WEN - Earnings call transcript Q1 2021

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Operator

Good morning. Welcome to The Wendy's Company Earnings Results Conference Call. [Operator Instructions] Thank you. Greg Lemenchick, Senior Director, Investor Relations and Corporate FP&A, you may begin your conference.

Greg Lemenchick

Thank you, and good morning, everyone. webcast Investor PowerPoint Relations and available which call our on website, conference includes presentation, a is Today's irwendys.com.

financial earnings share the Before release. from of we we could of forward-looking may results report, at Chief highlights GAAP results measures. our Various is Officer, certain call statements. affect open first an our business the things And note measure disclosure non-GAAP the our end factors in safe comparable projections harbor those set will we line discuss there, including to from investors at reference outlook. should to up begin, corporate Officer, end Executive statement Gunther this a provide with on update, comments will the the that our quarter Todd. information earnings will please our some Investors President that materially release. non-GAAP some This for refer and our reconciliations take Also, financial our our Plosch, our the On today, differ of Chief over hand and presentation I of measures Penegor; our From questions. forward-looking. Todd and financial conference give today's and reminds cause responsibility today our appears most forth results that, Financial of to will XXXX in or to update directly

Todd Penegor

our XXXX business. rest delivered as in of to momentum X-year first leading of Thanks, double-digit could result sales significantly be day growing that in daypart exceeded our Greg, model, economic not the pleased breakfast our business, our more on good digital same-restaurant our another and business expectations the restaurant profits. growth outsized the We and with continued strength We of fueled morning, quarter and sales everyone. our

was our basis almost digital growth breakfast significant of restaurant business of This XX%. sales momentum and led to quarter, to in sales that business XXX ahead X.X% Our points of approximately showed year-over-year the expansion grew plan. margin to

remains we focus are strong a have economic system, and our Our we model on across ensuring, executing. restaurant

also in targets. seeing incentive progress we year. great new area program we interest launched of We on-track development strong make all in And of development our are earlier to that as remain to continue our deliver on we long-term this the

result line performance, later a we meaningfully strong As financial our on XXXX of the which to will metrics, our top outlook our presentation. increasing all are talk GP of for key in

and fully long-term continue remain to initiatives, committed progress these. against make our to we growth great Lastly, we

We are confident that lot we of us growth of initiatives. these have a ahead behind

goal the invest which remains in accelerated are growth, to that on driving and commitment. same, is we Our efficient, delivering

to highlights results that we the X.X%. showcases the both slightly at Our our weather to X.X% quarter the was our basis a US acceleration translated significant and which underlying breakfast they've Puerto and metrics. up and which rest-of-day to This the a once sales two-year the growth both digital on US, menu. is added to were international in in continuing We X-year the our on boosted from of quarter global double-digit we business consecutive from that as quarter. and are business. again for XX%. are plan to growth, continues This same-restaurant we strength our same-restaurant positive in third our seeing our to emerge attribute our stimulus many by and posted system-wide of digital of global we numbers our same-restaurant their confidence U.S. increase of the strength strength start offset in first expectations in breakfast, year which firing of we strong strength payments COVID turn into as sales see Internationally, And same-restaurant to momentum momentum ahead to Canadian businesses. of same-restaurant and The XX.X% business, international all inclement to our exceeded international saw restrictions guidance our us XXXX items sales this X- our were and in Rico, XXXX. the X% and sales our business, severe sales take best on fourth delivered cylinders. growth quarter X-year up growth XX% the markets of sales of The pace results, the given one In to the has

the the about plans globe, are we and franchise remainder we place is of across in the Our have excited for engaged system XXXX.

talking Let's spend extremely of first which products US launched strength the successful. We quarter the quarter sales, in our Chicken business. were which rest-of-day on nicely our a the the Popper Sandwich new about Jalapeno, same-restaurant moments accelerated and two few in Salad, within

Our a are of saw salad business pleased which very with. substantial the as this we improvement result launch,

for very which selling X promotion Chicken, us higher strength in strength chicken sandwich and sales to sandwich our Crave within quarter continues than compete Popper, as large The drive category. of average a checks of component our platform. very Jalapeno success with the strong well more much key has the Classic along $X as Classic of continued alongside renovated of to mix version Made the and the allowed Chicken, the twice to recently Our was is our previous the

share in fact, $X in out. with Biggie favorite significant results In quarter We of up fan wrapped which our sandwiches activity. the Bag, within competitive close chicken drove strong of month the things a the despite breaded grew very March, to QSR

to we the to nice calendar, balance As will and a marketing about offerings include XXXX, we to between that items of drive into products. excited core new ensure some our to craveable product we forward our continue which look are most our continue rest very customers

official is the improved. all Breakfast energy be key dollars an officially We And excited. quarter, as our excitement at the breakfast not increased, now high. second with of pressure, and of sentiment by could grew, higher metrics our and as And and repeat. business. around breakfast, In our continued presence for by customer sales March of echoed awareness awareness ton we franchisees our notably to have successful drove our is entered we continue which our which significant same a was see $X breakfast amount all-time a year the Madness, X fueled Breakfast of drove most more trial. their promotion, our first marketing

the highest the also We be that loving satisfaction see at our are continue daypart customers to as scores have. customer we offering our breakfast

the of Lastly, confidence sales, we in their our grown us out breakfast over legacy They launch. seeing of daypart businesses results targets. to giving great long-term XX% already restaurants are the had our before national have some that breakfast

