WEN - Earnings call transcript Q3 2019

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Operator

Good morning. Welcome to the Wendy's Company Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] Thank you.

you. Thank Investor FD&A. Director, and Relations Lemenchick, Corporate Greg

You your conference. may begin

Greg Lemenchick

Investors good Thank which conference the Web morning, call and ir.wendys.com. is of site, and on presentation, Today's PowerPoint everyone. you, our a webcast available section includes

results factors the and we we that differ Harbor forth is may to our release. discuss appears Before investors cause reminds Various of statement This end today Safe disclosure statements. the note could the that from please results projections take our earnings in begin, those affect of our at certain materially forward-looking. information set forward-looking

Also, reference non-GAAP presentation our earnings should financial Investors today's the comparable some of the or refer in to at of this directly most comments non-GAAP financial of measures reconciliations release. GAAP will to our measure measures. end

today, and outlook. On initiatives. on update President for Plosch, will third our provide the up Executive review Financial Gunther questions. and we key will Penegor, line Officer, Officer, full-year call our our After results conference that, Todd will an open And Chief our Chief quarter

will With Todd. over to I hand things that,

Todd Penegor

morning, and everyone. good Greg, Thanks,

Before to we day you ago. all our get attended I the who thank to tuned or in of a take a few quarter want investor results, to into weeks moment third

As playing efficient striving a we shared, growth. to by we accelerated growth different unlock company are become an game to

highlights momentum we strong business. results, have the Let's which dive quarter our into our third in

in to accelerated wide through ability As growth our increase robust be an sales previously we X.X%. announced, showcase system a efficient of company

translated into and same sales growth. X.X% which global North continued restaurant America strong of earnings expansion backdrop restaurant the On strong of

our year-to-date. the is and of globe and X.X%, new had the time openings growth pacing remain last to I've across unit net slightly restaurants opened the in new deliver XXXX. of track XX third on open we in this goal year, we ahead quarter This XXX We

came as leveraged in re-image XX from the continue quarter, the image. at now restaurant margin growing our prior same have sales on XX.X% system basis restaurants new we of year Company our the also growth. global restaurant for and to points We XX% the

exceeded free approximately growth, results will through our This for year-to-date growth XX% increase our cash QX a outlook Our to as adjusted our in we result talk and flow. will year X% moment. a adjusted in flow the strong which updated EBITDA expectations X% EPS about achieved GP

turned Nuggets with Bacon up strategy to Jalapeno our customer the We restaurant contributed Our addition the sales of QX. North in newest highlighting powerful exceeded line-up, the promotion, to for marketing craving the same hamburger our then media X.X% this expectations. to product. balance quarter with growth customers heat that Crave Spicy America our to response re-launch accelerated voice Cheeseburger. our social We had and began Thanks of the Baconfest the Made

ordering transactions significantly check as This This platforms of the promotion Supporting Nuggets of incoming our promotion. during app. changed to this awareness when mobile our customer for increased mobile average launch number promotion. our Spicy doubled through our our count began promotion increased we digital trends and an led the we of

The around excitement addition to to spicy as to during Chicken quarter. the Bacon Crave as Sandwich Made line-up added Chicken of well Jalapeno Salad the Buffalo our the the chicken

and we to first established the innovation on flavor around continue year of build driving our equity with We the in the half menu.

dollar. business, have XXXX in our plans into the for one and are more more drive to we fourth to the we We have quarter one excited visit, place momentum about and in continue

to strong Day, at our restaurant our formula accelerate this restaurant is powerful, shared Investor economic growth. with global simple same fuel model expansion, restaurant yet we sales drive a As and

more dollar on strong sales to one, focus we working our which model, visit, third drive economic results. to our This job is a restaurant same drive continue strategy the one forefront quarter mix. restaurant by to organic With as number at one is healthy evidenced more

make we our provide capabilities continue we at enhancing we Investor a program. We're progress on more Day, our partners place the improving and to through ensure succeed. our to operations as discussed comprehensive also launching access continue and Kurt digital brand expanded As to to plan have in loyalty delivery a

We strengthening believe breakfast up in business our the of quarter us successful launch set will for a first XXXX.

