Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 25, 2024 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 1-2207 | |
Entity Registrant Name | THE WENDY’S COMPANY | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 38-0471180 | |
Entity Address, Address Line One | One Dave Thomas Blvd. | |
Entity Address, City or Town | Dublin | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 43017 | |
City Area Code | 614 | |
Local Phone Number | 764-3100 | |
Title of 12(b) Security | Common Stock, $.10 par value | |
Trading Symbol | WEN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0000030697 | |
Current Fiscal Year End Date | --12-29 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 205,133,491 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 498,333 | $ 516,037 |
Restricted cash | 36,058 | 35,848 |
Accounts and notes receivable, net | 125,546 | 121,683 |
Inventories | 6,110 | 6,690 |
Prepaid expenses and other current assets | 39,075 | 39,640 |
Advertising funds restricted assets | 162,406 | 117,755 |
Total current assets | 867,528 | 837,653 |
Properties | 890,667 | 891,080 |
Finance lease assets | 227,547 | 228,936 |
Operating lease assets | 696,944 | 705,615 |
Goodwill | 773,077 | 773,727 |
Other intangible assets | 1,210,124 | 1,219,129 |
Investments | 33,230 | 34,445 |
Net investment in sales-type and direct financing leases | 306,908 | 313,664 |
Other assets | 183,745 | 178,577 |
Total assets | 5,189,770 | 5,182,826 |
Current liabilities: | ||
Current portion of long-term debt | 29,250 | 29,250 |
Current portion of finance lease liabilities | 20,730 | 20,250 |
Current portion of operating lease liabilities | 49,848 | 49,353 |
Accounts payable | 26,175 | 27,370 |
Accrued expenses and other current liabilities | 144,211 | 135,149 |
Advertising funds restricted liabilities | 155,235 | 120,558 |
Total current liabilities | 425,449 | 381,930 |
Long-term debt | 2,727,371 | 2,732,814 |
Long-term finance lease liabilities | 563,955 | 568,767 |
Long-term operating lease liabilities | 729,086 | 739,340 |
Deferred income taxes | 270,875 | 270,353 |
Deferred franchise fees | 89,331 | 90,132 |
Other liabilities | 90,049 | 89,711 |
Total liabilities | 4,896,116 | 4,873,047 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 205,325 and 205,397 shares outstanding, respectively | 47,042 | 47,042 |
Additional paid-in capital | 2,962,241 | 2,960,035 |
Retained earnings | 400,465 | 409,863 |
Common stock held in treasury, at cost; 265,099 and 265,027 shares, respectively | (3,053,133) | (3,048,786) |
Accumulated other comprehensive loss | (62,961) | (58,375) |
Total stockholders’ equity | 293,654 | 309,779 |
Total liabilities and stockholders’ equity | $ 5,189,770 | $ 5,182,826 |
Common Stock, Par Value | $ 0.10 | $ 0.10 |
Common Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Common Stock, Shares Issued | 470,424 | 470,424 |
Common Stock, Shares Outstanding | 205,325 | 205,397 |
Treasury Stock, Shares | 265,099 | 265,027 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Revenues: | ||
Revenues | $ 534,753 | $ 528,807 |
Costs and expenses: | ||
Cost of sales | 192,113 | 196,536 |
Franchise support and other costs | 14,742 | 13,260 |
Franchise Rental Expense | 31,778 | 30,629 |
Advertising funds expense | 107,374 | 101,661 |
General and administrative | 63,757 | 62,276 |
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | 35,518 | 33,472 |
Amortization of cloud computing arrangements | 3,542 | 1,582 |
System optimization losses (gains), net | 127 | (5) |
Reorganization and realignment costs | 5,673 | 6,808 |
Impairment of long-lived assets | 2,006 | 376 |
Other operating income, net | (3,033) | (2,266) |
Costs and expenses | 453,597 | 444,329 |
Operating profit | 81,156 | 84,478 |
Interest expense, net | (30,535) | (31,705) |
Loss on early extinguishment of debt | 0 | (1,266) |
Investment loss, net | 0 | (3,562) |
Other income, net | 6,836 | 7,336 |
Income before income taxes | 57,457 | 55,281 |
Provision for income taxes | (15,464) | (15,460) |
Net income | $ 41,993 | $ 39,821 |
Net income per share: | ||
Basic | $ 0.20 | $ 0.19 |
Diluted | $ 0.20 | $ 0.19 |
Sales | ||
Revenues: | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 225,323 | $ 227,949 |
Franchise royalty revenue and fees | ||
Revenues: | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 146,500 | 141,677 |
Franchise rental income | ||
Revenues: | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 57,986 | 57,807 |
Advertising funds revenue | ||
Revenues: | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 104,944 | $ 101,374 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Net income | $ 41,993 | $ 39,821 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | (4,586) | 158 |
Other comprehensive (loss) income | (4,586) | 158 |
Comprehensive income | $ 37,407 | $ 39,979 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Common Stock Held in Treasury | Accumulated Other Comprehensive Loss |
Stockholders' Equity, beginning of period at Jan. 01, 2023 | $ 465,720 | $ 47,042 | $ 2,937,885 | $ 414,749 | $ (2,869,780) | $ (64,176) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 39,821 | 0 | 0 | 39,821 | 0 | 0 |
Other comprehensive income (loss) | 158 | 0 | 0 | 0 | 0 | 158 |
Cash dividends | (53,103) | 0 | 0 | (53,103) | 0 | 0 |
Repurchases of common stock | (38,810) | 0 | 0 | 0 | (38,810) | 0 |
Share-based compensation | 4,609 | 0 | 4,609 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 2,616 | 0 | 808 | 0 | 1,808 | 0 |
Common stock issued upon vesting of restricted shares | (1,544) | 0 | (2,222) | 0 | 678 | 0 |
Other | 90 | 0 | 58 | (22) | 54 | 0 |
Stockholders' Equity, end of period at Apr. 02, 2023 | 419,557 | 47,042 | 2,941,138 | 401,445 | (2,906,050) | (64,018) |
Stockholders' Equity, beginning of period at Dec. 31, 2023 | 309,779 | 47,042 | 2,960,035 | 409,863 | (3,048,786) | (58,375) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 41,993 | 0 | 0 | 41,993 | 0 | 0 |
Other comprehensive income (loss) | (4,586) | 0 | 0 | 0 | 0 | (4,586) |
Cash dividends | (51,374) | 0 | 0 | (51,374) | 0 | 0 |
Repurchases of common stock | (7,216) | 0 | 0 | 0 | (7,216) | 0 |
Share-based compensation | 5,853 | 0 | 5,853 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 1,215 | 0 | 179 | 0 | 1,036 | 0 |
Common stock issued upon vesting of restricted shares | (2,077) | 0 | (3,855) | 0 | 1,778 | 0 |
Other | 67 | 0 | 29 | (17) | 55 | 0 |
Stockholders' Equity, end of period at Mar. 31, 2024 | $ 293,654 | $ 47,042 | $ 2,962,241 | $ 400,465 | $ (3,053,133) | $ (62,961) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Cash flows from operating activities: | ||
Net income | $ 41,993 | $ 39,821 |
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) | 35,518 | 33,472 |
Amortization of cloud computing arrangements | 3,542 | 1,582 |
Share-based compensation | 5,853 | 4,609 |
Impairment of long-lived assets | 2,006 | 376 |
Deferred income tax | 603 | 2,302 |
Non-cash rental expense, net | 10,974 | 9,012 |
Change in operating lease liabilities | (12,112) | (11,718) |
Net receipt (recognition) of deferred vendor incentives | 8,584 | (1,197) |
System optimization losses (gains), net | 127 | (5) |
Distributions received from joint ventures, net of equity in earnings | 430 | 394 |
Long-term debt-related activities, net | 1,870 | 3,419 |
Cloud computing arrangements expenditures | (2,865) | (6,643) |
Changes in operating assets and liabilities and other, net | 3,464 | (22,449) |
Net cash provided by operating activities | 99,987 | 52,975 |
Cash flows from investing activities: | ||
Capital expenditures | (17,354) | (12,240) |
Franchise development fund | (4,741) | (218) |
Dispositions | 26 | 287 |
Notes receivable, net | 1,256 | 110 |
Net cash used in investing activities | (20,813) | (12,061) |
Cash flows from financing activities: | ||
Repayments of long-term debt | (7,313) | (39,122) |
Repayments of finance lease liabilities | (5,465) | (4,398) |
Repurchases of common stock | (7,295) | (36,727) |
Dividends | (51,374) | (53,103) |
Proceeds from stock option exercises | 932 | 2,881 |
Payments related to tax withholding for share-based compensation | (2,115) | (1,809) |
Net cash used in financing activities | (72,630) | (132,278) |
