The Wendy's Company (WEN) 11 May 222022 Q1 Earnings call transcript

Company Profile

Participants

Greg Lemenchick	Investor Relations
Todd Penegor	President and Chief Executive Officer
Gunther Plosch	Chief Financial Officer
Andrew Charles	Cowen
Gregory Francfort	Guggenheim Securities
Brian Bittner	Oppenheimer
Jeff Farmer	Gordon Haskett
Chris O’Cull	Stifel
Dennis Geiger	UBS
Jeffrey Bernstein	Barclays
Sara Senatore	Bank of America
Brian Mullan	Deutsche Bank
Jon Tower	Citi
Nicole Miller	Piper Sandler
Andrew Strelzik	BMO
Brett Levy	MKM
Jared Garber	Goldman Sachs
Jim Sanderson	Northcoast
Eric Gonzalez	KeyBanc Capital Markets
Peter Saleh	BTIG

Call transcript

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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.

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

things we hand As over upcoming as part to Investor long-term walk of will a will strategies Todd. reminder, our that, With Day our through in I detail in June.

Todd Penegor

a momentum acceleration our was have as of in business we same-restaurant the time the progress the and our X-year highlights second in on achieved quarters Greg double-digit made I the and across our with strength Wendy’s reinforcing Global extremely best our a meaningful an quarter, the QX of prior the quarter resiliency the brand. we Thanks, which all year. basis, reaching lapped three globe. good everyone. one X-year we in XX.X% growth of first morning against consecutive pleased This versus of strategic We pillars am sales,

outstanding with quarter another business international widespread achieved Our success.

growth shifted all We growth a with truly versus XXXX. recovery past into compelling story sales substantially have achieving markets our

to UK. and same-restaurant sales results to is in we America the share Canada, Latin continued our over charge continued from response the things: the where In the biscuit, rooms impact growth on distinctive favorable honey Caribbean despite the leading our prior customer and world innovation in and the positive bad and continue in our Our region our sandwich This U.S., strength rolling year chicken results solid environment core market, the stimulus March throughout increased biggest levels fun stages with Madness, the the approaching dining and at was hot few of and alongside and improved the operating in one fries, strength open quarter. our take from benefits staffing on XX% with weather early like newest improvements of crispy quarter. a an market X-year continued hot in advertising more and

all we here have As today, almost our open rooms sit U.S. across the dining we

again in we XX as the QSR once maintaining keeps growing quarters. or quarter. share grew very the versus quarter that consecutive in pleased our also outstanding dollar an of peers are We dollar This we streak to competed our share burger well our

of which opening net grow strong more take X% strategic right is of growth, in was have XX pillars. unit our to our and year. track to last X% we new XXXX. look we remain to growth We quarters restaurants, the compared And our on This on in by one units a QX with QX Now, place, plan. acceleration at a let’s in for significant three achieved best history than our new pipeline

a excited Own have have over interest we XXX parties in Opportunity about very becoming recently Your expressed We who Wendy’s where launched are also our campaign, franchisee. new

of offers, XX% our sales, to launched the over our in-app business across total mix, digital shattering recently grow. approximately XX% digital Canadian approximately by digital as which globe. accelerated gains along continued we way. records mix business, driven digital sales to Internationally, In reached the Our U.S., XX% reached the

Rounding grow full with resonate at to the the expectations. a the our solid to where The our promotions growth the our full customer Our environment sales category, into breakfast resulting more pillars, promotion. digital XX% our us burger of total the ability delivered to meal to results we low-end of impacting and success. They year sales the increase sales industry XX% were per Madness over QSR our year traffic people dollar by in proved proving huge breakfast our doubt hit to breakfast We was are strong share U.S. also headwinds average across March our the reached to not growth drove during approximately year offerings sales confidence QX that and breakfast an daypart, but believe no and to we these in performance short-term customers. morning out breakfast weekly in for versus our be users in to app, increase continue restaurant industry and by XX% only gives in $X,XXX relative both $X,XXX able that active and challenged goals a our grow in QX, frequency end.

officially also in Canadian launched last our As restaurants. we week, of breakfast

start. the have we about we are off great We a gotten thrilled seeing in the are and to excitement market

confidence which authorization returning this start second an shareholders. tough following investor highlights successful our commitment million increase quarter, deal in Getting raise $XXX share Finally, in to million incredible we market feat our repurchase that this in was plan. an the announced completion the growth long-term of our our cash at completed the to to $XXX transaction, of highlights our debt

we committed of which driving evident supports the our As in initiatives economic growth look long-term and our are model, success financial ahead, to our the we of restaurant is franchisees. health

our daypart, digital our business the and We our are breakfast mission accelerate to on expand across footprint our laser-focused build globe.

goals, at our that, in our not Investor more quarter plans first talk reach new GP we it our through to could be pass Day growth confident of to on strategies a have and more our deliver are X. We I to June With excited to year share I about that financial place will to results. the

Gunther Plosch

Thanks, Todd.