ability designed we our future. fully us for restaurant economic a to restaurant is launch this benefit and expect same initiatives in Breakfast accelerate strong tandem the in we These demand aligned program give system growth of sales to model. customer confidence franchise since at backdrop that on to Wendy's the overall the Our have working into

the at is brand customers to our around are open story, growth our more access in we on globe which restaurants vital XXXX. to track give deliver the we Accelerating pace our commitments and to to

we As Abigail backdrop the existing Investor on growth development of our discussed accelerated at international begin markets. our Day, will pursuing in strong

by XX UK company next in opening the We the XX will also Europe entering months. to we restaurants within that announced be

moment Our the growth announcement to at new I'd long-term Investor our take plans compelling highlight. like guidance to a which of Day, with culminated

long-term call to high X% X% digits. wide cash to grow to free growth us algorithms growth and new single for adjusted EBITDA flow sales Our system accelerate and our

the There growth. of expect this drivers are that of primary three be pillars we to acceleration

demand, U.S. part that strong We we that our first can at sales The execute. on the on XX% believe breakfast. of grow to we strong day customer and plan based this program to least is

access believe provide by brand approximately and sales could XX% as digital, plan total approximately The digital to sit through of second platforms. digital X% is U.S. sales our today versus contribute the we at our XXXX to that more we we

in double Europe. billion expansion existing by sales that we and driven our XXXX, by to as XXXX can grow to restaurants we well growth our approximately believe as markets, internationally $X Lastly, into

have different about growth accelerated a our to we We that playing are excited growth achieve investing as goals. are the we and plans game in

of able to In do any our be that partnership wouldn't to one remember closing, support, it the is without we system family of franchisees. is important this dedication and our and

with and and passion totally we plans of franchisees most to commitment We execute the we all to restaurant place have and our ensure The the vision aligned grow. is the brand. system has becoming on with achieve world's thriving are our in to in beloved excellence

I'll that, over things to GP. turn With

Gunther Plosch

Todd. Thanks,

We of the free sales generation. flow are accelerating same results very on expansion, three cash robust with strength global restaurant is pleased into our restaurant and quarter which translating

As three, targets. Todd mentioned, quarter strong our of due SOS in exceeded financial to our we many

of same result. in restaurant Let's by increase as revenues well were also The dive increase into operated which its acquisition company sales, and an was sales, company driven to restaurant franchise last due the positive as restaurants, attracted in restaurants. year's

$XX leases as payments related pass-through by new sub of lease the also standard. to were driven million revenues approximately of part Adjusted accounting

than result anticipated basis same restaurant institution X.X%. million legal restaurant in to company by increase reserve as for Year-over-year, a of proceeds increased reduction case. general proposed and of expenses administrative in XX sales an the leveraging in The our higher margin use available to the insurance driven by decrease primarily to of was due XX.X% expected primarily financial related a $X.X settlement points

financial impact consistent adjusted fourth will how of Please the the note adjustment our that treated is we excluded EBITDA with the XXXX. quarter case in institution calculation, which this of be from

the of by increased primarily accrual. approximately G&A would incentive compensation was higher this, a The have $X.X or result Excluding increase X%. million

restaurant offset on an Adjusted in increase an driven American partially the $X company to in EBITDA by accelerating the for to our increase margin same of franchise X.X% restaurants million. North restaurant support royalties quarter. franchise strength in investment sales, in grew $XXX This scanners by expense, by and approximately due was million our

an investments scanner be our due to to versus expecting now of are estimate We $X about roll our efficient up. previous $XX billion million

out, depreciation the this result primarily share result repurchase the round tax core to to tax and of Adjusted flow year-to-date earnings of offset adjusted our our shares share To X% by second programs per driven a higher increased earnings by was XX% expected lower as approximately $XXX reserve by free increased as in driven growth. $X.XX. million outstanding newer partially cash an growth, rate by strong EBITDA expense. was things quarter This release,

guidance three, In light performance metrics quarter of several our XXXX. for of in we updated our have strong

announced now global that sales high Day, be the our guidance previously we to announced system expect tightened As end of range. range, have we Investor our wide at and

XX% of our accrual the high adjusted We're for approximately of range million $XXX to end our as $XXX at increase year. to be to our guidance and rate expecting are to now XX% be performance, well. attractive result due EBITDA incentive million sales the a As compensation an we to be our now tax strong to expecting G&A in expect

about to range, attract to the our of end raised up addition trusted being guidance, our our new as three resulted in range adjusted high pennies, taking $X.XX. to $X.XX the EPS Thus, in by to coming

within stay to our articulated expect expenditures capital we cash continue free guidance and to flow range. previously Lastly,

would I allocation our Lastly, highlight capital to policy. like

early profitable growth, a financial Priority our door. largely us choices, October, franchise in at in policy on our with in return focused our always number at the discussed and investment we we are our discipline ensuring for As Investor is for strong investing franchisees one and Fay is unchanged.