Net cash provided by (used in) operations before effect of exchange rate changes on cash | 6,544 | (91,364) |
Effect of exchange rate changes on cash | (2,274) | 129 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 4,270 | (91,235) |
Cash, cash equivalents and restricted cash at beginning of period | 588,816 | 831,801 |
Cash, cash equivalents and restricted cash at end of period | $ 593,086 | $ 740,566 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 31, 2024, the results of our operations for the three months ended March 31, 2024 and April 2, 2023 and cash flows for the three months ended March 31, 2024 and April 2, 2023. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full 2024 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 31, 2023 (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 16 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. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2024 | |
Revenue [Abstract] | |
Revenue | 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 31, 2024 Sales at Company-operated restaurants $ 219,468 $ 5,855 $ — $ 225,323 Franchise royalty revenue 108,853 16,827 — 125,680 Franchise fees 17,826 1,889 1,105 20,820 Franchise rental income — — 57,986 57,986 Advertising funds revenue 96,700 8,244 — 104,944 Total revenues $ 442,847 $ 32,815 $ 59,091 $ 534,753 Three Months Ended April 2, 2023 Sales at Company-operated restaurants $ 222,632 $ 5,317 $ — $ 227,949 Franchise royalty revenue 106,339 15,811 — 122,150 Franchise fees 17,272 1,523 732 19,527 Franchise rental income — — 57,807 57,807 Advertising funds revenue 94,745 6,629 — 101,374 Total revenues $ 440,988 $ 29,280 $ 58,539 $ 528,807 Contract Balances The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: March 31, 2024 (a) December 31, 2023 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 62,000 $ 55,293 Receivables, which are included in “Advertising funds restricted assets” 74,614 76,838 Deferred franchise fees (c) 100,264 100,805 _______________ (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 $10,933 and $89,331, respectively, as of March 31, 2024, and $10,673 and $90,132, respectively, as of December 31, 2023. Significant changes in deferred franchise fees are as follows: Three Months Ended March 31, April 2, Deferred franchise fees at beginning of period $ 100,805 $ 99,208 Revenue recognized during the period (2,804) (2,814) New deferrals due to cash received and other 2,263 1,300 Deferred franchise fees at end of period $ 100,264 $ 97,694 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: 2024 (a) $ 9,345 2025 6,526 2026 6,390 2027 6,290 2028 6,169 Thereafter 65,544 $ 100,264 _______________ (a) Represents franchise fees expected to be recognized for the remainder of 2024, which includes development-related franchise fees expected to be recognized over a duration of one year or less. |
System Optimization Gains, Net
System Optimization Gains, Net | 3 Months Ended |
Mar. 31, 2024 | |
System Optimization | |
System optimization gains, net | |
System Optimization Gains, Net | System Optimization Losses (Gains), 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 31, 2024, 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, drive new restaurant development and accelerate reimages. During the three months ended March 31, 2024, the Company facilitated 11 Franchise Flips. During the three months ended April 2, 2023, the Company did not facilitate any Franchise Flips. No Company-operated restaurants were sold to or purchased from franchisees during the three months ended March 31, 2024 or April 2, 2023. Gains and losses recognized on dispositions are recorded to “System optimization losses (gains), 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,” which are further described in Note 4. All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.” As part of our system optimization initiative, the Company recorded a (loss) gain on sales of surplus and other properties of $(127) and $5 during the three months ended March 31, 2024 and April 2, 2023, respectively. The Company received net cash proceeds from the sales of $26 and $287 during the three months ended March 31, 2024 and April 2, 2023, respectively. Assets Held for Sale As of March 31, 2024 and December 31, 2023, the Company had assets held for sale of $2,678 and $2,689, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.” |
Reorganization and Realignment
Reorganization and Realignment Costs | 3 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
Reorganization and Realignment Costs | Reorganization and Realignment Costs The following is a summary of the initiatives included in “Reorganization and realignment costs:” Three Months Ended March 31, April 2, Organizational redesign $ 5,622 $ 6,737 Other reorganization and realignment plans 51 71 Reorganization and realignment costs $ 5,673 $ 6,808 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”). As a result of the Organizational Redesign Plan, the Company held its general and administrative expense in 2023 relatively flat compared with 2022. 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 to $19,000 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 31, 2024 and April 2, 2023, the Company recognized costs totaling $5,622 and $6,737, respectively, which primarily included severance and related employee costs. The Company expects to incur additional costs aggregating approximately $2,500 to $4,500, comprised of (1) severance and related employee costs of approximately $2,000, (2) recruitment and relocation costs of approximately $200 and (3) share-based compensation of approximately $1,500. 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 March 31, April 2, Total Incurred Since Inception Severance and related employee costs $ 5,362 $ 5,539 $ 11,605 Recruitment and relocation costs 82 78 636 Third-party and other costs 50 345 1,046 5,494 5,962 13,287 Share-based compensation (a) 128 775 1,399 Total organizational redesign $ 5,622 $ 6,737 $ 14,686 _______________ (a) Primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan. As of March 31, 2024, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $3,816 and $2,261, respectively. The tables below present a rollforward of our accruals for the Organizational Redesign Plan. Balance December 31, Charges Payments Balance March 31, Severance and related employee costs $ 1,692 $ 5,362 $ (977) $ 6,077 Recruitment and relocation costs — 82 (82) — Third-party and other costs — 50 (50) — $ 1,692 $ 5,494 $ (1,109) $ 6,077 Balance Charges Payments Balance Severance and related employee costs $ — $ 5,539 $ (741) $ 4,798 Recruitment and relocation costs — 78 (78) — Third-party and other costs — 345 (62) 283 $ — $ 5,962 $ (881) $ 5,081 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 31, 2024 and April 2, 2023. The Company does not expect to incur any material additional costs under these plans. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2024 | |
Investments [Abstract] | |
Investments | Investments The following is a summary of the carrying value of our investments: March 31, December 31, Equity method investments $ 31,512 $ 32,727 Other investments in equity securities 1,718 1,718 $ 33,230 $ 34,445 Equity Method Investments 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.” Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements: Three Months Ended March 31, April 2, Balance at beginning of period $ 32,727 $ 33,921 Equity in earnings for the period 3,151 2,783 Amortization of purchase price adjustments (a) (629) (684) 2,522 2,099 Distributions received (2,952) (2,493) Foreign currency translation adjustment included in “Other comprehensive (loss) income” (785) 10 Balance at end of period $ 31,512 $ 33,537 _______________ (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 years. Other Investments in Equity Securities During the three months ended April 2, 2023, the Company recorded an impairment charge of $3,562 for the difference between the estimated fair value and the carrying value of an investment in equity securities. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 31, December 31, Carrying Fair Carrying Fair Fair Value Financial assets Cash equivalents $ 339,779 $ 339,779 $ 365,901 $ 365,901 Level 1 Other investments in equity securities (a) 1,718 1,718 1,718 1,718 Level 2 Financial liabilities (b) Series 2022-1 Class A-2-I Notes 98,250 93,449 98,500 92,289 Level 2 Series 2022-1 Class A-2-II Notes 389,134 354,571 390,134 370,577 Level 2 Series 2021-1 Class A-2-I Notes 422,144 367,544 423,269 362,572 Level 2 Series 2021-1 Class A-2-II Notes 631,905 530,592 633,530 530,581 Level 2 Series 2019-1 Class A-2-I Notes 356,673 341,960 357,673 341,606 Level 2 Series 2019-1 Class A-2-II Notes 401,998 376,793 403,123 374,058 Level 2 Series 2018-1 Class A-2-II Notes 439,912 415,457 441,099 412,754 Level 2 7% debentures, due in 2025 48,405 49,813 48,237 49,431 Level 2 _______________ (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 7 for further information on impairment of our long-lived assets. Fair Value Measurements March 31, Level 1 Level 2 Level 3 Held and used $ 1,635 $ — $ — $ 1,635 Held for sale — — — — Total $ 1,635 $ — $ — $ 1,635 Fair Value Measurements December 31, Level 1 Level 2 Level 3 Held and used $ 1,212 $ — $ — $ 1,212 Held for sale 1,044 — — 1,044 Total $ 2,256 $ — $ — $ 2,256 |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets | 3 Months Ended |