Our the great of from remain results to breakfast putting our our to fully quarter sales breakfast expectations. XX% in a were in by of sales the in investment, by of our and grow coming XXXX. us position ahead XXXX XX% breakfast end reach And goal advertising we of our committed

mobile driven once than exited just sales, fourth grow Our the X% This strength the delivery has grew of the and by at our saw digital been globe XX% in to X% sales increases rapidly. business, again quarter. from quarter across on digital business again the delivery over US, first to approximately more quarter ordering. quarter. both In in continues up of growth acceleration our this the we in the Internationally, of which Canadian

the Delivery to awareness several the ran front, have successful first trial. in that and delivery markets strong is remained quarter to continue drive reopened, very promotions On has which promising. we in

the business, in we XX now program. ordering million enrolled by mobile continue have Our to which is total loyalty members our program, powered grow, as

are to seeing continue our take We program see of benefits advantage and And more more people terms positive program. of in this frequency. from we loyalty higher

In a begun more believe engage addition, we are will one-to-one that customers a part digital on goals. us to starting data we consumer reaching basis, leverage which are and with play major seeing have our in to the we

the with continue the coming by we a consumer achieving to making of our our sales well reaching we US of year. are as As digital XX% are brand, behaviors of end to through technology investments channels change, this way on goal along

continue other two make progress. pillars, expanding we just strategic third our And footprint. growth pillar great like Our is to the

As announced a in program, we seeing substantial new we interest launched earlier incentive are this year, it. and

and restaurant meaningful the uptick timing of to up, reminder, Franchisees until end and for see a operations. reward commitments have As grow we a accelerated in incentives sign their to new our will franchisees June new multi-year making we are growth, commitments. that confident

are franchisees exciting program, also which some this build system We new seeing their into through economics, way behind to see. strong the is the

on remain our at recruiting drive franchise we of significantly we grow investments heels efforts. pipeline in restaurant year the to about on will new franchisees by XX XXX to that first of stages made be On including Speaking new of different have our over company. that the which We potential currently we last our the to we the recruitment continue globally see franchisees, on evaluating UK. our note, open the UK are X, June operated process, track

will the of We we the the which of far reaching solid to have double These XX international to X,XXX recently examples have Central the deliver gives expect the development end of continue of end us footprint XXXX pipeline in and agreements will The large by Québec, development globally open sign thus about Canada, agreements Wendy's X,XXX with we by goal strong new our we significantly grow more to province. development XXXX, foundation also place accelerating over have Asia by we new in our to made XXXX. that we progress built, and franchisees approximately XXXX signed where in restaurants that our in in on and restaurants are footprint. we confidence

same. the displayed drives technology, globe of drive the are across margins economic fuel restaurant for long-term of build business and initiatives investing will foundation that to reinvestments breakfast playbook progress. people, restaurant future. into to The and our of pillars new rooted the deeply our growth quarter which we the behind expand confidence development, strong These daypart, great digital we the remain footprint and in first model. reimaging remains combination our meaningfully our Our sales growth the in in drive making accelerated our And three

is of One of our commitment sharing goals. cover Responsibility specific strategy. the that the We existing informed governance. ones. Good environment, goals that impact. findings against our Good alongside and continue engaged and food, materiality XXXX, first-ever opportunity is and our launched Done our which our transparency benchmark three on in do a we and overall nearly and make SASB new ESG highlights. to based areas Right, social to our responsibility a of business: to Done wanted tremendous of recently We people most These reporting released critical us new We I of to Wendy's ESG three to footprint. and positive Wendy's Report, comprehensive create we we right established the frameworks Right through foundational inform metrics those made strides provide to thing globally greatest few completed the to topics because committed in helped phrase part, simple diverse And area XXXX to new assessment GRI. items our Corporate our will We identify recently progress in our is to approach stakeholders material X,XXX track to set We're journey, these, report frameworks and are recognized such as progress. a corporate grounds

and the the please website. information, our focused world's to life, is we vision ESG Everything Value restaurant to thriving We which or Wendy's section wendys.com become bringing further go IR at section most our the, of brand. do on is of For beloved to What

talk With have first our that over now stronger, quarter results. and has hand business with the things never to we are financial our franchisees have I we our through that been on partnership way. we to will well the our GP momentum in

Gunther Plosch

Todd. Thanks,

that accelerate We showcasing are of results year, our ahead and our business first to restaurant the were continues sales quarter earnings of core growth same to expectations. proud start very well our as

to fees are by impacted partially EBITDA a were outlook higher was in result shift, company's G&A fee the earnings global technology royalty an of XX.X%, reduced initial another company-operated second improved sales by negatively results will new quarter, sales over company's company sales has in These week double-digit $XXX of we The partially This and adjusted cost. breakfast in These driven reached that from of was SRS by as the same-restaurant XX% the benefits higher Please advertising. and XXX by a our Adjusted points ahead in that driven expenses. continued XX% primarily restaurant XXXX a partially incremental we commodity XX%. our franchise $X.XX, one, compensation driven increased grew systemwide to was expecting expectations. by XXrd the as approximately increased the our and the higher for Adjusted US quarter primarily strong were a expecting accrual US increase increased same-restaurant where result in by driven of quarter XX% offset to revenues Our second are in our lower and XXXX grow note XXX% year-over-year investment increase incentive sales had company-operated higher restaurant growth per by our million. our into labor well X. rates. to by be EBITDA. travel sales implemented sales, to same-restaurant this margin. to in almost The offset continue share that quarter in our our in offset primarily benefits shift basis accounting leveraging to for same-restaurant momentum X-year SRS sales increased XXXX. we With XX% growth, margin related XX%, After sales quarter

in in first All in timing of the of The franchisee guidance increase Finally, our been $XX quarter compensation-related was effects of payments items, a had increased year-over-year incentives. original timing timing accrued to income, year. free for already the the rental cash higher flow the net decrease contemplated vendor approximately and related significantly receipts to million. primarily our

resulted results our one business in momentum the have quarter meaningful strong to and increase Our XXXX in continuing outlook. a