the increase launch we to we We beginning dividend recently quarter, fourth shares accelerated our year. share our $XXX fourth payout announced of to remain dividend debt. committed this to in repurchase as of Day ratio and cash utilize We a reduce commitment will or million at our the at north in plan maintaining program that and and attractive XX% demonstrated an with Investor in quarter XX% policy, repurchase excess to

expansion, is formula flows. of global by and restaurant on significant powerful, simple, Our showcasing free that yet sales the strong is system cash sales positive growth translating famous accelerated growth efficient company into backdrop and is which behind

now this will hand I out. to Greg to things over close

Greg Lemenchick

how reporting quickly I an GP. expected provide new impact on to moment business to a our is to unit our future Thanks, structure take wanted structure. update

the XXXX, we by opportunity announced for accountabilities saw May our an business our increase we In growth realignment as organization. to driving across effectiveness of clear the

Abigail total placed have the focused business Pringle business. the Kane Kurt for under international U.S. for and We P&L accountability

continuing result to have a are on this, changes structure. evaluate reporting segment As will future we the impact our of these

international anticipate report of estate segments; and filing our we February, the results development. in global that with real XX-K our Starting three in will we US, and

turn Relations calendar. our to let's Investor upcoming Now

First the TP, Abby King Thursday, I to Stephens manager on Nashville will up, XX. and head IR November in or conference of

XXth, New visit we GP, December weeklong stops with Wells a embark roadshow on Abby Ohio in and Fargo. King following Boston. Dublin, will Todd, a I The and Francisco, here investor will week, headquarter LA, host in On San York with

sales these please contact in respective firm. side any If you're us meeting with events, equity host at sell analysts interested of the or contact at the

morning. with And and call finally, XXXX that host conference along details further our the we to on day Wednesday, on plan earnings February release XXth, XXXX our outlook

take questions. With your that we're to ready

Operator

company. Bittner and [Operator First of instructions] question from Oppenheimer comes Brian

is open. Your line

Brian Bittner

at out Investor sales for sales Thanks specific adding you outside expectations congratulations. morning. breakfast the XXXX and a in your to you breakfast. on taking XXXX, Good Day about about to X% question growth of X% ask of XX% to system in core laid system talked sales want top that to I

XXrd week, expectations So, wide how that for within you're Can you before X% sales we XX% sales store basically about thinking XX% Is XXXX? XX%? it talking what the is system your to about to the to be same Is actual XX? same growth. just sales range talk about should XX% store

Gunther Plosch

remainder Morning, X% obviously and Brian, to recap you sales growth. growth restaurant closes growth. to Days can the I is that you the Investor The same we for Thanks X.X% Same The unit said restaurant only about question. correct. unit by core X%. what sales growth color is is on I an think X% of driven Yes, give

same difference sales. that's total So then growth restaurant between and sales the

Brian Bittner

million we Okay, model last spend our in your incremental on all take But not and to asking breakfast you of sure get you're I'm come spending XXXX. that, which begin talked guidance and we past perfect the I'm to not. this just close When we move We or will not XX subside XXXX. clarify to question. as to - conclusion follow-up that's advertising. about to for where you forward, it's if

next many tailwind rolls becomes How it be going do are EBITDA? Is you it want a over to off How rolls off there breakfast years? it How sales based and adjusted? pre-planned? Or rolls off very is how how to to be doing? the going us this on thinking about

Gunther Plosch

on work Hey, looks of Brian done like amount it we have good a this.

media that I make period waves make Investor right, that said sure are first our providing national year three in sure business. to drive we is breakfast the at we have company on years three to committed we Day our As there to funds, a the are on adequate

expect making business. we'll that In even we you XXXX, be to on in the still losses going in more be the loss that XXXX. we're less to to profitable have $XX on be million They're and breakfast in are XXXX can profitable than going XXXX, breakfast going

then initial on investment we and commitment you are full three breakfast And disappearing come to is XXXX, business. our profitability then the once reaching

a a how not of at as said how steep sales our be in it's sales slope steep you are the to terms have our or least function going call, the and In confident to Investor know, what are the is, on to that fast expand take while is we we going business. to to habit we reach going the going to of are breakfast XX% change Day

it, So, consecutively once going investment up to and levels we it's go reach a going are QX. down slide then our to result of as disappear

Brian Bittner

GP. you, Thank

Operator

Slabaugh comes question next Your from Will Stephens. of

Your line is open.