Mar. 31, 2024 | |
Asset Impairment Charges [Abstract] | |
Impairment of Long-Lived Assets | 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 31, April 2, Company-operated restaurants $ 1,775 $ 350 Surplus properties 231 26 $ 2,006 $ 376 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended March 31, 2024 and April 2, 2023 was 26.9% and 28.0%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the three months ended March 31, 2024 primarily due to state income taxes and the tax effects of our foreign operations. There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three months ended March 31, 2024. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $220 due to lapses of statutes of limitations. The current portion of refundable income taxes was $6,830 and $5,284 as of March 31, 2024 and December 31, 2023, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of March 31, 2024 or December 31, 2023. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The calculation of basic and diluted net income per share was as follows: Three Months Ended March 31, April 2, Net income $ 41,993 $ 39,821 Common stock: Weighted average basic shares outstanding 205,372 212,547 Dilutive effect of stock options and restricted shares 1,599 2,482 Weighted average diluted shares outstanding 206,971 215,029 Basic and diluted net income per share $ .20 $ .19 Basic net income per share for the three months ended March 31, 2024 and April 2, 2023 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 6,789 and 4,532 for the three months ended March 31, 2024 and April 2, 2023, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Dividends During both the first quarter of 2024 and the first quarter of 2023, 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 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. As of March 31, 2024, the Company had $302,813 of availability remaining under the January 2023 Authorization. Subsequent to March 31, 2024 through April 25, 2024, the Company repurchased 229 shares under the January 2023 Authorization with an aggregate purchase price of $4,316, excluding applicable excise tax and commissions. During the three months ended April 2, 2023, the Company repurchased 1,794 shares under the January 2023 Authorization with an aggregate purchase price of $38,785, of which $2,083 was accrued as of April 2, 2023, and excluding commissions of $25. 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 31, April 2, Balance at beginning of period $ (58,375) $ (64,176) Foreign currency translation (4,586) 158 Balance at end of period $ (62,961) $ (64,018) |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases, Company as Lessee | 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 31, 2024, the nature of restaurants operated by the Company and its franchisees was as follows: March 31, Company-operated restaurants: Owned land and building 155 Owned building and held long-term land leases 144 Leased land and building 112 Total Company-operated restaurants 411 Franchisee-operated restaurants: Company-owned properties leased to franchisees 493 Company-leased properties subleased to franchisees 1,176 Other franchisee-operated restaurants 5,168 Total franchisee-operated restaurants 6,837 Total Company-operated and franchisee-operated restaurants 7,248 Company as Lessee The components of lease cost are as follows: Three Months Ended March 31, April 2, Finance lease cost: Amortization of finance lease assets $ 4,297 $ 4,063 Interest on finance lease liabilities 10,658 10,750 14,955 14,813 Operating lease cost 21,701 21,449 Variable lease cost (a) 16,488 16,081 Short-term lease cost 1,394 1,506 Total operating lease cost (b) 39,583 39,036 Total lease cost $ 54,538 $ 53,849 _______________ (a) Includes expenses for executory costs of $10,221 and $9,848 for the three months ended March 31, 2024 and April 2, 2023, respectively, for which the Company is reimbursed by sublessees. (b) Includes $31,718 and $30,598 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,388 and $7,865 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants. |
Leases, Company as Lessor | Company as Lessor The components of lease income are as follows: Three Months Ended March 31, April 2, Sales-type and direct-financing leases: Selling (loss) profit $ (16) $ 129 Interest income (a) 7,719 7,862 Operating lease income 41,497 42,156 Variable lease income 16,489 15,651 Franchise rental income (b) $ 57,986 $ 57,807 _______________ (a) Included in “Interest expense, net.” (b) Includes sublease income of $42,783 and $42,951 recognized during the three months ended March 31, 2024 and April 2, 2023, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,089 and $9,778 for the three months ended March 31, 2024 and April 2, 2023, respectively. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2024 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following table includes supplemental non-cash investing and financing activities: Three Months Ended March 31, April 2, Supplemental non-cash investing and financing activities: Capital expenditures included in accounts payable $ 9,161 $ 9,119 Finance leases 3,749 333 The following table includes a reconciliation of cash, cash equivalents and restricted cash: March 31, December 31, Reconciliation of cash, cash equivalents and restricted cash at end of period: Cash and cash equivalents $ 498,333 $ 516,037 Restricted cash 36,058 35,848 Restricted cash, included in Advertising funds restricted assets 58,695 36,931 Total cash, cash equivalents and restricted cash $ 593,086 $ 588,816 |
Transactions with Related Parti
Transactions with Related Parties | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | 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 $5,030 and $4,673 under these lease agreements during the three months ended March 31, 2024 and April 2, 2023, respectively, which is recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $60 during both the three months ended March 31, 2024 and the three months ended April 2, 2023, 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. 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 April 2, 2023. Transactions with Yellow Cab Certain family members and/or affiliates of Mr. Nelson Peltz, our Chairman, 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 31, 2024 owns and operates 85 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab. During the three months ended March 31, 2024 and April 2, 2023, the Company recognized $3,612 and $3,610, 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 31, 2024 and December 31, 2023, $1,191 and $1,153, 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 31, 2024 and April 2, 2023, the Company purchased approximately $500 and $419, 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 31, 2024 and December 31, 2023, approximately $50 and $584, respectively, was due to AMC for such advertising time, which is included in “Advertising funds restricted liabilities.” |
Guarantees and Other Commitment