year systemwide to in on to improved are sales based growth XX% sales our outperformance one outlook. We raising and outlook an global full quarter our X%

will the an approximately growth. $XXX majority breakfast our our EBITDA sales unit is a to our anticipated net sales from million business come the our We in through increase global $XXX core in million. growth improved by with of growth coming expect that to $XX remainder continue to increase to and major adjusted million outlook outlook driver This

is benefit XXXX, anticipated. originally approximately outlook. is improved expecting by partially had as elevated average to than now driven to which our restaurant being XX% result being G&A the also outlook These a by incentive to from of are be offset high in driven improved increases checks sales which increase remaining We by company-operated million, are we in margin our accrual an XX% compensation and longer a $XXX

to which remains our allocation higher close, approximately we our raising capital Finally, as cash to a million outlook million. To of I adjusted free $XXX would expectations, EBITDA result our $XXX flow like are highlight to policy, unchanged.

the investing in we dividend across increase the cash Our This declaration $X.XX first are by quarter showcasing a we our first growth, to heels Today, investments growth it priority through are we the we three of is making remains in share. and our and a are this pillars. profitable per XX% increasing quarter. strategic second that on of announced we XX% announced

invest support are Our seeing still strong with momentum liquidity along we business, while position, our flexibility in this leaving to the growth. increase in

repurchase shares cash Lastly, we reduce plan utilize to excess and debt. to

repurchase to to $XXX our authorization, conditions. after authorization our $XX share existing due exhausting On share favorable have the front, market to million increasing added the additional an repurchase we million total

simple committed our fully continue are to powerful yet We formula. delivering

efficient are the flows. growth things accelerated, pillars investing an our in global I which backdrop hand expanding cash sales Greg. back and With will translating growth to positive system-wide and strategic significant same-restaurant driving is that We sales our of over strong footprint, on is into that, free company

Greg Lemenchick

quarter. all restriction, be on to our May start focused the on once West we events off, investor Thanks, again ongoing doing travel Stanley GP. To Coast will be virtual Morgan an Due will with this XX. the NDR meetings things

an Evercore Longbow virtual investor will we and which and on Partners June be conference call June be MKM NDR, on the We'll will with attending June also XX two on visit conference Stifel conferences, hosting XX. doing with headquarter May X a the be the Following XX. at on

contact interested If host the in analyst us you please contact sell-side in of or at any the equity are joining respective firm. sales these events,

on that August plan conference second same our call quarter day we Lastly, to earnings a and host XX. report

As And that question we questions. the number once on to the section, to call take everyone we we I that, our due Q&A only. with high to of transition ready analysts, to limiting one again are everyone your covering wanted remind into will

Operator

question [Operator line John your Ivankoe And from first comes the of Instructions] JPMorgan. with

John Ivankoe

Thank One and is you. a follow-up secondly question. a Hi, is Greg.

the First, to way fee there does then with technology year-over-year, run then recognitions having to how fees ticket are that NPC, franchise in of secondly, going able see obviously basically terms think fee? question and that And that your be throughout sales quick that, is average the lap the recurring, an average the mean, do average XXXX. comp accelerated first Thanks. perspective? that how come much guess, year from here is clarification. do secondly, you of ticket franchise And to you a to when I the that percentage was, related much That's, -- in service about comp that as as off? I real guess, I the to about of of how kind to ongoing of the additional drove is a spending to And traffic? we of lapping in maybe, relative ticket flowing gains kind of franchise part was

Gunther Plosch

up we the other implementation Yes, A $X definitely by the in majority franchise Good driven have increase year. versus quarter. is tax couple the about of morning, of franchisees. that drove that implemented the fee new together the prior The million successfully things fee of that with John. were net our year-over-year

have that canceled And the bit investment it year this of had level development the had is, also we NPC, an favorability. with didn't and that we favorability breakfast in third funds First, we little got of of acceleration a obviously base around. drove

a right, XX%. of the We acquisition. to about increase in of result the XX% quarter be discussion had the of lot we a fee would said, fourth net a it, As

by range. million this about lifted have in $X We our

So explains of, that, in on what's franchise kind net going hopefully, fees.

Todd Penegor

through now Yes. the ticket, of fully summer returns. average into the then expect the average better John, and ticket stay elevated part and we mobility to before fall

Our remained seeing XX% was items size We're size still. beyond transaction, the transaction, average the also as about average XX% and just encouraging. -- QX, ticket about about But is strong per seeing or items mix. in party same in up still party quarter we're the which seeing it the we're per up average

And craveable Bag how about tasting, trade continues think $X craveable out, is success $X into folks has Crave is items, to Made most on You quite Biggie most the mix, to mix. paced get best our sandwiches, our for lot calendar the X driving of business. is driving our for healthy up a which highest to quality,

and year. the we the continue the good focused rest a a do as during feel that, innovation. that We year really have year. continue bring build didn't to the calendar the more to to last core, throughout party And year. throughout this So lot we'll We can we news news strong on really of of

Operator

line next comes David your with the from question And Palmer ISI. of Evercore

David Palmer

just going I'm tech they saying getting how franchisees you to with going regard are this being the see you strength story what we'll remember with by be year? will Thanks that what really building? from there to or in With are then marries investments? Thanks. tech to order the I about that struggle you And technology, myself two ones. squeeze more quick think do the really Is your so broadly? thinking breakfast up separately, being drive-thru. driven is much. even something And incidence XXXX, your you of to that else end that