of labor as pricing financial and strategic quarter the results macro a in our formula in alongside momentum our first environment, highlighted improvement our driven strength an margin an sales one challenging Our showcased quarter company-operated by improving environment. restaurant by we increases exited continued

the declines some the just sales expansion restaurant driven year-over-year by decrease system-wide impacts continued company our weather to X% The offset and very left primarily global the our in by from our margin UK quarter as from by These driven entry tough food-away-from-home grew of mid-teens and we inflation by the sales labor another stimulus early quarter U.S. the of pricing market. benefits was in support commodity respectively, over global and last into below average year high-teens in remarkable business same-restaurant were supported encountered customer and of Our higher-than-expected that by investments impact was benefit to strong and partially growth check international higher driven a count the X.X%, inflation footprint momentum and X%.

and second increased for expense in share a driven EBITDA the in net we by compensation franchise XXXX. in primarily primarily partially shares and for cloud resources adjusted year and by primarily benefits in result driven travel for of flow higher implementation. to technology earnings of of digital our decrease cash share Adjusted development by expense XXXX. decrease decreased XXXX in a incentive also lower company-operated favorable was the the The We with support stock margin. primarily investments our a successful These interest impact was of refinancing driven higher repurchase related lapped as our per accrual payments in outstanding program net royalty from to arrangements, as offset free was were offset result increase adjusted quarter line the the salaries million, organizations, from as the and XXXX, to costs partially in It G&A a higher by The restaurants implementation. company’s income in acquisition G&A benefited from restaurant our disposition compensation expectations. expenses COVID-XX a in increase $XXX EBITDA related debt higher and decreases our completed and fewer and of ERP restrictions, to computing decrease in paid revenue. The lower decrease ERP fiscal cash pay an resulted in by

Let’s turn to our outlook for XXXX.

debt marketing unit programs, from in raise of financial growth we targets. continued for financial and our Our right April. following sales to digital the the completion acceleration XXXX believe We have update of mix strong outlook our global our pricing, of the remains support provided unchanged

by same-restaurant our X% and global X% driven strong We to with of remainder X%, over growth. driven sales system-wide X% continue growth half expect by the to unit to sales

EBITDA outlook $XXX $XXX million million remains of unchanged. to adjusted Our

to XX.X% margin the We for We are the partially which higher be offset expect expecting of know the to model. value pricing not are while this the we ensure alone mid economic inflation, facing our rising rapidly to the year driven in to pricing with now we by through inflation, expected restaurant levels but strong we perception believe by year. higher the in high single-digits. a full right we commodity protecting manage is mid-teens can being in XX.X% slightly lower This that company-operated for maintained restaurant we

of outlook flow $XX EPS to To cash of to I our policy, Finally, we for like would $XXX CapEx million our reaffirming close, $XXX million, to are remains capital allocation of which free $X.XX, unchanged. $X.XX million to $XXX million. and adjusted highlight

to an with remains of payout second share, XX%. of priority which sustain investing Our per we capital of attractive policy showcase allocation our quarter announced first profitable Today, growth declaration continuing aligns we dividend and to $X.XXX ratio this. are in a than dividend more our

plan We to We authorization our existing the debt accordance allocation brings million share and $XXX our million utilize to raise expiring XXXX. proceeds total cash This authorization transaction. our reduce in in to $XXX transaction to we excess addition debt. raise February intend policy. repurchase from of previously utilize to following the debt with remaining shares of capital repurchase Lastly, our our announced

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

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

Greg Lemenchick

GP. Thanks,

previously we X. we Thursday, virtual a Day hosting will announced, Investor on June As be

vision be event, and update strategic on outlook, new During provide how on planning U.S. Time. Q&A we XX:XX growth Relations accessible of long-term through will three an our a at are by businesses followed a at The our be will live p.m. presentations strategic will international we this growth approximately The pillars. will deliver Eastern X-hour long-term Time. begin concluding our It and Investor reintroduce a.m. year believe our irwendys.com. our across X:XX event to updates website, Eastern including session,

at Now, Day, events. we turning outreach our day Please this quarter enter NDR Investor will to quiet XX. after on period June. second to an we that our for Evercore as of in in week, prepare our Friday, June with the end into do New we Day note plan The a Investor investor York

XX, attend will We Virtual Kalinowski on June Research. June an followed by investor Equity then Oppenheimer with XX the call Conference on

Finally, Francisco round Sandler the June on in month NDRs, with XX, San the one Stanley first in followed West June by Morgan with LA on we two Coast XX. will out with Piper

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

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

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

Operator

first comes Charles [Operator Cowen. you. Andrew Thank Instructions] from question from Your

open. is line Your

Andrew Charles

mix the disclosed from Thanks. sales X% Q Great. in about was what to X.X% the closer the It breakfast the fourth on quarter. ticked of based looks in quarter like down in

to could year about target the the full headwinds wondering the guidance? of you talk low bit in if end that’s called little to XX% more out leading XX% breakfast quarter you that So I a was

Todd Penegor

question, the for Thanks Yes. Andrew.

dollar did and we category a That in breakfast in As had softened the breakfast we And the in business. what one weather QX in we impact Omicron gained said, daypart. do bit on at daypart QX, breakfast the share Clearly, the early the is an and was quarter than breakfast had January looked on and category burger had February of little a bit we impact see very the at the to that. breakfast business traffic few softer an on business. category the in the are we anticipated. QSR

that There to to within So of place daypart. good some to we And really awareness, the are seeing and starting every into back with some trial the we we have about to the drive and are as morning some winter nice routine. the of which that daypart year promotion, seasonality you biscuit drive as feeling return folks move past rest for we have breakfast plans seen are in kind QX brought has we breakfast. their people the started year is the into breakfast momentum to months that continue

are per that we of full squarely be growth to the get by restaurant really that can XX% per we to the very end feeling and So on confident end the year. that XX% year in a $X,XXX of low week to $X,XXX basis