Guarantees and Other Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantees and Other Commitments and Contingencies | 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 $93,979 as of March 31, 2024. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of March 31, 2024. 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 31, 2024. Letters of Credit As of March 31, 2024, the Company had outstanding letters of credit with various parties totaling $28,842. 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. |
Legal and Environmental Matters
Legal and Environmental Matters | 3 Months Ended |
Mar. 31, 2024 | |
Loss Contingency [Abstract] | |
Legal and Environmental Matters | 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 our 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. |
Segment Information (Notes)
Segment Information (Notes) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Revenues by segment are as follows: Three Months Ended March 31, April 2, Wendy’s U.S. $ 442,847 $ 440,988 Wendy’s International 32,815 29,280 Global Real Estate & Development 59,091 58,539 Total revenues $ 534,753 $ 528,807 The following table reconciles profit by segment to the Company’s consolidated income before income taxes: Three Months Ended March 31, April 2, Wendy’s U.S. (a) $ 125,824 $ 125,230 Wendy’s International (b) 10,690 7,446 Global Real Estate & Development 24,061 25,068 Total segment profit 160,575 157,744 Unallocated franchise support and other costs (26) — Advertising funds deficit 207 1,106 Unallocated general and administrative (c) (33,390) (32,161) Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) (35,518) (33,472) Amortization of cloud computing arrangements (3,542) (1,582) System optimization (losses) gains, net (127) 5 Reorganization and realignment costs (5,673) (6,808) Impairment of long-lived assets (2,006) (376) Unallocated other operating income, net 656 22 Interest expense, net (30,535) (31,705) Loss on early extinguishment of debt — (1,266) Investment loss, net — (3,562) Other income, net 6,836 7,336 Income before income taxes $ 57,457 $ 55,281 _______________ (a) Wendy’s U.S. includes advertising funds expense of $2,325 for the three months ended March 31, 2024 related to the Company’s funding of incremental advertising. (b) Wendy’s International includes advertising funds expense of $162 and $548 for the three months ended March 31, 2024 and April 2, 2023, respectively, related to the Company’s funding of incremental advertising in Canada. In addition, Wendy’s International includes other international-related advertising deficit of $150 and $845 for the three months ended March 31, 2024 and April 2, 2023, respectively. (c) Includes corporate overhead costs, such as employee compensation and related benefits. |
New Accounting Standards
New Accounting Standards | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Standards | New Accounting Standards New Accounting Standard Adopted Common-Control Lease Arrangements In March 2023, the Financial Accounting Standards Board (“FASB”) issued an update to amend certain lease accounting guidance that applies to arrangements between related parties under common control. The amendment requires a lessee in a common-control lease arrangement to amortize leasehold improvements that it owns over the useful life of the improvements to the common-control group, regardless of the lease term, if the lessee continues to control the use of the underlying asset through a lease. The Company adopted this amendment during the first quarter of 2024. The adoption of this amendment did not have a material impact on our condensed consolidated financial statements. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue [Abstract] | |
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 31, 2024 Sales at Company-operated restaurants $ 219,468 $ 5,855 $ — $ 225,323 Franchise royalty revenue 108,853 16,827 — 125,680 Franchise fees 17,826 1,889 1,105 20,820 Franchise rental income — — 57,986 57,986 Advertising funds revenue 96,700 8,244 — 104,944 Total revenues $ 442,847 $ 32,815 $ 59,091 $ 534,753 Three Months Ended April 2, 2023 Sales at Company-operated restaurants $ 222,632 $ 5,317 $ — $ 227,949 Franchise royalty revenue 106,339 15,811 — 122,150 Franchise fees 17,272 1,523 732 19,527 Franchise rental income — — 57,807 57,807 Advertising funds revenue 94,745 6,629 — 101,374 Total revenues $ 440,988 $ 29,280 $ 58,539 $ 528,807 |
Contract Balances, assets and liabilities | The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: March 31, 2024 (a) December 31, 2023 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 62,000 $ 55,293 Receivables, which are included in “Advertising funds restricted assets” 74,614 76,838 Deferred franchise fees (c) 100,264 100,805 _______________ (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 $10,933 and $89,331, respectively, as of March 31, 2024, and $10,673 and $90,132, respectively, as of December 31, 2023. |
Contract Balances, deferred franchise fee rollforward | Significant changes in deferred franchise fees are as follows: Three Months Ended March 31, April 2, Deferred franchise fees at beginning of period $ 100,805 $ 99,208 Revenue recognized during the period (2,804) (2,814) New deferrals due to cash received and other 2,263 1,300 Deferred franchise fees at end of period $ 100,264 $ 97,694 |
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: 2024 (a) $ 9,345 2025 6,526 2026 6,390 2027 6,290 2028 6,169 Thereafter 65,544 $ 100,264 _______________ (a) Represents franchise fees expected to be recognized for the remainder of 2024, which includes development-related franchise fees expected to be recognized over a duration of one year or less. |
Reorganization and Realignmen_2
Reorganization and Realignment Costs (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Restructuring Cost and Reserve | |
Restructuring and Related Costs | The following is a summary of the initiatives included in “Reorganization and realignment costs:” Three Months Ended March 31, April 2, Organizational redesign $ 5,622 $ 6,737 Other reorganization and realignment plans 51 71 Reorganization and realignment costs $ 5,673 $ 6,808 |
Organizational Redesign | |
Restructuring Cost and Reserve | |
Restructuring and Related Costs | The following is a summary of the costs recorded as a result of the Organizational Redesign Plan: Three Months Ended March 31, April 2, Total Incurred Since Inception Severance and related employee costs $ 5,362 $ 5,539 $ 11,605 Recruitment and relocation costs 82 78 636 Third-party and other costs 50 345 1,046 5,494 5,962 13,287 Share-based compensation (a) 128 775 1,399 Total organizational redesign $ 5,622 $ 6,737 $ 14,686 _______________ (a) Primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan. |
Schedule of Restructuring Reserve by Type of Cost | As of March 31, 2024, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $3,816 and $2,261, respectively. The tables below present a rollforward of our accruals for the Organizational Redesign Plan. Balance December 31, Charges Payments Balance March 31, Severance and related employee costs $ 1,692 $ 5,362 $ (977) $ 6,077 Recruitment and relocation costs — 82 (82) — Third-party and other costs — 50 (50) — $ 1,692 $ 5,494 $ (1,109) $ 6,077 Balance Charges Payments Balance Severance and related employee costs $ — $ 5,539 $ (741) $ 4,798 Recruitment and relocation costs — 78 (78) — Third-party and other costs — 345 (62) 283 $ — $ 5,962 $ (881) $ 5,081 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Schedule of Equity Method Investments | |
Schedule of Equity Method Investments and Other Investments in Equity Securities | The following is a summary of the carrying value of our investments: March 31, December 31, Equity method investments $ 31,512 $ 32,727 Other investments in equity securities 1,718 1,718 $ 33,230 $ 34,445 |