Todd Penegor

a things, technology, on of starting I Yes, couple think David. there's

drive folks you to better you economic average grab with to I and the the going its ordering, way. of up all the folks a think think getting into as XX%. line mobile We're as people of in XX% restaurant. and about help that experiences average mobile continue checks go, strong into XX%, higher business, checks creating our When you to curbside, mobile more think we're XX% to speed then folks about delivery, about we're through ordering. side much those And more seeing along convenient ovation get seeing we with think

turn continue importantly, continue more flow-through employee work to average we to creating into a drive customer to lots but and our checks experiences centers in nice to lot better as creating throughput, frictionless restaurants. experiences, those parking our nice quite business, drive better honestly, to So and transaction for

more and employee. lot like make restaurants – the So the we a lot both experience consumer our do and to in to our frictionless and for more can continue a that even to

When think this with business we if of we there's continuing continue about So, have, have. America of is just you out with you can And digital we to about that journey business think the increase year. brand, breakfast has been driving our part what strong can look very years, high are the food dollar think of trial. even that just you customer bringing the growth in breakfast, still story continue the name build just how us our and slightly we in consumers' satisfaction, to think And breakfast, about about North system at to of it's to continuing sales have. performing. of legs that access life a breakfast about about we offering game grow being year got we how to you this if across to which all highlighted think our for excited front on really our get the of in there globe, you big that I all the throughout lot growth doing the grow, repeat, awareness to we're quality mouths. but the is more to We the between food we customer momentum great know provide not When and in this is

Operator

with Charles next Cowen. And line your of from comes question Andrew the

Andrew Charles

to what XQ versus I of headwind of kind a seemingly XX% wanted the to of that shift? kind you're the a perhaps bit in was does of continued obviously, a that deceleration. it -- of just around thinking from April about? that just XX%, at was March just It Is I stimulus more X-week business. that deceleration. But look imply that, a it's dig that strength strong disclose in XQ, guidance, And I talk overall you XQ. even bit rolling guidance. anything off is philosophy bit if in should can there very we be into to on GP, related else perhaps Great. little the observing wondering

Gunther Plosch

in mentioned this the little a I shifting bit my remarks XXrd the going prepared Andrew, that of is on. week

right? what we does mean, that So, of COVID actually into first the always when deal time negatively the we XXrd shifted this. most quarter. we normally, week the weeks week. happens you last This what that second notice are around, obviously, with is seeing Realignment don't And from impacted you had had COVID. quarter And the in year now

there more is As it, would expect. a result of we headwind than actually

when adjust double-digit out that for shifting, with SRS a So, number. actually you're X-year you coming

Operator

your the And with from question & of Bittner Company. comes next Brian Oppenheimer line

Brian Bittner

Thanks, good morning.

the how about fully what look check system that breakfast seeing outperforming system you're average reopened year? elevated talk average stores are a Is indeed thinking you reopened about or average is more we these the check you that And is your markets And an and help in about we're As shaping really both performs at markets? throughout check reopened breakfast consumer are markets? normalized, habits can become think the how should how perspective staying just from have that where reopened? in in that the when perspective shape have fully

Todd Penegor

that breakfast be markets. we difference ones similar continue are rest a reopened We're how across average seeing breakfast a the discernible across slower stops folks the of daypart, reopen couple still behavior are a that mobility of the only you've and We're customers from all those reacting. and seen more haven't have would a rather mobility little at have seeing ones working pockets slower a the of to the home day, got way. where point-to-point versus it's XX% similar The Yes, markets than been mobility morning. to and checks. that with on on along very behavior picks very some of to little up, the as if reopen, as of exception look you recover in And less on that to

bit how rest of of in confident across that morning to some with come at which the could daypart as opportunity and more of confidence lot that seeing slower the a we're respects, looking dynamics, we're So fall. outlook starts that there us least for there that in be the a But little the back the be year. gives mobility average and we very feeling through check breakfast out at rest day the laid even

Operator

with And comes question next your Markets. Capital of line from Eric the Gonzalez KeyBanc

Eric Gonzalez

Hey, thanks.

Just breakfast. on another one

the the in quarter? dollar lift how first you think fourth in quarter your and mix growth. breakfast you the the And point second was as I mid-six that range part I said a the trend could your your talk filing, first at of the mix being it in the I did recall look breakfast? the quarter but – trended increase, I exited that accelerated trended just same-store the blank and X.X quarter. to then contribution you in we of terms breakfast says mix if sales Can in help fill and how into about the breakfast maybe know comp

Todd Penegor

Yes.

seeing in our most proud we're quarter mix, But first release. at as in steady very, grew at that you around remained feel it If in look darn noted strongly, the because breakfast what good the you X%. pretty breakfast rest-of-the-day breakfast about We the nice at we're very had we that rest guidance quarter, dollars second build build look continued throughout average the And business of to weekly of day. between is and that you the quarter. first a the across our business

on the growth elements the to contributing strong across So we're that board seeing growth.

Operator

with Bernstein line from And the question of Jeffrey your next comes Barclays.

Jeffrey Bernstein

Great. Thank you very much.

be color what just as to franchise, pressures? despite wondering the labor it, rest what thus based thoughts is Thank mitigate your XX% perhaps Just strong, profitability initiatives system, for discuss you seeing? You but franchisees really commodity help margins we've broader It profitability, and inflation up, showcase. other didn't or how your they're restaurant inflationary of are in franchise are seem even around but talking any cost year the critical. the the cost discussions your the on relative question terms franchise Any this pressure seems seen in your of to restaurant own to outlook what about. it's like in the or I'm you. And optionality year mitigate whether side far pricing everyone discussions like pressures those might terms whether ramping a franchisees. are sales Obviously, or that on of on margin? that with shortages

