of the Performance Period that has elapsed) into time-based restricted stock units (vesting on the last day of the Performance Period); provided, that the number of Units that shall be converted into time-based restricted stock units shall be based on (i) actual performance through the date of the Change of Control as determined by the Committee or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of Target performance as determined by the Committee. If, to the extent applicable, such time-based restricted stock units are not assumed or replaced by the acquirer/continuing entity in connection with such Change in Control on terms deemed by the Committee to be substantially equivalent, then all such time-based restricted stock units shall vest (and the restrictions thereon shall lapse) on the date of the Change in Control and shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, but in no event later than seventy-four (74) days following the last day of the calendar year in which the Change in Control occurred. Any such determination(s) by the Committee shall be final and binding on all parties, absent manifest error.
(b)In the event the Participant’s employment or service to the Company and its Subsidiaries is terminated prior to the end of the Performance Period by the Company or its Subsidiaries other than for Cause (and other than due to death or Disability), or by the Participant for Good Reason, in each case following a Change in Control, then the Participant shall become vested in the time-based restricted stock units received pursuant to Section 5(a) above and the
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restrictions thereon shall immediately lapse as of the date of such termination of employment or service; provided, in each case, that the number of restricted stock units that shall become fully vested and free from such restrictions shall be prorated, with such proration determined by multiplying the number of restricted stock units by a fraction, the numerator of which is the number of full calendar months worked by the Participant since the Award Date (with the month in which the Award Date occurred being the first month) to the date of termination of employment or service, and the denominator of which is the total number of months between the Award Date and the end of the Performance Period. The restricted stock units earned in accordance with the foregoing shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, but in no event later than seventy-four (74) days following the last day of the calendar year in which the termination of employment occurred.
6.Effect of Termination of Employment or Service.
(a)General. If the Participant ceases employment or service to the Company and its Subsidiaries for any reason prior to the end of the Performance Period (except following a Change in Control as described in Section 5(b) above or as a result of the Participant’s death, Disability, severance or Retirement as described in Sections 6(b), (c) or (d) below), the Units shall be immediately canceled and the Participant shall thereupon cease to have any right or entitlement to receive any shares of Common Stock under the Award.
(b)Death or Disability. Notwithstanding Sections 4(c) and 6(a) above, in the event the Participant’s employment or service to the Company and its Subsidiaries is terminated by the Company or its Subsidiaries due to death or Disability, outstanding Units granted to the Participant shall become vested and the restrictions thereon shall immediately lapse as of the date of such termination of employment or service; provided, that the portion of any such Units that shall become fully vested and free from such restrictions shall be based on (i) actual performance through the date of termination as determined by the Committee or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of Target performance as determined by the Committee, in each case prorated, with such proration determined by multiplying the number of Units by a fraction, the numerator of which is the number of full calendar months worked by the Participant since the Award Date (with the month in which the Award Date occurred being the first month) to the date of death or Disability, and the denominator of which is the total number of months between the Award Date and the end of the Performance Period. The Units earned in accordance with the foregoing shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, but in no event later than seventy-four (74) days following the last day of the calendar year in which the termination of employment or service occurred.
(c)Severance not in Connection with a Change in Control. In addition, notwithstanding Section 6(a) above, in the event the Participant’s employment or service to the Company and its Subsidiaries is terminated by the Company or its Subsidiaries prior to the end of the Performance Period other than for Cause (and other than due to death or Disability as described in Section 6(b) or in connection with a Change in Control as described in Section 5(b)
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above), if the Participant is subject to an employment letter with the Company or its Subsidiaries, is in a class of employees subject to the Company’s Executive Severance Pay Policy, or is in a class of employees subject to another severance policy adopted by the Company or its Subsidiaries, and such employment letter or policy addresses the treatment of the Units, the Units shall vest and the restrictions thereon shall lapse as set forth under such employment letter or policy. The Units earned in accordance with the foregoing shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, subject to and in accordance with Section 4 above.