Will Slabaugh

incentivize talk Can a guests had program? to ways question loyalty guys. you and sign that going to on for up you thanks, loyalty. prepared Yes, digital the you're as get launch to about I

know of your so so a far, are that our your have much I digital of through. of trouble back kind the peers the with lot on drive question, just transactions QS had And of engagement given through

So, ahead, scan or can into in as how they're they're the getting through that drop about incorporate you to director? the either you customer order as talk

Todd Penegor

a to about the be opportunity to have that you Investor in Yes, specifics, as talk out a that we early digital, then don't on program. said awareness. point-based And many drive about but couple have everything did journey, place it we too a we things give think would our I is program to want the of in will of we XXXX. biggest well, at loyalty Day continue

with app more how How ordering, but become do got we be one of we continue folks our do we to come, loyalty of sure that complete universe things get into to when options stick mobile folks get loyal? not make only make those sure a they you to that us into

get year the scanners to for putting more awareness frictionless allow sure that really arena. in we in to drive we mobile us but not of folks go believe So, to then come that, place. continue when programs plays our seamless for And we to they into into will continue seamless, the big users customers to role they're the make all experience that, incent when to we're a as the mobile only to utilizing moving continue will things back next create all on becomes tools employees, mobile will experience and the forward that the

Will Slabaugh

Thank it. you. Got

Operator

Your next comes question Charles Andrew with Cowen. from

Your line is open.

Andrew Charles

relative Great, not spicy thank now expect you. are to nuggets posted Looks help same like the the these chicken of menu the seeing Nuggets buzz for still we're promotion to available. permanent can generate be addition Spicy them plan brand? or level Is a to make we XQ. to on overtime But to

Todd Penegor

menu advertising we strong and to every needs lot Nuggets continue fan day to Spicy before nice We good of that see on of the even menu had and clearly velocity presence up folks on feel a Spicy we right to always national the behind It's one stay our favorite. show its say, turned item we Nuggets. media social like on earn

the have now X on do featuring, in also We hamburger, but chicken premium featured really have for going offering a spicy spicy right the nugget market, sandwiches XX-piece promotion chicken X that. core sandwich, our our in we

to the stomach our continues vote in how momentum on the that and on offering long stays that with business continue we'll the let portion consumer of So, their restaurants.

Andrew Charles

that in to about just I platforms branding expand decision you've $X check that is like was a margin and Crave in and more this marketplace, the to new and is of relative the Box? to wondering to nice the which Biggie the other Biggie more - Made Gotcha $X already Box to to is creative Todd and done on are rationale job offerings similar promote XXXX

Todd Penegor

hamburger into This consumers be chicken base, got big get sure business, to them Exactly. and with more driver we This sure core strategy we driver business, we continue they a best core is come look want premium, we make up one do do how would check about tasting hamburger food one highest that we more you mouths at consumers make get our our the products. we of trade How our to when more into a visit into one quality business, nice balance our consistent the frequency? to traffic make drive a between isn't dollar. again back sure way to think

Andrew Charles

self-driving the implied we That's he and $X.X helpful. right up to in step XQ question tail last have that's And G&A the the should and about reduction you just my be quarter what fourth reserve, lee as for GP G&A million thinking talked habit about for higher? the

Gunther Plosch

incentive payout ended year, the go in year, last result last second about for fourth plan we half Again, low question. XXX% comp, it be If it $XX really below of accrued million. and Great G&A a remember, quarter with you to up as right? incentive approvals, didn't was us, the of

up midpoint was implied it The so of million actually in about for is pushed the in quarter reserve down help P&L there that million, the be million to $XX the was to on to fourth roughly need it step G&A $XX clear, of prior not million. adjustment the of range what seen it's to $XX And has adjusted take $XX is, guidance P&L, a our for have is face which quarters, a really again, face the G&A out. EBITDA you massive performance, on line, the not obviously

Andrew Charles

Thank Very you. good.

Operator

of Evercore Your ISI. next question David comes from Palmer

is open. line Your

David Palmer

question Thanks. is, crazy. about which guys. Good A morning, business it's your underlying

guys about this you're you that sort later how a the underlying XXXX. looks layer in to wonder be you of really really was given has going business Nuggets, comps think momentum forward, going at this, But of your success laughing base now, you needed on real like it the midyear, that given around breakfast. Because which sales Spicy spark

I Earlier it year, in breakfast. momentum, that you might have the to seem this of some lose worry but with you

about having Hail wonder regret really little back as breakfast a and this as Mary I you're businesses the almost with a if wonder anything about much gotten business underlying given spark. as look I such underlying breakfast for So, go you for to go has on you that

maybe on other them, really margin things, lot of for the And at they're dated a my is this you value I side question these you and don't like sacrificing point, of guess value constructs them. seem like they're know, need