Operator

Gregory Guggenheim from comes Francfort from Your next Securities. question

Gregory Francfort

for the thanks question. Hey,

REEF to how kind helpful? on units thoughts there going how kitchens year, the Thanks. Just and maybe Just accelerate of be any of any performing kind years? generally this those the are next plans update is would of on couple

Todd Penegor

Yes.

a REEF. Just on thoughts few

So, here the sit as the quarter, first open. coming over we XX units we REEF on end have of at

As in U.S. and we the Canada you are the UK, them in know, opening

to As performing we been have the today. are of that our continue starting of very where they out we REEF their don’t are, in have and urban to provide in build yet look in here our locations a to they and restaurants U.S. locations brand can footprint we access the the And kitchens lot have confident at there. some international are great best momentum where we

growth they closely and to profitable still We us to the continue those awareness, on sales they their are the are building team with businesses restaurants and still to position are win really restaurant in that partnering their building that to forward. but are resources support in moving with focused sure we REEF are ensure make our towards reallocating they grow a

Operator

from next Brian Your Oppenheimer. question from comes Bittner

Brian Bittner

Good and outlook. the results My Thanks. first morning. quarter question is on

first the have also As specific don’t were I specifically it quarter analyst relates out the slightly forecast communities to there. quarter you but they below on EBITDA, first results, realize guidance

the So the keep your be expectations your need raise to the color is, with line guidance expectations in did EBITDA of the were results full internal your in you remainder to question for helpful? or on year place? in Any year would order that

Todd Penegor

bit line. then bottom talk have start a the top will with line I Yes, and the GP little about

February, that On the top plan. line, in weather were we notwithstanding some of we saw on our on the and January impacts

track that doing was those be little line. because bit So we with a would top below plan on the what we of and that weather impacts, internally the but on thought

On GP commodities little we but the quarter progression quarter. a headwind did early the will of on enhancement in GP? margin let comment, bottom out from the some see we line, on gate, the have but throughout nice I more

Gunther Plosch

importantly, Brian. we we amount Yes. you but was what to – remarks a the more and mid-teens. of Nobody higher inflation high-teens margin commodity in fully view little morning, it quarter the pressure, progression the on that headwind first obviously a that majority go commodity inflation so, the have of called Good bit explains created Yes, margin not did than versus from a in plan. of the expected. prior the labor missed point – quarter. slightly sales inflation We and the decent prepared leverage of labor

that our PX acceleration translated in already in We pricing margin have in restaurant PX. taken the in

the for point margin pricing XX.X%. Therefore, from The second order get XX%. a more outlook, our our seen, fiscal margin are was from to quarter. single year mid-single have taking high to in is you clearly to pricing we quarter. That last As actually the In was PX quarter about translating of is time we up second starting then pricing mid the that of in expectation margin digits. to in talked view, kind improvement the stepping

to clear, XX.X%. sequentially two. any to inflationary less we comfortable improve. XX.X% the the we’d is to of margin increases To in expect accelerate a be new price business. year have are on view we our left. are to restaurants. will want traffic more inflationary I take go, actually the new have we we pressure pricing price. stepping to think long-term going taking we We further, after guidance are pressures be with guidance If to We not So pricing absolutely are attracting counting make Combined say power margin with quarter the more to sure obviously, into on in

guidance. model. I on think rest really with we economic margin doing inflationary reflected And headwinds our a are act good balancing managing it’s

As from for you up basis restaurants remarks, about XX might a the in investment we includes there the our picked points. the making prepared have are of UK guidance headwind

you is XX% back if margin U.S. between out, XX%. actually, that So and the sitting

with basically very tightened pressure but had is with picture, are so bit that line a only a back range in commodity little we we bit. this margin in the – way we pressure the have pressure in we difference more and the To margins back complete than outlook the labor we we more The and confident margin what changed is the So down G&A outlook, pre-COVID basically the picture, margin XXXX. had on all shifted are work little have the ‘XX.

little to We net a also more income due a on little more franchise have fee income activity. fleet franchise bit bit

a hopefully answer, question. that – hopefully long explains the So was

Operator

you. Thank

Farmer comes next Your question from Gordon from Jeff Haskett.

Jeff Farmer

Thank you.

seen other this that noted see curious the see quick of customer meaning also similar their one-thrid peers, your this what $XX,XXX? customers would mix to income do under service And roughly they or months? just you’ve from On is roughly I’m guest you’ve making what you in think segment less than of one-third year. per last from are your it I you call, recent what was $XX,XXX customers seen

Todd Penegor

Yes.