Todd Penegor

XXXX. strong of into work against little the system, could is a those commodities on into a are, it us the to fully as development. turn elements to inflation which Yes. be staffed I'll time momentum some a have lot and system and performed and let there. to start we But that start how in work very of we we there be I’ll restaurant Yes, outlook XXXX, a to gives moving energizing to we're lot our items. to sheets. inflationary, to look to finish but into start confidence get this detail. restaurants the on have really across But year, a little is reimaging we're focused is They in sentiment hard economic news GP got the continue with community, allows moment. with work as continue as summer out those with in we of the across health said to on the GP going, into over strong some profitability franchise the with We're the to remarks, turnover we're and which But They the on new the little into we we brand the model. good future. balance in. prepared course work more season, as that it technology, we are the people, year of continue we that had about restaurants to Labor more to And and have, we work but the as seeing year fast the about think commodity, system. of at better And make talk ended of the our initiatives all with strong franchise the the challenged headwinds not seeing labor during for alignment with you sure a where strong profitability to us fun reinvest, blessed at continue stronger the growth which may where our our

Gunther Plosch

Yes.

unchanged On We're what the labor we flat. unchanged. about X% X% ago. actually our forecasting expecting front, commodity versus is inflation we Also, a outlook are is said quarter to

about deflationary commodities points. front the XX to were point basis was quarter. the first It Just we on worth out, actually in

for of bit we rest little It choppy. be inflation. expect year, So will slight the the a

We inflation beef are expecting three, one expect deflationary. in be on last quarter that four. within and inflation a year, in spike domestic quarter quarter we had to two But we

Operator

Morgan line the comes next John And your question Glass Stanley. of from with

John Glass

Thanks. Thanks and good morning all.

are those Thanks. become you have you since initiated about if on about starting now, the base digital now We image AI is at that. a while. business? to is those do think didn't details your I new but fleet a stores it's bigger versus remodels, smaller two-thirds which digital in haven't talked to is you that, has elements the a provide the as How digital all, And remodeled. guess, mix? activation adding initially? evolve How can -- perform thought maybe you piece About -- you How some of that you of

Todd Penegor

SRS XX image points. now, the of John, about about sitting image activated. at activation, we morning. are quarter, basis progressing Good well, end the It's tailwind right? yes, of XX% We're really

So depending investment over We this finishing the keep we activation over seeing XXXX. to that single-digit do project, it. with the puts basically, on franchisee the see, into [Indiscernible] and expect that's together codeword this especially, We again. if levels image are by lift people activate high mid for the we program

So we that outlook given unchanged, slow bit. quite is down -- allowed actually to is through remarkable, the COVID, franchisees which actually right, a since -- little have actually

design pickup. customers, separating through a experience up. we of seeing our for the And have designs, likes. cues in in view. -- That's know, the this. options so process drivers for you including from new gone new obviously view, better execute they we to of this the as accelerating in we And and key we do -- And our a that are point point order do delivery from when and are a enabler of From and of digital are terms design

Operator

with comes of Capital question And line Carril the your next from Chris RBC Markets.

Chris Carril

question. morning. the for Thanks Good Hi.

room I dine-in the So you offering about some system across Q, wanted services. of XX% the dining In dining the to I think reopenings. ask noted that with open are rooms now

what reopenings? of relation in guest So transactions how dining impact margin extent in? thinking are walk seeing I'm by about in guests? drive-thru in you you're the seeing shift room And To terms curious changes room behavior dining as those to from what to utilization to you're

Todd Penegor

reopenings XX% dining Yes, Chris. our able the quarter. through room got that we've open. up tick We've first We've been of to rooms our been dining pleased now

folks drive-thru, X/X ordering And curbside. And the that that improved. and are from make we're long into the a-third where complement those at of with between about that were of in driving we're grab-and-go and room. other speed the We perception mix XX% initiatives drive-thru. get speed lots our focus expect mix ways underway And split XX% transaction continue our actually that take through coming a continue room, about drive speed the those folks stage. at away even pre-COVID the dining continue get and the the dining make from all seeing really and XX% how mobile at dine-in room takeaway, drive-thru. we room, the we to so pandemic. start dining sure do at are consumer time. about room into into folks customers more faster, that dining to will to the A dining a our the of line get For we to of back we're parking more mix between to to to that's on we get as in about being a in quarter they this we're build has for get the side continue dining why first feedback are in while that at But that to pleased can of mobile very to are would over it vaccinated, frictionless to coming versus centers And

managing Our items more with has stage. speed stayed transaction XX% overall flat, per customer that's relatively we're that at but this per

good GP, about you that. of thoughts. So, I couple we other had feel a think

Gunther Plosch

open. Yes. From franchisees definitely a accretion pay profitability well. because followed point we hold. have profitability it of a are rest it's We as of franchise But pre-COVID now suppressed level. compare We rooms that point a we see the economic dining of from you view, if right, would we as little only have through profit view versus -- don't franchisee we levels, model. amount always same think as of And sales bit of sales going gone has out to I the percent really protect and have a pre-COVID the probably

economy the back the improves, see as whether So get to to. we'll utilization they're full used we

Operator

line next your question Suisse. Lauren Crédit And from of comes Silberman with the

Lauren Silberman

Thank you.