(d)Retirement. In addition, notwithstanding Section 6(a) above, in the event of the Participant’s Retirement (as defined below), outstanding Units granted to the Participant shall become vested and the restrictions thereon shall immediately lapse as of the date of such Retirement, subject to actual performance through the end of the Performance Period as determined by the Committee in accordance with Section 4 above. The Units earned in accordance with the foregoing shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, subject to and in accordance with Section 4 above. For purposes of this Award, “Retirement” shall mean the Participant’s voluntary termination of the Participant’s employment or service with the Company and its Subsidiaries at a time that Cause does not exist (A) after attaining age sixty (60), (B) after having at least ten (10) years of employment or service with the Company or its Subsidiaries, (C) as of a date specified (or such other date as agreed to by the Company) in a written notice of proposed Retirement provided by the Participant to the Company at least six (6) months before the proposed Retirement date and (D) the Participant otherwise complying with the Company’s then-current retirement policy.
7.Dividend Equivalent Rights. Each Unit shall also have a dividend equivalent right
(a “Dividend Equivalent Right”). Each Dividend Equivalent Right represents the right to receive all of the ordinary cash dividends that are or would be payable with respect to the Units. With respect to each Dividend Equivalent Right, any such cash dividends shall be converted into additional Units based on the Fair Market Value of a share of Common Stock on the date such dividend is paid. Such additional Units shall be subject to the same terms and conditions applicable to the Unit to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in this Agreement. In the event that a Unit is forfeited as provided in Sections 4 and 6 above, then the related Dividend Equivalent Right shall also be forfeited.
(a “Dividend Equivalent Right”). Each Dividend Equivalent Right represents the right to receive all of the ordinary cash dividends that are or would be payable with respect to the Units. With respect to each Dividend Equivalent Right, any such cash dividends shall be converted into additional Units based on the Fair Market Value of a share of Common Stock on the date such dividend is paid. Such additional Units shall be subject to the same terms and conditions applicable to the Unit to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in this Agreement. In the event that a Unit is forfeited as provided in Sections 4 and 6 above, then the related Dividend Equivalent Right shall also be forfeited.
8.Withholding Taxes. The Participant shall be required to pay to the Company, and the Company shall have the right and is hereby authorized to withhold, from any cash, shares of Common Stock, other securities or other property deliverable in respect of the Units or from any compensation or other amounts owing to the Participant, the amount (in cash, Common Stock, other securities or other property) of any required withholding taxes in respect of the Units, and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such withholding and taxes. In addition, the Committee may, in its sole discretion, permit the Participant to satisfy, in whole or in part, the foregoing withholding liability (but no more than the withholding liability calculated using the highest
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marginal tax rate) by (a) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) owned by the Participant having a Fair Market Value equal to such withholding liability or (b) having the Company withhold from the number of shares of Common Stock otherwise issuable or deliverable upon settlement of the Units a number of shares with a Fair Market Value equal to such withholding liability. The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. If no election is made by the Participant, the Company will withhold shares of Common Stock to satisfy the minimum statutory required tax withholding.
9.Securities Laws. The Participant agrees that the obligation of the Company to issue shares of Common Stock upon the achievement of the Performance Goal shall also be subject, as conditions precedent, to compliance with applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, state securities or corporation laws, rules and regulations under any of the foregoing and applicable requirements of any securities exchange upon which the Company’s securities shall be listed.
10.Bound by Plan. The Units have been granted subject to the terms and conditions of the Plan, a copy of which has been provided to the Participant and which the Participant acknowledges having received and reviewed. Any conflict between this Agreement and the Plan shall be decided in favor of the provisions of the Plan. Any conflict between this Agreement and the terms of a written employment agreement for the Participant that has been approved, ratified or confirmed by the Board of Directors of the Company (the “Board”) or the Committee shall be decided in favor of the provisions of such employment agreement. This Agreement represents the entire agreement between the parties and supersedes all prior and contemporaneous agreements and understandings relative to the same subject matter. This Agreement may not be amended, altered, suspended, discontinued, cancelled or terminated in any manner that would materially and adversely affect the rights of the Participant except by a written agreement executed by the Participant and the Company.