Schedule of Equity Method Investments | Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements: Three Months Ended March 31, April 2, Balance at beginning of period $ 32,727 $ 33,921 Equity in earnings for the period 3,151 2,783 Amortization of purchase price adjustments (a) (629) (684) 2,522 2,099 Distributions received (2,952) (2,493) Foreign currency translation adjustment included in “Other comprehensive (loss) income” (785) 10 Balance at end of period $ 31,512 $ 33,537 _______________ (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 years. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments: March 31, December 31, Carrying Fair Carrying Fair Fair Value Financial assets Cash equivalents $ 339,779 $ 339,779 $ 365,901 $ 365,901 Level 1 Other investments in equity securities (a) 1,718 1,718 1,718 1,718 Level 2 Financial liabilities (b) Series 2022-1 Class A-2-I Notes 98,250 93,449 98,500 92,289 Level 2 Series 2022-1 Class A-2-II Notes 389,134 354,571 390,134 370,577 Level 2 Series 2021-1 Class A-2-I Notes 422,144 367,544 423,269 362,572 Level 2 Series 2021-1 Class A-2-II Notes 631,905 530,592 633,530 530,581 Level 2 Series 2019-1 Class A-2-I Notes 356,673 341,960 357,673 341,606 Level 2 Series 2019-1 Class A-2-II Notes 401,998 376,793 403,123 374,058 Level 2 Series 2018-1 Class A-2-II Notes 439,912 415,457 441,099 412,754 Level 2 7% debentures, due in 2025 48,405 49,813 48,237 49,431 Level 2 _______________ (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. |
Fair value of assets and liabilities (other than cash and cash equivalents) measured at fair value on a nonrecurring basis | Fair Value Measurements March 31, Level 1 Level 2 Level 3 Held and used $ 1,635 $ — $ — $ 1,635 Held for sale — — — — Total $ 1,635 $ — $ — $ 1,635 Fair Value Measurements December 31, Level 1 Level 2 Level 3 Held and used $ 1,212 $ — $ — $ 1,212 Held for sale 1,044 — — 1,044 Total $ 2,256 $ — $ — $ 2,256 |
Impairment of Long-Lived Asse_2
Impairment of Long-Lived Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Asset Impairment Charges [Abstract] | |
Impairment of Long-Lived Assets | 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 31, April 2, Company-operated restaurants $ 1,775 $ 350 Surplus properties 231 26 $ 2,006 $ 376 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The calculation of basic and diluted net income per share was as follows: Three Months Ended March 31, April 2, Net income $ 41,993 $ 39,821 Common stock: Weighted average basic shares outstanding 205,372 212,547 Dilutive effect of stock options and restricted shares 1,599 2,482 Weighted average diluted shares outstanding 206,971 215,029 Basic and diluted net income per share $ .20 $ .19 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of 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 31, April 2, Balance at beginning of period $ (58,375) $ (64,176) Foreign currency translation (4,586) 158 Balance at end of period $ (62,961) $ (64,018) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Real Estate Properties | As of March 31, 2024, the nature of restaurants operated by the Company and its franchisees was as follows: March 31, Company-operated restaurants: Owned land and building 155 Owned building and held long-term land leases 144 Leased land and building 112 Total Company-operated restaurants 411 Franchisee-operated restaurants: Company-owned properties leased to franchisees 493 Company-leased properties subleased to franchisees 1,176 Other franchisee-operated restaurants 5,168 Total franchisee-operated restaurants 6,837 Total Company-operated and franchisee-operated restaurants 7,248 |
Lease, Cost | The components of lease cost are as follows: Three Months Ended March 31, April 2, Finance lease cost: Amortization of finance lease assets $ 4,297 $ 4,063 Interest on finance lease liabilities 10,658 10,750 14,955 14,813 Operating lease cost 21,701 21,449 Variable lease cost (a) 16,488 16,081 Short-term lease cost 1,394 1,506 Total operating lease cost (b) 39,583 39,036 Total lease cost $ 54,538 $ 53,849 _______________ (a) Includes expenses for executory costs of $10,221 and $9,848 for the three months ended March 31, 2024 and April 2, 2023, respectively, for which the Company is reimbursed by sublessees. (b) Includes $31,718 and $30,598 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,388 and $7,865 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants. |
Lease, Income | The components of lease income are as follows: Three Months Ended March 31, April 2, Sales-type and direct-financing leases: Selling (loss) profit $ (16) $ 129 Interest income (a) 7,719 7,862 Operating lease income 41,497 42,156 Variable lease income 16,489 15,651 Franchise rental income (b) $ 57,986 $ 57,807 _______________ (a) Included in “Interest expense, net.” (b) Includes sublease income of $42,783 and $42,951 recognized during the three months ended March 31, 2024 and April 2, 2023, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,089 and $9,778 for the three months ended March 31, 2024 and April 2, 2023, respectively. |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | The following table includes supplemental non-cash investing and financing activities: Three Months Ended March 31, April 2, Supplemental non-cash investing and financing activities: Capital expenditures included in accounts payable $ 9,161 $ 9,119 Finance leases 3,749 333 The following table includes a reconciliation of cash, cash equivalents and restricted cash: March 31, December 31, Reconciliation of cash, cash equivalents and restricted cash at end of period: Cash and cash equivalents $ 498,333 $ 516,037 Restricted cash 36,058 35,848 Restricted cash, included in Advertising funds restricted assets 58,695 36,931 Total cash, cash equivalents and restricted cash $ 593,086 $ 588,816 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Reconciliation of Revenue from Segments to Consolidated | Revenues by segment are as follows: Three Months Ended March 31, April 2, Wendy’s U.S. $ 442,847 $ 440,988 Wendy’s International 32,815 29,280 Global Real Estate & Development 59,091 58,539 Total revenues $ 534,753 $ 528,807 |
Reconciliation of Profit from Segments to Consolidated | The following table reconciles profit by segment to the Company’s consolidated income before income taxes: Three Months Ended March 31, April 2, Wendy’s U.S. (a) $ 125,824 $ 125,230 Wendy’s International (b) 10,690 7,446 Global Real Estate & Development 24,061 25,068 Total segment profit 160,575 157,744 Unallocated franchise support and other costs (26) — Advertising funds deficit 207 1,106 Unallocated general and administrative (c) (33,390) (32,161) Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) (35,518) (33,472) Amortization of cloud computing arrangements (3,542) (1,582) System optimization (losses) gains, net (127) 5 Reorganization and realignment costs (5,673) (6,808) Impairment of long-lived assets (2,006) (376) Unallocated other operating income, net 656 22 Interest expense, net (30,535) (31,705) Loss on early extinguishment of debt — (1,266) Investment loss, net — (3,562) Other income, net 6,836 7,336 Income before income taxes $ 57,457 $ 55,281 _______________ (a) Wendy’s U.S. includes advertising funds expense of $2,325 for the three months ended March 31, 2024 related to the Company’s funding of incremental advertising. (b) Wendy’s International includes advertising funds expense of $162 and $548 for the three months ended March 31, 2024 and April 2, 2023, respectively, related to the Company’s funding of incremental advertising in Canada. In addition, Wendy’s International includes other international-related advertising deficit of $150 and $845 for the three months ended March 31, 2024 and April 2, 2023, respectively. (c) Includes corporate overhead costs, such as employee compensation and related benefits. |
Revenue Disaggregation of Reven
Revenue Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Disaggregation of Revenue | ||
Total revenues | $ 534,753 | $ 528,807 |
Sales at Company-operated restaurants | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 225,323 | 227,949 |
Franchise royalty revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 125,680 | 122,150 |
Franchise fees | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 20,820 | 19,527 |
Franchise rental income | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 57,986 | 57,807 |
Advertising funds revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 104,944 | 101,374 |
Wendy's U.S. | ||
Disaggregation of Revenue | ||