Day, So just on targeted by XXXX. XX% digital. digital At your business you Investor the at

of that accelerated and path to get on end You've XX% the 'XX. by to

mix that And then do can you do here can grow you delivery? of digital think of today, that majority is by X.X% XXXX? where how see evolving? And So the assume sales sitting digital the we to

Todd Penegor

starting we're we'll an us the of pleased by of that we the to As there very have you get being it's to a the mix, exiting digital at ordering, especially and we're Historically, program the lot in even we're driven end digital Gives quarter, driven where year. see confidence been with complement by XX% delivery. ended think to it by that. delivered we loyalty as this building. X% now more of momentum mix really mobile But

programs we in still see which growth for the X So ordering which opportunity ordering and for for big delivery of there in million and mobile do program, quite program, users build, our both key to we're But business, in starting between day. the every lot loyalty million honestly. We're had our We've is to awareness out nice see frequency a seeing here a single continue delivery active mobile and QX. users XX loyalty is was that there. that. driving Awareness

have between business. we're those do So to to how We'll starting it high into see think a our both think business grow our balance elements I continue see to foreseeable go tailwind the to digital We to future. continue a nice time. nice to over will be can of

Operator

And Geiger your of the with line UBS. question next Dennis from comes

Dennis Geiger

on latest the for the growth Todd the Thanks question. and Great. and international the And GP, update performance for outlook. thanks

about the opportunity. you if wondering development bit international Just more could talk a

add have you. growth about of and well those But anything if highlighted number the that you how out discussions international they're opens the curious the should for? new some or discussions of at discussions kind as just in looking the a to that UK, and if be week partner as mentioned? Central just COVID and agreements Thank certainly, announced the I'm on those any think I this guideposts Canada the you now. pace wondering big existing sort Asia other all challenges more franchisees, impacted of for with thinking of we

Gunther Plosch

making progress steady We're our Dennis. Good morning. Yes, on development.

Since weeks in pillars. As with new growth restaurants. about development we time, XX signed you Central know, a you eight we three our And to it's talked ago. one – the then, strategic of agreement last actually Asia

unlock franchise is of actually part Québec, to So That in which allows for underpenetrated that we Canada. totally also enabled us. a us flipping Canada,

it UK, we're for us. the more and consumer So The creates seems right? be And us. ready growth UK more getting to excited about for

XX robust We have their remarks it prepared put a hands. in We said built franchise the up pipeline. about franchisees

be So is for help there potential of UK of reason that the said interviews long-term Wendy's the the to Development no want believe to the that, I one Chief the in UK, grow Officer, restaurants. like us you UK a XXX shouldn't with why in and in

our to signed where development investment. UK. that's we're and the after, no make belief a be we'll have, there's going Just that agreement It's to clear, and be we for going that

Operator

line question the next comes with your of Farmer from Jeff And Haskett. Gordon

Jeff Farmer

you. Thank

system? staffing those what You like briefly the across that but common in your levels most themes the of it, are some the current success on And touched what of with the franchisees have staffing had current look environment?

Todd Penegor

Yes.

in bit gotten little out restaurants. little a earlier, staffing our has bit mentioned I tighter a As

great that are and leveraging to operate experience. restaurants we're to that creating simpler sure fun make really that employees have on ensuring energizing, our make technology them to We are a focused

turn, our a in can experience. great So customers have

on focus have. the So employees is the really retention we of

paying folks seen bit have more. We a little

paid of very a and technology a great that things into come lot how leveraging to taking reimaged make believe reimaging that's recruit restaurants, whether bit for tight be our a certainly doing will at folks or we lunches, helps things sure like We're do it But we're care go We're variety to new of developed restaurant helped with reasons, and seen tools recruit trying free along culture the and we're off. have most staffing for folks we're our to we're staffed. drive how managing at existing the look positioning seeing more through work really a new and restaurants. Wendy's we time out restaurant is little folks there employees. We way. in what folks we're of we're certainly that to as even like a that the restaurant, to into throughput And folks where employees and in

Operator

Deutsche And of Mullan the Brian with Bank. your line from comes next question

Brian Mullan

you. thank Hey,

end need do cited deadline particular? domestic year, achieving net And a May, conversion growth good feel on And today, I unit comment here was next you response about that. you in the if next of to wait already remarks? acceleration piece think piece you sense are to are in year. of the just growth Sitting good asking about June, I'm US those do prepared Just confident the you until When just you seeing which could the net of incentives, Really, you unit still franchisees on to if you or development. X% hoped incentives? in another have how responding question a think the you'd

Gunther Plosch

about good X% to our confident north is Yes, feel really up is on Yes, very development The pipeline. of morning, XX%. we based broad Brian. step international,

slightly on is couple expecting going US you up of US. that new give from nuggets. a X% net in can the to expect Really signs I step also that growth program we're encouraging the the this year. We incentive

especially, think because and very is definitely, starting now franchisees that And that we've I improving probably is now they that business interest. clearly built several have confidence, nugget have never first to more it's incentive, little before, have that it's returns. The a a show we viable built compelling breakfast bit a

So completed the yet not process. have we

to report I'm We end part we're earnings will have sure give of quarter that. June stock. And to out we ourselves on till going take of how done the as second

Operator

And Miller Piper your next question comes from the with Nicole Sandler. line of

Nicole Miller

morning. Good you. Thank

you the is percentage bit or proactive labor talk related inflation, measures? elements little optional labor maybe in line, is to you employees? hourly company-operated a just of you. On could about what or when that And mandated then, stores what about versus structural think your the Thank

Gunther Plosch

Nicole. morning, Good

if step restaurants, company operate to you Otherwise, when in right, our we back, always competitive So be we you cannot talent. the want marketplace. address

wage. So competitive talent need. several actually attract the to you that above states, we clearly average wage labor of rates are minimum the that we a minimum in be and either And function have is

on the share majority people. are In line of the it, lion like assistant cost shift clearly the higher crew. the sitting managers, portion is terms It's clearly channel crew. the managers of of labor of the general That's our managers is itself, and majority

Operator

And line comes from of question with Stifel. your Chris the O'Cull next

Patrick Johnson

more bit for in you've the people that basis the think one-on-one hoping, more grow? forward? come how a about visitation opportunities we about little program that got could mentioned that million competitors of prepared going was I on an frequently little maybe us much bit to is gap, that the of we the bit could And that specifically you what you in terms getting around key annual of dig seen color on Patrick could know Thanks. you've past closed your Chris. might is in This a how tell in little what that's in dig or more and mentioned even maybe opportunity of you about terms what of think marketing we levers guys. in And into just XX members. to and -- you've the what effective impact Thanks, remarks, but a either Great. I to program loyalty customers