11.Clawback. The Participant acknowledges and agrees that the Award of Units is subject to (a) the clawback and forfeiture provisions of Section 14(u) of the Plan, (b) the Company's Policy for Recoupment of Incentive Compensation and (c) any subsequent clawback or forfeiture policy adopted by the Board or the Committee that is communicated to the Participant or that is consistent with applicable law, whether the Award was granted before or after the effective date of any such clawback or forfeiture policy. Consistent with Section 14(u) of the Plan, the Committee may, in its sole discretion, cancel the Award if the Participant, without the consent of the Company, while employed by or providing services to the Company or any Affiliate or after termination of such employment or service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise has engaged in or engages in any Detrimental Activity that is in conflict with or adverse to the interest of the Company or any Affiliate, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Committee in its sole discretion. If the Committee determines, in its sole discretion, that the Participant has engaged in or engages in any activity referred to in the
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preceding sentence, the Committee may require the Participant to forfeit any gain realized on the vesting of the Award and to repay the gain to the Company. In addition, if the Participant receives any amount in excess of what the Participant should have received under the terms of the Award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant agrees to repay any such excess amount to the Company.
12.Electronic Delivery. By accepting the Award evidenced by this Agreement, the Participant hereby consents to the electronic delivery of all documents, including prospectuses, annual reports and other information required to be delivered by Securities and Exchange Commission rules. This consent may be revoked in writing by the Participant at any time upon three (3) business days’ notice to the Company, in which case all documents, including subsequent prospectuses, annual reports and other information, will be delivered in hard copy to the Participant.
13.Notices. Notices and communications under this Agreement must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to The Wendy’s Company, One Dave Thomas Boulevard, Dublin, Ohio 43017, Attention: Corporate Secretary, or any other address designated by the Company in a written notice to the Participant. Notices to the Participant will be directed to the address of the Participant then currently on file with the Company, or at any other address given by the Participant in a written notice to the Company.
14.No Right to Continued Employment; No Waiver. This grant does not constitute an employment contract. Nothing in this Agreement or the Plan shall (a) confer upon the Participant the right to continue to serve as a director or officer to, or to continue as an employee or service provider of, the Company or its Affiliates during all or any portion of the Performance Period or (b) be deemed to be a modification or waiver of the terms and conditions set forth in any written employment agreement for the Participant that has been approved, ratified or confirmed by the Board or the Committee. The failure of either party to enforce any term of this Agreement shall not constitute a waiver of any rights or deprive the party of the right to insist thereafter upon strict adherence to that or any other term of this Agreement, nor shall a waiver of any breach of this Agreement constitute a waiver of any preceding or succeeding breach.
15.Section 409A of the Code. If any provision of this Agreement could cause the application of an accelerated or additional tax under Section 409A of the Code upon the vesting or settlement of the Units (or any portion thereof), such provision shall be restructured, to the minimum extent possible, in a manner determined by the Company (and reasonably acceptable to the Participant) that does not cause such an accelerated or additional tax. It is intended that this Agreement shall not be subject to Section 409A of the Code by reason of the short-term deferral rule under Treas. Reg. Section 1.409A-1(b)(4), and this Agreement shall be interpreted accordingly.
16.Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and
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performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. For purposes of litigating any dispute that arises under this Agreement, unless otherwise provided in a written employment agreement or letter, arbitration agreement or severance agreement and release executed by the parties, the parties hereby submit to and consent to the jurisdiction of the State of Ohio and agree that such litigation shall be conducted in the courts of Franklin County in the State of Ohio, or the federal courts for the Southern District of Ohio, where the grant of Units is made and/or to be performed.
17.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Furthermore, delivery of a copy of a counterpart signature by facsimile or electronic transmission shall constitute a valid and binding execution and delivery of this Agreement, and such copy shall constitute an enforceable original document.
18.Electronic Signature. This Agreement may be executed and exchanged by facsimile or electronic mail transmission, and the facsimile or electronic mail copies of each party’s respective signature will be binding as if the same were an original signature. This Agreement may also be executed through the use of electronic signature, which each party acknowledges is a lawful means of obtaining signatures in the United States. Each party agrees that its electronic signature is the legal equivalent of its manual signature on this Agreement. Each party further agrees that its use of a key pad, mouse or other device to select an item, button, icon or similar act/action, regarding any agreement, acknowledgement, consent terms, disclosures or conditions constitutes its signature, acceptance and agreement as if actually signed by such party in writing. Furthermore, to the extent applicable, all references to signatures in this Agreement may be satisfied by procedures that the Company or a third party designated by the Company has established or may establish for an electronic signature system, and the Participant’s electronic signature shall be the same as, and shall have the same force and effect as, such Participant’s written signature.