Total revenues | 442,847 | 440,988 |
Wendy's U.S. | Sales at Company-operated restaurants | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 219,468 | 222,632 |
Wendy's U.S. | Franchise royalty revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 108,853 | 106,339 |
Wendy's U.S. | Franchise fees | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 17,826 | 17,272 |
Wendy's U.S. | Franchise rental income | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 |
Wendy's U.S. | Advertising funds revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 96,700 | 94,745 |
Wendy's International | ||
Disaggregation of Revenue | ||
Total revenues | 32,815 | 29,280 |
Wendy's International | Sales at Company-operated restaurants | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 5,855 | 5,317 |
Wendy's International | Franchise royalty revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 16,827 | 15,811 |
Wendy's International | Franchise fees | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 1,889 | 1,523 |
Wendy's International | Franchise rental income | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 |
Wendy's International | Advertising funds revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 8,244 | 6,629 |
Global Real Estate & Development | ||
Disaggregation of Revenue | ||
Total revenues | 59,091 | 58,539 |
Global Real Estate & Development | Sales at Company-operated restaurants | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 |
Global Real Estate & Development | Franchise royalty revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 |
Global Real Estate & Development | Franchise fees | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 1,105 | 732 |
Global Real Estate & Development | Franchise rental income | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 57,986 | 57,807 |
Global Real Estate & Development | Advertising funds revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 0 | $ 0 |
Revenue Contract Balances (Deta
Revenue Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Apr. 02, 2023 | Dec. 31, 2023 | |
Contract balances | |||
Deferred franchise fees at beginning of period | $ 100,805 | $ 99,208 | |
Revenue recognized during the period | (2,804) | (2,814) | |
New deferrals due to cash received and other | 2,263 | 1,300 | |
Deferred franchise fees at end of period | 100,264 | $ 97,694 | |
Deferred franchise fees, noncurrent | 89,331 | $ 90,132 | |
Accounts and notes receivable, net | Short-term Contract with Customer | |||
Contract balances | |||
Receivables, Net, Current | 62,000 | 55,293 | |
Advertising funds restricted assets | Short-term Contract with Customer | |||
Contract balances | |||
Receivables, Net, Current | 74,614 | 76,838 | |
Accrued expenses and other current liabilities | |||
Contract balances | |||
Deferred franchise fees, current | 10,933 | 10,673 | |
Deferred franchise fees | |||
Contract balances | |||
Deferred franchise fees, noncurrent | $ 89,331 | $ 90,132 |
Revenue Anticipated Future Reco
Revenue Anticipated Future Recognition of Deferred Franchise Fees (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees, Amount | $ 100,264 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-04-01 | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees, Amount | $ 9,345 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-12-30 | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees, Amount | $ 6,526 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-12-29 | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees, Amount | $ 6,390 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2027-01-04 | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees, Amount | $ 6,290 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2028-01-03 | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees, Amount | $ 6,169 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2029-01-01 | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees | |
Revenue, Anticipated Future Recognition of Deferred Franchise Fees, Amount | $ 65,544 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 0 years |
System Optimization Gains, Net
System Optimization Gains, Net Summary of Disposition Activity (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) number_of_restaurants | Apr. 02, 2023 USD ($) number_of_restaurants | |
System optimization gains, net | ||
Company-operated restaurant ownership percentage | 5% | |
Proceeds from sales of restaurants | $ | $ 26 | $ 287 |
System optimization gains, net | $ | $ (127) | $ 5 |
Sale of franchise-operated restaurants to franchisees | ||
System optimization gains, net | ||
Number of restaurants sold to franchisees | number_of_restaurants | 11 | 0 |
Sale or Purchase of company-operated restaurants to franchisees | ||
System optimization gains, net | ||
Number of restaurants sold to franchisees | number_of_restaurants | 0 | 0 |
Restaurants acquired from franchisees | number_of_restaurants | 0 | 0 |
Sale of other assets | ||
System optimization gains, net | ||
Proceeds from sales of restaurants | $ | $ 26 | $ 287 |
System Optimization Gains, Ne_2
System Optimization Gains, Net Assets Held for Sale (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Other assets held for sale | ||
Long lived assets held for sale | ||
Assets held for sale | $ 2,678 | $ 2,689 |
Reorganization and Realignmen_3
Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Restructuring Cost and Reserve | ||
Reorganization and realignment costs | $ 5,673 | $ 6,808 |
Organizational redesign | ||
Restructuring Cost and Reserve | ||
Reorganization and realignment costs | 5,622 | 6,737 |
Other reorganization and realignment plans | ||
Restructuring Cost and Reserve | ||
Reorganization and realignment costs | $ 51 | $ 71 |
Reorganization and Realignmen_4
Reorganization and Realignment Costs Organizational Redesign (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Restructuring Cost and Reserve | ||
Reorganization and realignment costs | $ 5,673 | $ 6,808 |
Organizational Redesign | ||
Restructuring Cost and Reserve | ||
Restructuring and Related Cost, Incurred Cost | 5,494 | 5,962 |
Reorganization and realignment costs | 5,622 | 6,737 |
Restructuring and Related Cost, Cost Incurred to Date | 13,287 | |
Restructuring Charges, Incurred to Date | 14,686 | |
Organizational Redesign | Minimum | ||
Restructuring Cost and Reserve | ||
Restructuring and Related Cost, Expected Cost | 17,000 | |
Restructuring and Related Cost, Expected Cost Remaining | 2,500 | |
Organizational Redesign | Maximum | ||
Restructuring Cost and Reserve | ||
Restructuring and Related Cost, Expected Cost | 19,000 | |
Restructuring and Related Cost, Expected Cost Remaining | 4,500 | |
Organizational Redesign | Severance and related employee costs | ||
Restructuring Cost and Reserve | ||
Restructuring and Related Cost, Incurred Cost | 5,362 | 5,539 |
Restructuring and Related Cost, Expected Cost Remaining | 2,000 | |
Restructuring and Related Cost, Cost Incurred to Date | 11,605 | |
Organizational Redesign | Recruitment and relocation costs | ||
Restructuring Cost and Reserve | ||
Restructuring and Related Cost, Incurred Cost | 82 | 78 |
Restructuring and Related Cost, Expected Cost Remaining | 200 | |
Restructuring and Related Cost, Cost Incurred to Date | 636 | |
Organizational Redesign | Third-party and other costs | ||
Restructuring Cost and Reserve | ||
Restructuring and Related Cost, Incurred Cost | 50 | 345 |
Restructuring and Related Cost, Cost Incurred to Date | 1,046 | |
Organizational Redesign | Share-based compensation | ||
Restructuring Cost and Reserve | ||
Restructuring and Related Cost, Incurred Cost | 128 | $ 775 |
Restructuring and Related Cost, Expected Cost Remaining | 1,500 | |
Restructuring and Related Cost, Cost Incurred to Date | $ 1,399 |
Reorganization and Realignmen_5
Reorganization and Realignment Costs Organizational Redesign Accrual Rollforward (Details) - Organizational Redesign - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Restructuring Cost and Reserve | ||
Beginning balance | $ 1,692 | $ 0 |
Charges | 5,494 | 5,962 |
Payments | (1,109) | (881) |
Ending balance | 6,077 | 5,081 |
Severance and related employee costs | ||
Restructuring Cost and Reserve | ||