Todd Penegor

users fully day loyal are seeing redemption. out, seeing We're redemption engaged among day increase. the to scanned, for and we a frequency in come think early active are still folks And the when uptick app seeing we digitally in It's that's those that consumers. having our million order When in be you X about so Yeah. program. in start enabled

So to a us continue have on another app, to to folks earning awareness, to give The restaurant program. quite reason and high. we a drive want digitally more way activity, on with program our relatively They digitally Those you folks get have the been at point of like to that awareness points to even can order to is They ahead The customer to from along digital program. And Wendy's engaged build the our be confidence more sale. to for the to more continue the be our actively that are is get delivery our customers us, be like flat the them in to more ordering. aware even lot opportunity the Company. that which enabled of continue using opportunity folks at level. crew opportunities around satisfaction use drive We've whether of The of that it into or ease are is of mobile the awareness can get Wendy's loyalty gives the Company, engage

Operator

the with And James Rutherford from Inc. question comes line your next of Stephens

James Rutherford

it think, nationally. March I'm you pull Madness are to to to follow-up was and sequentially the mobility breakfast. $X curious, was Todd, I just $X achieve promotion even I And and end morning good the to envision breakfast Thank wanted want driving it the end on of between steady mix, what being you. levers thank main as Hey, well. you of XXXX second for I part That with a is, that you. And innovation increasing more growth Is the function do by component and that breakfast the of XXXX? mix of frequency trial? XX% -- a now growth up XXXX? existing customer or new of think of

Todd Penegor

we bring we trial of introduce Yes. new to a offerings. news to opportunity to such bring the great that existing innovation, I'll start said, need We to will. we I lot drive don't of because awareness, That right to when an with drive offerings strong we want we now, need innovation. continue mean, And have have have today. pipeline. a we

high getting is Wendy's frequent rest-of-day to a play our breakfast Our if the loyal and And food. most beyond see there's a most Those that our we're existing percentage have have, still and consumers customers business. into Wendy's biggest opportunity, trial our But that have out the then opportunity that game. start of yet is really our our to it starting existing this tried try to consumer, really become in bringing not users is portfolio. just new

getting mobility, up come we breakfast as But need are our the tick to And awareness in to a bit is to to little food. try what and get in confident do we're of habit the And into continue XXXX, to later We especially morning, Wendy's quarter. within folks start routines more and into can comes really back people for the morning we morning. and year more. help even again to get this in those that

Operator

from with your And question next Jared line of Sachs. the Garber Goldman comes

Jared Garber

the back circle for Thanks question. wanted to I loyalty the program. on

those that, it looks members active the presentation, the quarter give color as in loyalty customers? transition into million million this that those members, guys is Are think frequency on X active the first Thanks. million XX and us X given actual Can think that us some kind I plays seeing you have people the reopening from Are the what more what rewards I like you XX out? active. of million million X like? you the shows numbers

Gunther Plosch

about Jared. to We actually The not from bit million fourth yet that right? to are in Thanks, the prepare which little Yes, is We users it's XX said, quarter. detail. result the ready come you and given -- more give stayed active prior up quarter. unchanged a

that has into I exactly out higher opportunity to check and And we it biggest with keep is past, Todd to be is why seen playing of XX% invested which on. overall digital beyond. see we which higher So, what size, going it's have given. our brand, speak exactly strategically the want we working ask of color one drivers our to a in that's you And frequency, restaurants. in what We sales consumers reach as know, is frequency you as because, to the

Operator

next BMO. question And from with line your Andrew of the comes Strelzik

Andrew Strelzik

guess Maintaining little you the Hey was just a understanding morning. I get on the provided. surprised But good going of I worse guidance, it's good progresses. markets, outlook forward. guess, I seen pacing worse as in little a the year thought was a kind going little wanted maybe I etcetera, I in commodity that be follow-up we've bit bit given would to to it the way. what to have supposed bit a

So I'm just kind trying contracting? understand kind just Is function risk inflationary to to your outlook? the of around that mix Thanks. of kind of something is a do is visibility that's year I'm planning what progresses. the the you're there as that to of moderating understand, trying or that

Gunther Plosch

into good a a From of majority locked. at there's about commodities. for Good very obviously chicken. point are Yes, chatter morning, have of visibility the The lot the moment year our view, Andrew. of we positions protein

Our chicken year. the contracts are actually fixed for

beef, actually fresh that. us not a market since there's So we for position there. have a an open What of price long bit is for little creates certainty

We are in of We're now in now visibility. terms the the securing of third supply quarter and middle pricing.

And guidance given. so trend supporting far, our that the have are the actual we reporting trends

Todd Penegor

our to with have us seeing great growth to support make the partners, the fuel we've level. in working that which make our co-op. sure conjunction purchasing we're been can that in then supplier QSCC, continue our the sure work with and long-standing with is addition, They're And and very at to that supply got brand partnership who pleased hard we protecting to I'm with continuity restaurant

Operator

next from with line question your the And comes BTIG. Saleh Peter of

Peter Saleh

and conversation to around for or a I costs, construction development. conversations international but I the When Thanks either want rising lot on rising franchisee, taking having there's to the obviously, to Great. in maybe commodity of costs. well. of there's around that willingness question. Is the and primarily lot impact the a and labor, guess, US now – conversation psyche the back grow a around invest, internationally? of in US, been any here shortage as come just