in customers, category, at cohort QSR. under the of quarter it’s the across the over $XX,XXX of same roughly of to bucketing for start by on folks that’s have made seen we kind slow all the folks consumer the making but within been What first segmentation, seen the some the the those we’ve On up traffic $XX,XXX. it

front for there for So calendar we the digital do to really did them to and trade to on hanging the bring in, the mind there, not keep even $X that’s that driving the well why of come buck make the the value, in do we’re hard back, into a backdrop X sure the pretty and biscuit things need bag, market what continue that And have sure to are our and out sure that again Biggie we so traffic. year folks QX innovation is was only sales, on on top within to of on that things we consumers to start we drive we’ve to we’re we’re with continue our that with in $X between gain quarter. but make driving offering dollar work make app, in some sure to do, which dollar menu our really the whole, to that all in offers we focused pleased our continue is the compelling have customers the got to fresh first shifts of in can trial share working that up like promotion on make

in now share. to the or consecutive traffic So on gaining quarters holding burger we’re we’re quarter, segment. And share QSR hold able all-day XX the of dollar

Operator

Thank you.

from comes Chris question O’Cull from next Stifel. Your

open. is line Your

Chris O’Cull

understand even business. guys. and even factors open the reacting the margin are might the investments or to trying just make U.S. to rates? how in morning, units Todd, interest pressure franchisees just good new these affect to I’m willingness rising Thanks, how

Todd Penegor

we’ve to really community, had And regularly we’re make one our to focused the Yes. on them the you one sure make it’s $X calendar No, always about right that that adjustments, with with more we’re partnership franchise still tight. visit, our strategy. more meeting think as

work as of need So price, well to nicely we rest app, way. our continue great up op that trade enhancement calendar the high on the the back of of place, And we a the sure how partner the mix, take we do to them drive and complexity the continue folks as continue along we’ve lot in really with manage some make then of to actions in simplification the to profitability to there out house the with drive on daypart got What good drive in a breakfast. lot loan restaurants, we story. really hold how that innovation of folks into and of in we to to profit

As into lot GP talked in we’ve margin. to we He about as actions talked in earlier, about a years, We XXXX. build last X had QX. the of said our we business. we’re talked about And pricing think profits about momentum additional record – starting PX, the in

We’re and I’ll collecting our that. franchise talk through financials right GP now, let

Gunther Plosch

financials. Yes. Todd, preliminary we have

U.S. positive. at benchmarks, at benchmarks. finalize it show full system levered And for will at We sheet balance headline but the record on we in of franchise detail basically our Leverage kind are is the Investor Day, ratios our unchanged. less the look as the XXXX. their are than industry profit That’s franchises

result balance comfortable and time we of for healthy a growth it, the very algorithm confidence in it’s going with feel a our that profits still and therefore, system. brand As a into record for clearly really sheet, our we’re tougher

Todd Penegor

had the you’re is net-net, Chris, So really on we’ve some in unit development great momentum that what QX. seeing

commitments the deliver a a calendar sure the growth year that team net during to on with openings the franchisees that this and of we new strong getting great comfortable to X% have has year. of to are that the course still in chain get really place in to making have those the to our we’ve We’re unit all openings X% get we done Supply and more components is job little the to challenged, a this year. ahead got position the that pipeline restaurant

Operator

you. Thank

from next UBS. from Geiger question Your Dennis comes

Dennis Geiger

you you know rest It year sales if in drivers said the growth the wondering I were same-store kind rest more you on Todd, solid here. year little the line, rest the from and talk bit thinking on if of basically color of a of weather, Great. the wondering like you. about for there the with sales? calendar I else provide could you of there, is anything sales of year was Thank year. for lapse, you. more kind could sounds Thank called about rest stimulus XQ cadence, any excluding out anything But a of implied

Todd Penegor

we look stand to dining today. the the year even And front will rooms the of open. the saw of X-year stack, more full from our Yes, into X-year saw into the year, forward, on year, half it have got expect rooms in that half get here right? as sales same-restaurant most at those another is out so thought of tremendous just that What accelerate just we’d half if we the amount comps why over we’re that back in very a start extent confidence expectation. we we little the the opportunity at proud we not We’re we comps, look of the starting QX, X-year few We’ve our And same-restaurant nicely. X-year we ago. to in QX of thoughts year back as that. build we from I lap the into then much That lap But reason against. softer further QX. We rest accelerate we’re dining to the be QX first even open our of our moving really year. we and is against the And still as big a year-on-year would when double-digit the expect maybe managing a strong half of a a accelerate see to always in over balancing was sales comps

We’re the quarter. see starting operation up of in here second to hours extended nicely pick

chockful our a open. coming evening later on in against year. good as getting of breakfast in the half some innovation daypart, the got some crave talked restaurants bit calendar past. the many into is the we’re back So we’ve about innovation with little The new the We’ve with

an really to with great got And folks arena. sure to make the digital we restaurants. franchise the takeout delivery community moving offers that our racks hard to to mobile out working digital forward really have restaurant, consumer in we’re continue by We better and can into make better our have a have into we we mobile so and to sure getting take-out experience in get partnership a the drive quicker play efficient

line about we’re lot really as drive earlier, up a the of throughout to this that and year to can our going things continue talked forward. growing share, us momentum we’ve give is initiatives. the business confidence those been continue So with expectation to And I’ve calendar moving we those

Gunther Plosch

And I also as that in of about we Todd the we positive seen definitely is first Dennis, pricing, of on mix, mix. answer. say, have Positive all previous on really mix there the would I my top while positive in tailwinds talked talked acceleration quarter, expect about, actually positive top mix in

the international by X%. as do is Todd year programming, lift marketing So SRS We as breakfast. Canadian expect on X% to well. the of working said, And to you know, Xnd May, we launched

So tailwinds a bit more is even obviously, for that loaded go. creates mechanically, the it little to back-end year

Operator

you. Thank

Your Jeffrey comes next from Bernstein from question Barclays.