Beginning balance | 1,692 | 0 |
Charges | 5,362 | 5,539 |
Payments | (977) | (741) |
Ending balance | 6,077 | 4,798 |
Recruitment and relocation costs | ||
Restructuring Cost and Reserve | ||
Beginning balance | 0 | 0 |
Charges | 82 | 78 |
Payments | (82) | (78) |
Ending balance | 0 | 0 |
Third-party and other costs | ||
Restructuring Cost and Reserve | ||
Beginning balance | 0 | 0 |
Charges | 50 | 345 |
Payments | (50) | (62) |
Ending balance | 0 | 283 |
Share-based compensation | ||
Restructuring Cost and Reserve | ||
Charges | 128 | $ 775 |
Accrued expenses and other current liabilities | ||
Restructuring Cost and Reserve | ||
Ending balance | 3,816 | |
Other liabilities | ||
Restructuring Cost and Reserve | ||
Ending balance | $ 2,261 |
Investments Carrying Value of I
Investments Carrying Value of Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Investments | ||
Equity method investments | $ 31,512 | $ 32,727 |
Other investments in equity securities | 1,718 | 1,718 |
Investments | $ 33,230 | $ 34,445 |
Investments Equity Method Inves
Investments Equity Method Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Schedule of Equity Method Investments | ||
Balance at beginning of period | $ 32,727 | |
Foreign currency translation adjustment included in “Other comprehensive income (loss)” and other | (4,586) | $ 158 |
Balance at end of period | $ 31,512 | |
TimWen | ||
Schedule of Equity Method Investments | ||
Equity Method Investment, Ownership Percentage | 50% | |
Equity Method Investment, Purchase Price Adjustment, Amortization Period | 21 years | 21 years |
TimWen and Brazil JV | ||
Schedule of Equity Method Investments | ||
Balance at beginning of period | $ 32,727 | $ 33,921 |
Equity in earnings for the period | 3,151 | 2,783 |
Amortization of purchase price adjustments | (629) | (684) |
Equity in earnings for the period, net of amortization of purchase price adjustments | 2,522 | 2,099 |
Distributions received | (2,952) | (2,493) |
Foreign currency translation adjustment included in “Other comprehensive income (loss)” and other | (785) | 10 |
Balance at end of period | $ 31,512 | $ 33,537 |
Investments Other Investments i
Investments Other Investments in Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Investment Income, Net [Abstract] | ||
Investment loss, net | $ 0 | $ (3,562) |
Fair Value Measurements Financi
Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Other investments in equity securities | $ 1,718 | $ 1,718 |
7% debentures | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 7% | 7% |
Reported Value Measurement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash equivalents | $ 339,779 | $ 365,901 |
Other investments in equity securities | 1,718 | 1,718 |
Reported Value Measurement | Series 2022-1 Class A-2-I Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 98,250 | 98,500 |
Reported Value Measurement | Series 2022-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 389,134 | 390,134 |
Reported Value Measurement | Series 2021-1 Class A-2-I Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 422,144 | 423,269 |
Reported Value Measurement | Series 2021-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 631,905 | 633,530 |
Reported Value Measurement | Series 2019-1 Class A-2-I Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 356,673 | 357,673 |
Reported Value Measurement | Series 2019-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 401,998 | 403,123 |
Reported Value Measurement | Series 2018-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 439,912 | 441,099 |
Reported Value Measurement | 7% debentures | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 48,405 | 48,237 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash equivalents | 339,779 | 365,901 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Other investments in equity securities | 1,718 | 1,718 |
Estimate of Fair Value Measurement | Series 2022-1 Class A-2-I Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 93,449 | 92,289 |
Estimate of Fair Value Measurement | Series 2022-1 Class A-2-II Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 354,571 | 370,577 |
Estimate of Fair Value Measurement | Series 2021-1 Class A-2-I Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 367,544 | 362,572 |
Estimate of Fair Value Measurement | Series 2021-1 Class A-2-II Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 530,592 | 530,581 |
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-I Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 341,960 | 341,606 |
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-II Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 376,793 | 374,058 |
Estimate of Fair Value Measurement | Series 2018-1 Class A-2-II Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 415,457 | 412,754 |
Estimate of Fair Value Measurement | 7% debentures | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | $ 49,813 | $ 49,431 |
Fair Value Measurements Non-Rec
Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | ||
Assets Held and used, Long Lived, Fair Value Disclosure | $ 1,635 | $ 1,212 |
Assets Held for sale, Long Lived, Fair Value Disclosure | 0 | 1,044 |
Total | 1,635 | 2,256 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | ||
Assets Held and used, Long Lived, Fair Value Disclosure | 0 | 0 |
Assets Held for sale, Long Lived, Fair Value Disclosure | 0 | 0 |
Total | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | ||
Assets Held and used, Long Lived, Fair Value Disclosure | 0 | 0 |
Assets Held for sale, Long Lived, Fair Value Disclosure | 0 | 0 |
Total | 0 | 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | ||
Assets Held and used, Long Lived, Fair Value Disclosure | 1,635 | 1,212 |
Assets Held for sale, Long Lived, Fair Value Disclosure | 0 | 1,044 |
Total | $ 1,635 | $ 2,256 |
Impairment of Long-Lived Asse_3
Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Impairment of Long-Lived Assets | ||
Impairment of long-lived assets | $ 2,006 | $ 376 |
Company-operated restaurants | ||
Impairment of Long-Lived Assets | ||
Impairment of long-lived assets | 1,775 | 350 |
Surplus properties | ||
Impairment of Long-Lived Assets | ||
Impairment of long-lived assets | $ 231 | $ 26 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Apr. 02, 2023 | Dec. 31, 2023 | |
Effective Income Tax Rate | 26.90% | 28% | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21% | ||
Significant changes to unrecognized tax benefits | $ 0 | ||
Significant changes to interest and penalties related to unrecognized tax benefits | 0 | ||
Reasonably possible decrease in unrecognized tax benefits | 220 | ||
Income Taxes Receivable, Current | 6,830 | $ 5,284 | |
Income Taxes Receivable, Noncurrent | $ 0 | $ 0 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Earnings Per Share [Abstract] | ||
Net income | $ 41,993 | $ 39,821 |
Weighted average basic shares outstanding | 205,372 | 212,547 |
Dilutive effect of stock options and restricted shares | 1,599 | 2,482 |
Weighted average diluted shares outstanding | 206,971 | 215,029 |
Basic net income per share | $ 0.20 | $ 0.19 |
Diluted net income per share | $ 0.20 | $ 0.19 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 6,789 | 4,532 |
Stockholders' Equity Dividends
Stockholders' Equity Dividends (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.25 | $ 0.25 |
Stockholders' Equity Repurchase
Stockholders' Equity Repurchases of Common Stock (Details) - January 2023 Share Repurchase Program - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Apr. 25, 2024 | Mar. 31, 2024 | Apr. 02, 2023 | Jan. 31, 2023 | |
Equity, Class of Treasury Stock | ||||
Stock Repurchase Program, Authorized Amount | $ 500,000 | |||
Treasury Stock, Shares, Acquired | 392 | 1,794 | ||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 7,187 | $ 38,785 | ||
Stock Repurchase Program, Repurchase Accrual | 470 | 2,083 | ||
Stock Repurchase Program, Excise Tax Accrual | 24 | |||
Stock Repurchase Program, Cost Incurred | 5 | $ 25 | ||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 302,813 | |||
Subsequent Event | ||||
Equity, Class of Treasury Stock | ||||
Treasury Stock, Shares, Acquired | 229 | |||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 4,316 |