Todd Penegor

we're Yes, But opportunity still Peter, to there. the the returns provide convenient, restaurant to to food. momentum high-quality delivering are fundamentally development And grow incentives, the as in build access have now fast, headwinds strong more continue we those with to brand the model we our that with and want that the economic this compelling. and along business out right are is

the in. more into into want got coming leaning to we're the are system. that even We've franchisees build So that pipeline way their

our have, So economic truly we're the despite engaging to other good to with driving model hiring, of to positioned feeling that we're we employees thoughts? start customers restaurant that well those GP, growth. and headwinds, from both the any tools all digital that to

Gunther Plosch

we design is to the tools of one have And value. Yes.

can talk returns actually We We're first related. it's we new about the terms better the it. functional, to to how for build from to get constantly have working trying the stunning and and keep in of design offset inflation

Operator

Jon line of with Tower comes from And next Fargo. question your Wells the

Jon Tower

the taking for question. Thanks Great.

a earlier. on Just you've comment, I made Todd, wanted follow-up to

had drawing breakfast. you the greatest that think I for your using breakfast suggested is the already try to are opportunity customers that in rest-of-day business business

you if do from or I'm breakfast them you a home competitor's away eating there just Essentially, trying need you this habit going know are customer curious, with to moving customers and already new I'm out, sale? where build are just might – doing these just So and do they to be figure today? a from

Todd Penegor

breakfast you as Like, is Jon, habitual. very know,

the rather they've but that become new during of very able dinner, becomes very for the habit the we use it habit they than daypart, to offering that know already continue brand quality to got the be to So the offering just quickly high-quality we got or when build rest to loyal, And frequent. day. a high-quality introduced as at quickly. And even get they they have to breakfast that higher breakfast

bounce frequency dinner So lunch because create drives continue folks it’s to way. our visit, awareness business, got another picked to those another incrementality that into along up and we the to back breakfast, gets which from then to

Operator

your with the Levy MKM And Brett next from comes line Partners. of question

Brett Levy

taking call. for the Thanks Great.

obviously some stayed G&A about of addition should the as have stock-based How just about costs G&A, front, talked not the also comp that have the just On and think your books. you some off in year think back but year, half investments XXXX, this can opportunities? do through into you flows where you and it more or be and conservative greater either the more aggressive leverage greater we of the

Gunther Plosch

offset Yes, is morning, we basically margin as That going. Good million. about sales right, our was increase million our outlook in a $XX about increased Brett. and part revision, underlying significantly between of range, The majority by this G&A. restaurant outlook is as that comp, $XX incentive financial of EBITDA by

is are in, ultimate The with benchmarked are for sales. that to industry all obviously that. the sales of and needing continue Our performance that our is, have predicated the to it grids always are about on performance. It's we that, kicking way think to goal P&L we accelerate X.X% said protect

I comp give the XXX%. other incentive nugget obviously, next to as The is, year, would payout earnings are you back tailwind resetting we it an creates

Operator

your of with Research. line the from Jim comes Sanderson Northcoast question And next

Jim Sanderson

for Thank question. the you Hey.

to follow-up breakfast. wanted Just on

there's if offered, in there? what think share strong me. excuse that -- XX% you contributing and stores located, they company earlier a if us store -- you'd or creating Thank breakfast you. And to where sales where mentioned you remind currently sales is about of or margins represent stores margins, mix. if stores regional then a actually are issue these I achieved was breakfast Can legacy your headwind total on

Gunther Plosch

Jim. Yes, legacy hanging are the the prior morning, in Good that ones were restaurants there from experiments.

really a breakfast the achieved XX%. they across So created nation. have They're new now, and habit they’re spread with of sales to already. have achieving customers They delighted the about the breakfast XXX whole north restaurants. switch somewhere obviously, It's

to we year are that's to So leads this seems we investments, we to It's -- that $XX can to our by number repeat trial. matter the around habit repeat growth. thing, of break million XX% To play to have sales and we And Awareness are always number we're make what driving so, sales percent we to the get investing leads leads right? of time. -- why of a trial XXXX, a Trial the that's right confident sure it why because awareness. doing matter out is thought.

of for rest happy. the past designed, terms day. breakfast In really daypart which as basically profitability, Profitability is playing a of is out

So margin It provides that to continuing to and of restaurant, restaurant grow. business our for is for course… franchisees tailwind our our a

Operator

Truist And Jake Bartlett with of from your the final Securities. comes question line

Jake Bartlett

taking for environment if is becomes to you more And the frame risk Thanks Mine rebuilding more and Great. -- and commercial we the on the the just as on, for on promotional? question. the potential the competitors environment desire year wondering focus traffic traffic. can goes that

Todd Penegor

traffic back more it's Biggie normal Bag our nice start. items craveable, program like is out high-quality We've Crave got you Things a lineup lot we food But also got off well. highly for be that got will everybody of across value our feel fighting menu. that We $X there the compelling what like compelling a for ongoing performs commented as like the X folks patterns. minds. that know it Made to get already $X X worth I into we says value, is Yes, we've have pay. quite created consumers' value in But having for to and $X

into to continue spectrum feel where of a that. pleased competitive. I'm set competitive we and lineup food up is. is we'll a very we've highest-quality sure year on we folks We'll did that's really trading that our menu continue we take to our we're look core. what got But last compete the continue across items, always we And the like make to whole as best, do the to with about focused hiatus So innovation

you'll well see into Our in innovation hamburger this year. little way Made the so Crave more business. this platform news on the to a innovation the coming And chicken, plays

You've Jalapeno it with already seen Popper.

great we Cheeseburger, a consumers great food. it pay and with Bourbon you restaurant You're worth got Bacon what into with opportunities to continue seeing our bring pipeline of to

Greg Lemenchick

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

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The Wendy's Company (WEN) 12 May 212021 Q1 Earnings call transcript