Jeffrey Bernstein

Great, thank you.

perhaps at earlier, we’re looking a mentioned seems you it like As macro. slowing

is of investors you in environment. is positioned within noted think how the But often wondering at quick think And know end end the their just versus service? of type quick slowing most I think lower is that think the that industry positioned consumer Wendy’s rest especially, visitations. the you I of I in the I’m higher Wendy’s about of service well QSR.

in pricing think trying you for outlook confidence environment. you I So know that understand you I’m have year to further just rest the power. in your mentioned the of better

how you track elasticity. wondering maybe Just

a slowing acceleration confidence get macro. to for trying in your comp and Just that be a sense what likely will

Todd Penegor

kind the that And of by that rooms one affordability levels, goods, quality speed fast initiatives what just all you we well innovation, relative for provide. the And that what metrics great racks come work nice on hot when to leveraging the And higher restaurant. to $X experience, casual, are why do worth to the we of time place being we Wage get have our pay. is we’ve we’re positioned convenience, we’ve to there, it’s to the our the we and day. of that like X a space, and that consumers. folks savings quality about to a it’s of we’re consistently But with mid-scale things We we trade-up and to move focus differentiate watch drive roll lot really on QSR in Biggie of think and hotter of deliver from the generally is continue to with juicier some out why business relative on for work casual of a value to that our that news as our single will forward, Jeff, it’s and work fry doing consumers historical also is restaurant, speed, things overall QSR. to the the the around The the quality than restaurants. X.X the but we service, QSR have hamburgers. we dining you innovation say $X deliver back improve guarantee. not work our into those still lot category continue the have us Bag, a not in continue done demand continue the into of continue U.S. be. we drive our really is all affordability of still open, to construct but a that done digital around the to our The and that value news you convenience putting The are every crispy lot DSG price focused the and to of again. say, bring strong. but that’s just will noticed the But inflation is daypart to rest calendar growth that’s

Gunther Plosch

elasticity, And your pretty part Jeff. morning, have which changes. a elastic to elastic which are good the less to Good more question on price and are we understanding while menu of

is XX%. that pricing trying I high. our obviously rate as about we as on flow-through you, can. can pretty tell best We’re to balance It’s

that tell bit than sure, So probably think. less I but floor for little XX%. actually can for you Elasticity, of you gate. the it’s It’s out

Operator

you. Thank

from Sara comes Senatore Bank question next Your of America. from

Sara Senatore

traffic. about ask to wanted I much. very you Thank

just taking was price obviously, you’re you to see benefit, some I type negative. that quarter. be that particular, even in traffic wondering you’re dynamic. as you’ll dynamic order share, mix positive take still I But second implicitly, think mentioned of guess, about but traffic, therefore, aggregation and of in you seeing how persistence traffic more I be still the negative. and in the know And negative this may given that going more that could seems mentioned its mix was and You industry traffic

check? that, whether there kind So talk could a limits of to and you please, ticket-driven just through are

Todd Penegor

started traffic are that the as it Clearly, I Sara, first for think during us quarter. the impacted of first negative there traffic things that good folks category. dynamic. some within you held was quarter and And staying unique in traffic. the news a Omicron, out in Yes, we with the But mentioned, is share happened home. lot That

had for that you time lot weather had a this in up that filled of that high a last consumer at especially pump have year now February. the they adjusted hit impacts adjusted some inflation had fuel to first and March start in when And the January You that that of to get they to. versus then year

traffic impact some had the So think in on in dynamics bigger a QX. of category outsized impact, I those

are summer to starting months. move the We into

value inflation is wide relative for versus of food-away-from-home, gap for Our XXX the food-at-home which versus points over more a food-at-home is to us. positive food-away-from-home, basis

get side extended take we back? we to our I we Where have traffic Where of in win open, as have that arena. smart really better on do back? Where position, it in start menu to And headwinds the near-term loyal well move more customer a to that to we GP still need? rooms So we our pricing. we’re do pricing? do the manage have be the the start said we earlier, high-low promotions we a start that bodes pressures continue make have we summer that near-term our we’re sure going staffing deal base today. the but think we to other customers the hours do we to to to have do Where more So seeing through as restaurant, on continue start to into dining get to start the in months, we

Operator

you. Thank

from from next Mullan Brian Your comes Deutsche Bank. question

Brian Mullan

Hi, thank you.

where sense long-term what make of to a Wendy’s? week for for a do, that year to of there U.S., if within support and reason the could strategic weren’t by I per large it opportunity you if target advertising is some the a Just to beyond important $X,XXX that scenario in breakfast the this business reach corporate continued business that the able follow-up or on this with year? end ask you context $X,XXX even quite And is

Gunther Plosch

Good Brian. morning, Good question.