So, value? what Thanks. your is on future

Todd Penegor

driving about And spicy having have we really being has and question, book do built nice in the lot the get chicken traffic a back with that the running. going talked we're this Made on on low we been half and business. and a that a nice check, for in back Thanks we David, our the we've get we're it the And momentum mix. that were able balanced focused play bringing Crave to to on some between balance excited to the healthy little the platform, high more early balance focused and year year the nuggets, of

additional continue in breakfast business. company. be want the about we're a into And get because to business efficient And growth the don't our breakfast we growth the Hail news Mary, talking an being part great we why the is, our want confident be That's layer accelerated we an to to core the into future. day to in stronger we core more drive breakfast expect to momentum is the the

for new remember support construct dollars this advertising to breakfast, and our so to lunch how to We're dinner. life sacrifice support going we're against bringing And of life. we're not the bringing

nice impression, across the not should day additional as dinner. across there will dollars our have and Halo breakfast we lunch have but of parts, that all just So, a have out we

around core growth feel both to optimism base do going good tools excitement forward. got we've drive we business that and our on that breakfast So, and

in we about So, Day, you feel best in plans when our Investor down growth at great execution, living We've place. we're comes them international. worlds, laid the think like do digital breakfast, and of initiatives all right? to got We out all the

need what we to system hearts to We know minds the do. we go the the execute. of and got So,

execute. go, to got we've Now,

David Palmer

Thank you.

Operator

comes Your Guggenheim Securities. Difrisco of Matthew question from

Your line is open.

Matthew Difrisco

Thank you.

of up rollout. spur I among of the broader be on The Or the with the guess board? State questions, breakfast front in follow and where the lived for also or little I consolidation greater of through that then - have in are past some something Just in one fully the franchisees? concerned network a broader flips? the buying might there all Is breakfast the that that might wake greater that little some question. Is guess, is consolidation there or this the Union sort potentially some a might of digested have they're franchise this

respect sort what with delivery delivery then, you digital, you're digital. as because sounds relatively context how of to today is delivery is though still, number digital into growth X And even that the pretty you that that going a into goal? Can on XX for like XX% it X% from to low digital put basically expecting said plays XXXX, is sounds it's

Todd Penegor

of on focused, and Matt attitude folks first came breakfast back be couple in convention we future our or higher. off been in we optimism the our to and about has out the weeks So, never business business on, of consolidation, expect a really

at all-time highs. In it's fact,

this platforms, one of growth So, they're we're all about breakfast subset. excited where on being business taking our

focus grow. see to consolidation more in think you'll I system a we've don't think I short got term. So, the

that are valuation excited can folks in their profitability can and to think breakfast drive business. I add

So, good they're it to going a goal. give

see flip they may in execute against down is the first it the going potentially this some slow of as fact, forward. continue even in buy new that of might In half the activity you and opportunity the growth of year, to

delivery even by what around clearly areas. about around doing balanced and When what ordering, more forward I as about doing of trade to we're digital, get XX am and lot X% you a journey, to is when you from our going move X we start mobile today is delivery, and think we're to kiosk driven a think select

through us transactions moved of delivery digital to that journey, XX% channel. those to have against to start have the work a to get coming of our So, which all start you'll to tools

Matthew Difrisco

Thank you so much.

Operator

Bank America. question from Gregory comes of Francfort next Your of

Your line is open.

Gregory Francfort

guys, for question Hey two. have thanks the I

of talk the The XXXXsales. making in can assumption practice XX% you're first you incrementality the point component is about the in

I X% maybe think In wasn't mix. launched great. range, the when biggest years list got few ago, your but one a of percent as plus of A a kind sales similar competitors Brexit they of to

is what the assumption just there. So

is the to piece back And other going mobile.

I think talked remarks, of you mix your about in mobile promotion prepared Nuggets. Spicy the during doubling the

You has before talked about you how mobile a what consistent in mix you much that and forward? there basis how were Thank stickiness, maybe that been that much. promotion on the did was of to much and very drive you after able and going kind

Todd Penegor

We at look see that volume we Yes, the lot breakfast, we on. we've all the in that today. work going all of activity cannibalistic done a have metrics, breakfast restaurants the don't

into outlook the taken year is our for of we have opportunity make into We is for that some that, sure visit us. have account opportunity of drive our modeled but an frequency, to that to frequency

the for back come see had lunch for that to at more day, our a come opportunity we if restaurant they have often. little not breakfast may them Wendy's but someone You to

So, it's a frequency really play.

into shifting it's I plan a a don't as our fact, setting of lunch about just in incremental up and lot we see dinner So, way the our promotional lot And in from earlier. we're advertising, talked of support, breakfast.

stair plateau. step awareness, piece, every that's ordering, we move get a into drive whether new that's whether we as drive up the mobile awareness, As time delivery, to mobile we we

plateau. spike new it during in then the but activity, higher at does a So, settles

is know still awareness our biggest to opportunity. So, we and it build, that continues

build So, going up to to we're continue mobile the stickiness to the have that to to arena. in continue of things all ramp

Operator

question next Your from Nicole Miller Piper comes of Jaffray.