19.Data Privacy. The Participant agrees and acknowledges that by entering into this Agreement and accepting this Award, the Participant (a) consents to the collection, use and transfer, in electronic or other form, of any of the Participant’s personal data that is necessary or appropriate to facilitate the implementation, administration and management of this Award and the Plan, (b) understands that the Company may, for purposes of implementing, administering and managing the Plan, hold certain personal information about the Participant, including, without limitation, the Participant’s name, home address, telephone number, date of birth, social security number or other identification number, salary, nationality, job title, and details of all awards or entitlements to awards granted to the Participant under the Plan or otherwise (“Personal Data”), (c) understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, including any broker with whom the shares of Common Stock issued upon vesting of the Award may be deposited, and that these recipients may be located in the United States or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the United States, (d) waives, solely for purposes of implementing, administering and managing the Award and the Plan, any data privacy rights that the Participant may have with respect to the Personal Data, and
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(e) authorizes the Company, its Affiliates and its agents, to store and transmit such Personal Data and related information in electronic form. The Participant understands that the Participant is providing consent under this Section on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke consent, the Participant’s employment status or service with the Company will not be affected; the only consequence of the Participant’s refusing or withdrawing consent is that the Company would not be able to grant the Award or other awards to the Participant or implement, administer or maintain such awards.
20.Validity of Agreement. This Agreement shall be valid, binding and effective upon the Company and the Participant as of the date the Participant accepts and agrees to the Agreement, so long as such acceptance is received by the Company by the deadline and in the manner prescribed by the Company and communicated to the Participant. If the Participant fails to accept and agree to this Agreement on or prior to such date and in the manner prescribed by the Company and communicated to the Participant, this Agreement will not be binding and enforceable, the Participant shall have no rights and interests pursuant to this Agreement, including specifically the Units evidenced by this Agreement shall be forfeited, and neither the Participant nor the Participant’s heirs, executors, administrators and successors shall have any rights with respect thereto.
21.Transferability. This Award shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. The shares of Common Stock acquired by the Participant upon settlement of the Units may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant, unless in compliance with all applicable securities laws as set forth in Section 9 above. The Participant shall not be deemed for any purpose to be the owner of any shares of Common Stock subject to the Units prior to settlement of any vested Units.
22.Beneficiary. The Participant may designate in writing one or more beneficiaries to receive the stock certificates (or, if applicable, a notice evidencing book entry notation) representing those Units that become vested and non-forfeitable and settled upon the Participant’s death. The Participant has the right to change any such beneficiary designation at will.
23.Impact on Other Benefits. The Units and any underlying shares of Common Stock, and the income from and value of the same (either on the Award Date or at the time any Units become vested and/or settled), shall not be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan.
24.Administration. The Committee shall have full authority and discretion (subject only to the express provisions of the Plan) to decide all matters relating to the administration and
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interpretation of this Agreement. All such Committee determinations shall be final, conclusive, and binding upon the Company, the Participant, and any and all interested parties.
25.Successors. This Agreement shall be binding and inure to the benefit of the successors, assigns and heirs of the respective parties.
26.Force and Effect. The various provisions of this Agreement are severable in their entirety. Any determination of invalidity or unenforceability of any one provision shall have no effect on the continuing force and effect of the remaining provisions.
27.No Company Advice. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan or the Participant’s acquisition or sale of the shares of Common Stock. The Participant should consult with his or her personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Company, by a duly authorized officer thereof, has caused this Long-Term Performance Unit Award Agreement to be executed as of the Award Date stated above.
THE WENDY’S COMPANY
| By: | |||||
| Name: | |||||
| Title: | |||||
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EXHIBIT 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Kirk Tanner, certify that:
1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 2, 2025
/s/ Kirk Tanner
Kirk Tanner
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Kenneth Cook, certify that:
1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 2, 2025
/s/ Kenneth Cook
Kenneth Cook
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATIONS OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of The Wendy’s Company, a Delaware corporation (the “Company”), does hereby certify, to the best of such officer’s knowledge, that in connection with the Quarterly Report on Form 10-Q of the Company for the quarter ended March 30, 2025 (the “Form 10-Q”):
1.the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 2, 2025
/s/ Kirk Tanner
Kirk Tanner
President and Chief Executive Officer
Date: May 2, 2025
/s/ Kenneth Cook
Kenneth Cook
Chief Financial Officer