out was share, pretty digits gained in happy get traffic category in breakfast to We category. both actually tough are market high growth dollars a with The as and of it. business actually our we down single

company have pleased with own right? is point are to bit we on business, whether country, business. absolutely range, a with. it of what started sales. little for believe see delayed legacy more we’re And plan investment to we restaurants, bit has we of the XXXX We down rest number. still the The shouldn’t pretty feet. XXXX. $X,XXX in little our enough $X,XXX will the restaurants breakfast no investment that its proof versus sitting no biggest the so XX% scale U.S. in on The the having a We’re the legacy the is we reason Canadian get entry, where that in same to – than me, I are definitely in steps stand investing

the view I bump. really So as results quarter little a first

XXXX. P&L our business. lot a As I don’t And needs and is it Todd like investments breakfast said, in of don’t to things there think, incremental about believe we

Operator

you. Thank

Tower Citi. from question next Your comes from Jon

open. line Your is

Jon Tower

question. for taking Great. the Thanks

a of may. if clarifications question, Just then couple and I a

year for get that’s me, noise those then terms you you were had I that to specific into think, to the about around the you question how consumers or less coming are $XX,XXX last given are the shifts In in some shifts loyalty if commentary making Thank out digging itself, U.S. the you. the sales above are the past. average And mentioned then about income last for below terms ourselves Are still XQ same-store loyalty seeing that the the about model? and users? the Todd, a And still how frequently in the on calendar excuse hoping running we call. we thinking that basis, than the are seen users intact that of could of similarly those And around shifts any from guidance think you’ve some in Or year, in G&A of customer? should XQ play the into calendar lower multiyear brand? rest I know and I the was lapping of

Gunther Plosch

Good morning, Jon.

million little steps internal unchanged guidance Just a the your a technical of forecast range, million at questions on $XXX with but to the within efficiencies. some this is down G&A. $XXX Yes, G&A bit kind

front, On consideration SS have memory that of due do of due the good quarter and to calculation the to need there shift the you X.X% last year take as you week a was the a XXrd the to first investment business. in first – your you into

answer on to loyalty. is question think I going the Todd

Todd Penegor

Yes.

increase during monthly of for there saw hamburger those folks We loyalty increase with consumers really pleased of the increased within front, app, were we’re of the lot users. active loyalty our into breakfast, folks We we pleased. active is XX% in users. awareness XX% the driving app. tournament. become the – the out our course nice We We user a really our in a quarter. frequency official total On nicely nice saw were had first March a that the net NCAA official And what the

we into that become demographics. we more our cut much they, So, program, folks once expected, loyalty across a all get would and does frequent customer, as have

speed continue with up get and a then accuracy, as that a helps one-to-one order the our drive connect drive-thru, So, app. we time ultimately to of folks helps for consumer quickness into provides we good really us payment basis. over benefit awareness, get feeling the information that are better of have lot on drive we to all to It helps to

moving continue So, a forward do to good us. investment to for

Jon Tower

you. Thank

Operator

comes Nicole question next from Sandler. Miller from Your Piper

Nicole Miller

Thank you. Good morning.

be the of the point second quarter for markedly at-home take maybe margin to what some So, the around example, start the informal Thank year? or happen? and because where think share And quarter XX.X% please, second you a seed terms outside about in eating you that broader you is day-parts And breakfast. the It’s just about might for clarification, gains. kind you. now my about to question stores, that would or price, what’s maybe include When the the there. to other can apologize of market I of XX.X%. And on share Just clarification. actually if out sorry, different? hear for great of of happening And curious breakfast, year, Is full win should people we market? legacy too as QSR, eat convenience full

Gunther Plosch

Good Nicole. morning

my I of margin yes, lot out a So, threw in talk numbers there track.

year quarter. guidance totally as first margin signs the to well. that step The this margin are because to – that XX.X%. UK points to basis was our taking Todd. is global And of year. again, go feel XX guidance margin we margin basis up higher the already as for second price ease, So, is is expect U.S. in because guidance for to second mainly guidance we Over The QX the you, have. margin we XX.X% a increase in XX plus I of as pressures about XX% comfortable price to previous of guidance the investment basically quarter, the in XX.X% took the in comparisons, increase starting second going points. seen we half, another the have with inflationary the we of the That global is to

Todd Penegor

Yes.

to As you think have build where opportunity to sales. we about continue the do

year, awareness to news to a with some breakfast drive day-part trial, that’s drive opportunity at on continue business. an the us, in we to build as strong trial clearly, bring disruptive promotions to but bring growing throughout and only keep not the to calendar, innovation So our folks

our continue do to do operation continue we relative we think And grow. business. at have pricing into means a the most the at later rooms to the taking more our it’s of lunch a get as C-stores, for a to of happening continue big have and to are of lot process what the a which be experience digital at dining and grocery off racks be us evening, happening opportunities happening to in open we we advantage. Relative are inflation with lot inflation the and opportunity our the C-stores. seamless things a for doing to expand nice importantly, drive-thru, we still us, where will store, a system pressure restaurant we is grow There to take throughput in some and hours As dinner

with when you a So, managing believe things pricing, scale take how our think in choices margins have with that folks better need and have our drive-thru about they we for their supply ordering position chain are would lot that with goes much heck instance, C-store, us the value more to a along puts the convenience than to relative at what I the our to a and value, of hold with to do experience. a mobile

Operator

you. Thank

from BMO. Strelzik Your next question from comes Andrew

Andrew Strelzik

ask to Thanks another on morning. breakfast. I taking my Good for Hey. question. wanted one

into outlook a related seems may more consumers for branch to difficult new getting lowered softer. it be the was is that year. like the the spending But not mentioned the environment day-part to You breakfast quarter, rest the if of rest first out