you. open. is line Your Thank

Nicole Miller

company ask does Good the to big it Thank bang stores how about a goal, do the support get with then how to with grow? franchise, XXXX how those And split scale that between you. it store wanted does does you international scale morning. marketing? I and or

Gunther Plosch

is in through Nicole, franchised questions. of Majority great the clearly international restaurants. growth

announced going We are enter we minority restaurants have stronghold to the have but to it's be the we're and that to announced for the have as of there, we that United going Europe going footprint. a Kingdom

show say markets. really to the it of growth is coming also I would that might they from existing you

our this during geography. Only have are think means of basically which Europe, basically we I X% new demonstrated restaurants by XXXX. related a today to invest

Nicole Miller

have And essence, stores you be again, the year And it's to currently part, step modest internationally? in up. how XX a internationally. just a marketing support it's second seems So, a XX to it then do

Gunther Plosch

that differently. is we're doing there Yes, something

a obliged couple to of franchises revenue The differently. of So, a on marketing are certain activities. current percent things spend local their

help establishment we the international days in markets, investments getting the potentially are so Europe front, As marketing more open are the especially money aside brand-new geography on set on to these for in make the we to there's the of new that. chip

Nicole Miller

larger fall talking to Okay the the you've be confines that and just into that's within clear, plan that been about?

Gunther Plosch

You repeat were breaking up. Can you the question?

Nicole Miller

that you've, within the larger a guidance true? strategy is I'm sorry would that confines about that. That or be of support vendor

Gunther Plosch

correct. will that be Yes,

Nicole Miller

Thank you.

Operator

of comes Geiger next Your question from Dennis UBS.

open. is line Your

Dennis Geiger

month parts your a wondering respect or perhaps sounds communicated like more talk if and good I could doors, into operations, feedback, guess, seeing day with other breakfast about respect thanks. Great, you with to high at to anything anything last like bit the there. things you you've that, since impacted incremental But just Todd, least at a seen just around a ago? so commentary some anything the you're test customer level? gave about Thanks.

Todd Penegor

comments. couple A of

period that restaurants we and out. out that for potentially very across things offered restaurants were few the some that of of passed system. has the locations, some of decided And opting had one there up to opted could opt have breakfast have out So, unique

return. they the there's about support going. menu They incremental have performing right? rest investment the and not us the there. we're the So, it's new operational look We a lot of have look they of look We at don't simplicity, how folks they any a where as lot at at look at feel good that out look the new news, of at They we

And And communities we're during at with driven that room opening have through what restaurant, day we and in been And the received But at the restaurant model can feel to hearing operationally opening part. with efficient the the fine very operate. menu up the three two open has run only. of had track. we very XX comfortable the the window o'clock X on restaurant we everything's so XXX then breakfast where

really excited. And the general to do need get what we do our to turn managers now page we to

begins eventually journey to and Our hiring, ourselves prepare for on into training launch. then

Gunther Plosch

is what news. if is the so actually other view obviously And we a we model to around modeling to The level model sales the actually we have sales would of don't volumetric that expect size we The expecting. levels lot of the add and you then seeing, have the advertising good thing accurate that to did business. the do also we

Dennis Geiger

guys. Thanks,

Operator

next comes of Stifel, open. Chris question from O’Cull Your is line your

Chris O'Cull

Thanks. sounds should rollout? Good morning to you milestones another there to spend maybe more chain large want first whether their the system out they about of certain spends or system what like during to support plans How year you guys. see when determine to to breakfast? rolled invest the half whether it Are the needs

Todd Penegor

long of we the levels bit people's day time, part, predetermined our behaviors have on changing that along in we the habit. breakfast takes breakfast and We've this to do confident of time We're take feel XX% in get go, don't kind milestones we term the way. work some know laid to needs where know driven we that we think it's we over can to and of to play a business spend little vision game going but the out ingrain the

into, day growth next playing and We the beyond bring is consumer a along know sure breakfast several a strong support have system the years foundation us bring lead can lend game to along period. make we're part that really all to consistent the for sustainable that a over the that

Chris O'Cull

missed provide some apologize you actions enough. fair And and Okay, but changed mix to details if can for the up and the I pricing expect happen then quarter it, quarter? I for price you the more fourth how what into heading around and then mix

Gunther Plosch

strategy seen changed contributing we equal remember, more third sales seen and Yes, to traffic, we've And so one we about we price portions have commercialization expected you've seen growth. have what both to the have totally in dollar. week quarter, then our negative traffic more negative our to one mix,

to visit. $X.XX lapping, create frosty which more designed are and obviously, we promotion, the And more was