Stockholders' Equity Accumulate
Stockholders' Equity Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Accumulated Other Comprehensive Loss | ||
Balance at beginning of period | $ (58,375) | $ (64,176) |
Foreign currency translation | (4,586) | 158 |
Balance at end of period | (62,961) | (64,018) |
Foreign Currency Translation | ||
Accumulated Other Comprehensive Loss | ||
Foreign currency translation | $ (4,586) | $ 158 |
Leases Lessee Lease Narrative (
Leases Lessee Lease Narrative (Details) | Mar. 31, 2024 number_of_restaurants |
Lessee, Lease, Description | |
Number of restaurants | 7,248 |
Land And Building - Company Owned | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 155 |
Building - Company Owned; Land - Leased | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 144 |
Land And Building - Leased | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 112 |
Entity Operated Units, Total [Member] | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 411 |
Leases Lessor Lease Narrative (
Leases Lessor Lease Narrative (Details) | Mar. 31, 2024 number_of_restaurants |
Lessor, Lease, Description | |
Number of restaurants | 7,248 |
Land And Building - Company Owned | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 493 |
Land And Building - Leased | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 1,176 |
Franchised Units, Other [Member] | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 5,168 |
Franchised Units, Total [Member] | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 6,837 |
Leases Components of Lease Cost
Leases Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Lease, Cost | ||
Amortization of finance lease assets | $ 4,297 | $ 4,063 |
Interest on finance lease liabilities | 10,658 | 10,750 |
Total finance lease cost | 14,955 | 14,813 |
Operating lease cost | 21,701 | 21,449 |
Variable lease cost | 16,488 | 16,081 |
Short-term lease cost | 1,394 | 1,506 |
Total operating lease cost | 39,583 | 39,036 |
Total lease cost | 54,538 | 53,849 |
Franchise rental expense | ||
Lease, Cost | ||
Total operating lease cost | 31,718 | 30,598 |
Cost of sales | ||
Lease, Cost | ||
Total operating lease cost | 7,388 | 7,865 |
Executory costs paid by lessee | ||
Lease, Cost | ||
Variable lease cost | $ 10,221 | $ 9,848 |
Leases Components of Lease Inco
Leases Components of Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Lessor Lease Income | ||
Sales-type leases, selling profit | $ (16) | $ 129 |
Sales-type and direct-financing leases, interest income | 7,719 | 7,862 |
Operating lease income | 41,497 | 42,156 |
Variable lease income | 16,489 | 15,651 |
Franchise rental income | 57,986 | 57,807 |
Sublease income | 42,783 | 42,951 |
Executory costs paid to lessor | ||
Lessor Lease Income | ||
Sublease income | $ 10,089 | $ 9,778 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information Non-Cash Investing and Financing Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||
Capital expenditures included in accounts payable | $ 9,161 | $ 9,119 |
Finance leases | $ 3,749 | $ 333 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Apr. 02, 2023 | Jan. 01, 2023 |
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract] | ||||
Cash and cash equivalents | $ 498,333 | $ 516,037 | ||
Restricted cash | 36,058 | 35,848 | ||
Restricted cash, included in Advertising funds restricted assets | 58,695 | 36,931 | ||
Total cash, cash equivalents and restricted cash | $ 593,086 | $ 588,816 | $ 740,566 | $ 831,801 |
Transactions with Related Par_2
Transactions with Related Parties (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 USD ($) number_of_restaurants | Apr. 02, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Related Party Transaction | |||
Number of Restaurants | number_of_restaurants | 7,248 | ||
Accounts payable | $ 26,175 | $ 27,370 | |
TimWen | Franchise Rental Expense | |||
Related Party Transaction | |||
Operating Costs and Expenses | 5,030 | $ 4,673 | |
TimWen | Management Fee Income | General and administrative | |||
Related Party Transaction | |||
Other Operating Income | 60 | 60 | |
QSCC | Patronage Dividends | |||
Related Party Transaction | |||
Related Party Transaction, Purchases from Related Party | 3,096 | 0 | |
QSCC | Patronage Dividends | Other Operating Income (Expense) | |||
Related Party Transaction | |||
Related Party Transaction, Purchases from Related Party | 2,909 | ||
QSCC | Patronage Dividends | Cost of sales | |||
Related Party Transaction | |||
Related Party Transaction, Purchases from Related Party | 187 | ||
Yellow Cab | Royalty, Advertising Fund, Lease and Other Income | |||
Related Party Transaction | |||
Other Operating Income | 3,612 | 3,610 | |
Yellow Cab | Accounts and notes receivable, net and Advertising funds restricted assets | Royalty, Advertising Fund, Lease and Other Income | |||
Related Party Transaction | |||
Accounts receivable, net, current | $ 1,191 | 1,153 | |
Yellow Cab | Franchised Units | |||
Related Party Transaction | |||
Number of Restaurants | number_of_restaurants | 85 | ||
AMC | Advertising Funds Expense | |||
Related Party Transaction | |||
Related Party Transaction, Purchases from Related Party | $ 500 | $ 419 | |
AMC | Advertising funds restricted liabilities | Advertising Funds Expense | |||
Related Party Transaction | |||
Accounts payable | $ 50 | $ 584 |
Guarantees and Other Commitme_2
Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Property Lease Guarantee | |
Guarantor Obligations | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 93,979 |
Guarantees and Other Commitme_3
Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Guarantor Obligations | |
Letters of Credit Outstanding, Amount | $ 28,842 |
Segment Information Reconciliat
Segment Information Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Segment Reporting, Revenue Reconciling Item | ||
Total revenues | $ 534,753 | $ 528,807 |
Wendy's U.S. | ||
Segment Reporting, Revenue Reconciling Item | ||
Total revenues | 442,847 | 440,988 |
Wendy's International | ||
Segment Reporting, Revenue Reconciling Item | ||
Total revenues | 32,815 | 29,280 |
Global Real Estate & Development | ||
Segment Reporting, Revenue Reconciling Item | ||
Total revenues | $ 59,091 | $ 58,539 |
Segment Information Reconcili_2
Segment Information Reconciliation of Profit from Segments to Consolidated (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Apr. 02, 2023 | |
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated | ||
Segment profit | $ 81,156 | $ 84,478 |
Unallocated franchise support and other costs | (14,742) | (13,260) |
Advertising funds deficit | 207 | 1,106 |
General and Administrative Expense | (63,757) | (62,276) |
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | (35,518) | (33,472) |
Amortization of cloud computing arrangements | (3,542) | (1,582) |
System optimization gains, net | (127) | 5 |
Reorganization and realignment costs | (5,673) | (6,808) |
Impairment of long-lived assets | (2,006) | (376) |
Unallocated other operating income, net | 3,033 | 2,266 |
Interest expense, net | (30,535) | (31,705) |
Loss on early extinguishment of debt | 0 | (1,266) |
Investment loss, net | 0 | (3,562) |
Other income, net | 6,836 | 7,336 |
Income before income taxes | 57,457 | 55,281 |
Corporate and Other | ||
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated | ||
Unallocated franchise support and other costs | (26) | 0 |
General and Administrative Expense | (33,390) | (32,161) |
Unallocated other operating income, net | 656 | 22 |
Operating Segments | ||
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated | ||
Segment profit | 160,575 | 157,744 |
Operating Segments | Wendy's U.S. | ||
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated | ||
Segment profit | 125,824 | 125,230 |
Advertising funds deficit | (2,325) | |
Operating Segments | Wendy's International | ||
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated | ||
Segment profit | 10,690 | 7,446 |
Advertising funds deficit | (162) | (548) |
Other international-related advertising deficit | 150 | 845 |
Operating Segments | Global Real Estate & Development | ||
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated | ||
Segment profit | $ 24,061 | $ 25,068 |