And the that how breakfast guess for So, to just do am I on play the way? would out some have not Thanks. your evidence case? about perspective Maybe and you you flexibility it curious strategy that if were the of levers that. I think be that,

Todd Penegor

Yes.

will couple be there tailwinds. think I a of nice

early folks impacts the in lot think talked Omicron. a I at the and quarter, staying about we home of

getting it’s are see know opportunity start comfortable great into day-part. gives You satisfaction customer to our pick breakfast. We still to that routines, really a back more lot the folks office, an highest up, really to feel return us their starting showcase mobility our having to

day-part. We we have get know great speed drive trial We breakfast the good to we got when service. that of repeat

very go, at look and hot breakfast quite out forward. we get that as that moving feeling are folks on nicely the of we a serve So, quickly need that prepared convenience optimistic can

to our quarter disruptive offering. and like We the will have innovate to folks to trial we to forward. that we start thing front PX It’s here continue both to things promotion do in will continue had And the continue done. moving to on food great The do. the will we beverage drive we one

and only continuing routine of news more gets the awareness, that’s into it in brings drives individual office just rather the bring not into than that in folks but So, the and all-family headed the drives to trial an morning.

playing have forward So, of support out deliver calendar our all way is we we nicely that. to of think the plenty that got constructed moving with

Operator

you. Thank

question from next Your from MKM. comes Brett Levy

Brett Levy

you look by of When the seeing seeing across are guess questions. try at little in the to just, unpack can you a above deal taking for more transactions, I bit mix Thanks terms value the Thanks. cohorts, what $XX,XXX and how are different you much or overall or you transactions, cohorts? below

Gunther Plosch

morning Good Brett.

do bit is everybody tries promotions. little of competitive. Obviously, the QSR business to So, value always a

platforms it absolutely right. with doing own, We are we that our way

one the user currently into create to for migrate trying are $X and lift strategies. of We It’s Bag. Biggie our a upside

activities the users into loyalty various see obviously to attract database. You

average years as orders there and a point bigger of there, lower a the Why do than from digital respective cost us. with value kind offers characterize digital view. because X probably do way a to obviously, to lot would of So, is I this, – not check customer ago. fulfill years X a more we out the situation for we But of

respectable consumer. low-income the a of money decent a gets good The $X pretty on. make consumer checks and have between and still spread a X that We kind buys check for we low-income high-income to that lot of of the

So, balanced. I think well are we

is same. is And category kind not balanced. that approach I Our of the think promotional

driving points affect not profitability. are kind price We crazy that of

Todd Penegor

customer make trade important loyal cycle doesn’t that the because the they X why Yes. there to in the throughout of consistent other for brand. or up we pay it’s are offering a That’s they sure choice nice and the $X Lower-income great or to it’s everyday has our bag. offering are quarter, cycle, back those to $X have crave for options Biggie a been The to make later consumer major to right. trade beginning pay

Operator

you. Thank

next Your Goldman question comes from from Sachs. Jared Garber

Jared Garber

questions, one one think transaction, in digital said on Digital rather the or about XX%. breakfast. the on it’s wanted for two taking U.S., and the then you I mix, about question. of Canada move on in I Thanks was just back to XX% morning. Good digital – while

on driving that you to market U.S. So, wanted breakfast, if organically? if differences get there more, your of in number the customer learnings any delta bit driving two in from and those a are wanted is offering. what get over just of on trying I sense just maybe core there then to that different that’s can of you in to to a And terms is the you markets? bring the sort an update that or accelerate get Canadian seeing market – just what’s the And that

– I get the opportunity core remaining of tried there was think think wanted to day-part? customer than breakfast. the I I into was update it to a XX% had less about last loyal just the of sense Thank get you heard customers the you. most what your

Todd Penegor

Yes.

the is Canadian across delivery in In big U.S., the of business. mix, it’s a On big XX% that Canada, a driver have it’s right. digital XX% really international, business. we

great [indiscernible]. We footprint have partner an more a many in instances, with urban of

We Eats. added have Uber

that honestly, add tools international more in build to But come We offers already the the which delivery the that in are experience to further. quite did Canada, digital out is market. the U.S. business can to place things. to that in even accelerate experience international helped continue the in in has We there to convenience to drive accelerate

awareness to can the and food March a U.S. do Wendy’s, a us have in that continue Madness the international, do great we what app, do that you or support with So, loyalty all you the from QX we program, event. have in during saw we got whether we get delivered that’s had drive that to that that’s to

preponderance we at that our that lunch, the still join us for for trial have customers best opportunity do dinner to us breakfast. On of still the have us side, a breakfast join

that that attack control into breakfast are times So, will to of have day-part. to year at sure to QSR to already the the see will about promotions, to a talked this across that the many even to folks the we drive folks calendar, we restaurant have drive got of continue bring as some bounce on before a breakfast, have news rest combination some get that’s continue awareness that continue lot to around under the drive that level our you to we awareness, why And back we start to to call, trial. of category of advertising make combination disruptive we equity the

so to long-term. built business be are a They grows we Burger the in great Our spot. XX King have awareness feel have just industry which continue We breakfast to the a that business has in got right routine, we tools happen to in there levels with where sure for we in over good the that. very make place that feeling years, about been the continue that the got to are we make successful that good for to is,