So, why way. expected the that's different. the promotions hydraulics the And of are by

be will hydraulics bit you promotion $X be again, and so a more traffic of pricing a that on are fourth traffic, similar be going there, and to to basis, obviously lapping will and was again headwind fiscal that, fashion, are price definitely on out drive is down If slightly the expect we positive positive we the we in on quarter, we look the the because going a year mix set now traffic. balanced much designed a aside any have calendar mix little and more for again, to

Chris O'Cull

is the that shift? promotions driving the favorable mix are What really

Todd Penegor

to out of in an couple XX some play, XX That favorite. it's X a we of things a been and back cases promotion Chris pieces. everyday bringing chicken and there, one, didn't nice a lot require from it's up is into even of This and spicy X nuggets trade did lot piece see

Crave trade our we've that So that's on to folks to, one we talked the about are mix from on premium more Made drive been play dollar as a up sandwiches. folks up continues platform,

had So have those against biggest of drivers with the We've the that are year. mix four earlier quarter throughout driving probably for the $X Biggie the in Bag the us consistently the the two also been promotion.

on we it's and on and we things things expected. as we were planned that delivering performing So, that all

Chris O'Cull

thanks, Great, guys.

Operator

next Goldman with Your Katherine comes question from Sachs. Fogertey

Your line is open.

Katherine Fogertey

Breakfast employees the us get it on how fit? they they or toggle roll you. them off little ability understand find, out? that of kind bit Thank months for help they Thank as the when and more plays the it Can you. help you about Or one commitment a they the franchisee they have kind or to with six system. of do committed year? see to on sticking you Are

Gunther Plosch

It's a great question.

program. So, to you're we've chance had launch, has they with breakfast time passed, executing committed and then sure going to that definitely out that the that national milestone a make to opt they're excellence a that against obviously

them, out have breakfast to entertain opportunity to to not they willing After be could returns then that year, maybe concerns a creating we discussion potentially later mutually are opting they an enough on. raise is if financial business agree the for a

that the therefore, believe profitable. program best be forward? low. demonstrate But Because side put understand need And we their is on that really they again, very, the the designed foot need right, a passionately to we the you really to compelling cloud again, that very very breakfast to expect range have very,

Katherine Fogertey

they they point investments away that to the be? ability the you've on they for Would from would And to made, you walk fee have that some a you just or to have to guys would breakfast? pay opt reimburse of out

Gunther Plosch

fee no to franchise it's entire involved. not also I make want there's organization. sure No,

individual a on of restaurant by out review restaurant that an potential really basis. is So opts happening

Operator

question Strelzik Your of Andrew Markets. from Capital BMO comes next

is line open. Your

Andrew Strelzik

of us there years? for targets first think the trajectory range questions Can kind for of Two kind you one some next longer two about that kind looks like help over day morning. Good of that getting investor what me you gave at G&A. to the the

Gunther Plosch

it's Yeah, very right. steady, really

on of Investor the As get sales. you we - system as down committed to X.X% are Day to said about

to that achieve expect We level in XXXX.

to that are down we remember year, can are slightly about currently sitting every You we X.X%. ever single expect at stepping

as is amount a X% by of sales down. adding of are going we main driver our that is So, G&A the sales decent

Andrew Strelzik

leaned great. focus over last you just have product the to pipeline been where is And where kind the ops. years new it question XXXX. There my product the called two times other call you into for innovation back Okay, of on

of how to where product the digital it on is year this outside kind role year-on-year as of be think you about because Is takes a well, of bit about be a can that year your Next a kind or basis, - that of that where key Brexit does a so going a and a talk anticipate, fit obviously of backseat in going to that? of parts. within innovation the day breakfast core plays other important maybe is drivers focus

Todd Penegor

important one quality the in messaging we that is more when news premium we one The that think the to dollar. more and visit, like continues about drive

to it Made keep platform Crave to think continue to news will you to about bring the XXXX, as So, fresh and [indiscernible].

during So, course the of you'll see the year. that sprinkling

a in markets talked we we Day, testing burger at are black about today. some As Investor bean

you pace and day of continue focus if really success our we to to the could that sequence can that alternatives, think day sure course and for really we'll out. along run during to you see and up news sure the about set that way. year ourselves we calendar So, protein But in to, keep plant-based make that make some restaurants great

Andrew Strelzik

you thank Great, much. very

Operator

comes from next Chen JP of the Your question Morgan. Patrice

is line open. Your

Patrice Chen

Hey, you I'm strategy and that may thanks wondering the in open kind flow how manager staffing lunch for especially your of hours and breakfast, labor need good the and the not with breakfast volumes at temptation every dinner to hours? on the avoiding of ship are together, morning, work single store guys. levels keeping side, maybe additional question. just And may not as labor stores those some and may, and

Gunther Plosch

proud needs we Yes, we actually the model people. It that about labor breakfast. have created very only three for

The other thing are investing doing part so that it's million $XX our is we of we investment.

can sure actually We VNS they part sure that XX,XXX employees generating those hire the are staffed. make for make investing be can advertising new to to system we

the already it part lunch in day popular flexibility place. for have a it's in, actually think actually you and creates work during accrued morning part, more day as We and to people

call recover in cold So, that. later you actually the mid-morning, from on if better can you much have offs

tight overall, But all sorted but market, right, well that. are before executing is think we we've of So it. point type through about and against is, the a it we labor pretty of a

Todd Penegor

really to you boil that restaurant to you people go really four three if need per And higher. down, it really it's

not you that GP can step lunch. us get into is but a just everything help the to XX,XXX block scheduling, location, people by So that not as down to of breakfast, some and we through hiring think really it's across if getting daunting the really location said, system, start it the restaurant

Patrice Chen

Thanks.

Operator

from Bartlett questions Your today of come final SunTrust. Jake

open. is line Your

Jake Bartlett

My case Great, taking thanks for checking your that really it mix. the that the be master's seem comments well, of is negative in sales seems driver XXXX. And, is your will interest some the be the other for biggest question. traffic to been what's been has to competitors from in as

need question we to or affairs try does something is, the from I your or change into faster? drive a, from go state guess, of to perspective, as is your franchisee’s acceptable that And the an to perspective traffic XXXX

Todd Penegor

things, couple growing last very the share. I of traffic holding over think, we've that been years Jake, or category we've this been, proud several

often the we've growth restaurants work been customers seen. a that bring hadn't more in to check doing of and of participated more into others So, our lot some have

$X.XX have and think and this bit strategy balance, dollar promotional We've more As we any moved into we've that the calendar we got one laugh do more a frosty little like visit But rebalanced over year. right. we our and fries. dollar one to things that size

going normalized think you're into go I basis, a more see So, XXXX. to you

to run, up and part we the consumers to can that. our bring restaurants Literally to and we our come the a continue to laughs again, to continue be we're of for successful reimaged another, that and system restaurants that still We drive across into in needs game the new got got our more often. tools operational do speed. see, time where long back got consistency to of lot day XX% continue people be on you XX% to we Got more another to entering,

you're customers And turned keep traffic us more often. has are toolbox our several starting in So, last industry whole the that the and ahead tools in quarters, across see there QSR in bringing more positive. to three, of to four

plan to in we healthy that drive business a the for long So, that's and participate will run. what

Jake Bartlett

it of presentation feels to then be give to think going to a GP there's Got in at business a growing rates like it a ramp would XXXX, it. And be in compounded of instance, growth? as CAGRs. you the is sense Day, up Can us lot fast the growth for Investor so the naturally kind how you

than, kind So, higher of CAGRs, the than you around I'm some unit growth. specifically of end and thinking

that Seems in a CAGR XXXX. to about business. the just of like So, the and you've talked wanted how higher trajectory you of confirm up, than X% end you'd think

Gunther Plosch

growth Yes, to and in steady XX. million We going we've from XX expect Right, do between XX.X actually about between total million X%. change definitely a step ramp to from to X% and the between million. XXXX XXXX X.X, we're XX.X XX

the between a years. not lot of there's variation So,

Jake Bartlett

how assume would the or University thinking you're slower I growth, unit that in saying the of XX, terms XX. International Is XX much would in in be it it? just about then that But

Gunther Plosch

to still And Right, about but unit That international is the of overall but contribution the lower. forget, sales the X%. be growth also, also correct. is and have growth is impact excited don't compounded

point is related that sales because half compounded view going growth have on negative X% days two an and there. a why kind of a make is actually international OV you to slightly X.X% of somebody Our and in

a point from So it overall about view. impact a of doesn't massive pacing have that's

Todd Penegor

to XX on our And we beyond X% international as higher business we've overtime, non-traditional lower. a non-traditional units, than the be to bit the of Abigail open could to of really some focus today, those much we're XX of and about little talked be that to this X% about, got got some locations, AEVs

So, those about. into factor things talked just that all GP delta that

Jake Bartlett

in always the then last third that And the fourth. you're it question, million none Got that in XXXX, it. was be that the to quarter making assuming investment $XX was included I'm the and quick in in of going and

Gunther Plosch

That is correct.

Jake Bartlett

you Thank Okay. very much.

Greg Lemenchick

We Thank look GP you speaking Have That of great this forward question and thank in with call Todd a on participating the for call. everyone again you, fourth quarter you, February. to Jake. Thank you, and day. our our was last morning.

disconnect. now may You

The Wendy's Company (WEN) 6 Nov 192019 Q3 Earnings call transcript