Operator

you. Thank

from from comes Northcoast. question next Your Sanderson Jim

Jim Sanderson

broader outlook for could UK or of your on you. adjusted what the you the Canadian has whether in development us out type remind just European I Thank question. you for to for Thanks of forward? going to Russia? given conflict And you growth also market wanted comment if unit the expect

Gunther Plosch

morning Good Jim.

restaurants one is to It’s So, to our our as are of as globally. focus goal global areas. where space we one the clearly X,XXX you part of Europe markets growth know, X,XXX of reach expansion doing white few

small. we it’s impacted pressures that, inflationary all Europe. but expansion couple huge Your Ukrainian is material. has obviously, in in franchisees restaurants of that, Georgia It European the apart It’s by our question directly are from of there on not plans. obviously an a Kazakhstan not and war, directly, interest in impact said Having

UK now up company have footprint. We market. for join to already very our the signed restaurant They excited franchisees several are

XX so the are between of company kitchens, by restaurants in combination expecting and this the of restaurants you end year As a know, XX and we UK, delivery REEF.

positive. Overall, Philippines, obviously, are year, is in that we UK. mainly international, for for about a growth XX% a rate, the focused this overall, expecting unit India, So,

Investor the not again, Day, in no that the given by ghost a moment. driven definitely we we at out penetrate specific REEF expecting We especially kitchen acceleration, for have markets presence where are at but number again we where might urban do We Canada. have

Operator

Thank you.

question Your Rahul next Gill comes JPMorgan. from from

Unidentified Analyst

Good think my this to contract year. I morning just guys earlier was guys. question. chicken check Thanks discussed that the wanted for on taking you I finalized

looking this into factored but the or this You And already, a XXs, influences in that look wasn’t cost, at have previous they or be like cost corn the inflation attached this it – previous said high-single which cost? comes guide with and contract XXs the digit chicken stabilizing to does also the to in component something here.

if are there to for guide drivers curious was us COGS? mid-teens I any point you more the year could on the revision for So, to full

Gunther Plosch

you Beef Good inflationary to significantly. inflationary right. Rahul. not contribute outlook was driven went up revised did are Yes, morning Chicken outlook. significantly mainly by beef. revised our The

The have yet, coverage didn’t that other we increased several items where sharply.

to on we this, point view. to want we rapidly for taken the successful of know, to both. of moved do result definitely share pricing dollar performance. not revise from that, year. have traffic to on but it had a We share you action as a mid-teens want us. I the right, appropriate be As And and guidance commodity did And expect our we the

continuing haul. we this in the holding why to action, sure guidance so make or slightly ever pricing changing we inflationary because have not dollar share attempted want and traffic outlook for long but and This expanding or to restaurant of category. offset is attracting taking free we pricing. taken without are pressures that with down flow our the in EBITDA the the we in cash short-term are have streak building we consumers our margin are So, our the all and We more

Operator

you. Thank

from comes Eric Capital from Markets. next Your KeyBanc question Gonzalez

Eric Gonzalez

headwinds pressure that you the spending $XX average maybe mix more if you became the And million progresses? maybe exited could the was as the breakfast timing the pull – the as that’s about spend timing Good apparent? the total talk And on not, Thanks. planned the color first there as in morning. or the an advertising quarter? in give to of some quarter you for the opportunity us back advertising day-part just of year for then on that Can maybe COVID the year, sales

Todd Penegor

– As not day-part. evenly you pressure, the on it’s we get ahead incremental we our dollars the on of ad in put marketing we about that way that think contributions place, the from the the just but dollars fund, use plan. spread our have total pretty We

in are So, it’s the place. laying plans hard quick are to promotions short-term make adjustments as if the – set out, those

split. evenly pretty So,

breakfast lot our a gone, has impacted in think As two. about period was where one, business clearly, you more period it

at comp we we As staying lap a I Omicron, to as see said, with year have that whether starting acceleration into folks that PX. how get home into big clearly, Buck plays our to role breakfast in And promotion we And the ability a same-restaurant QX, QX. PX, was in accelerate sales the X-year that. in contributing that out ago Biscuit there that’s to some with in

Eric Gonzalez

Thanks.

Operator

you. Thank

last comes from Saleh BTIG. question Peter from Our

Peter Saleh

there that you were update in Great. the Thanks. are some give on appetite in grills? these for labor there update is is innovation seeing, well, just installing as ask execute I to a just these you or grills you on if that Any later time? could company-owned you can wanted savings guys lastly, of an units? or Thanks. that maybe a on menu the implement the franchisee point then that to new something And

Gunther Plosch

morning Peter. double-sided company very but as the franchise, the grills, just Good excited our Yes, and are we system. about not actually we, entire

are the investment. decent We about in double-sided is A and been out already. for has a pretty part there that there lot across two the grills excitement of supplying amount order strong And have suppliers installed that these a book system those.

allows don’t actually that point at time. to it disclose right, want innovation. it also in is suspicion we Obviously, Your additional

satisfaction. think quality, better we to will better And it customer so contribute

two do things. an So, attempt to it’s really

actually the have up a First, of us on increase the food bit because are a much, grill give and to cook chance burgers quality of much cooked our labor little been free shorter. times that

because So, it’s why any are investments clear, they this. franchisees we making the investment up To system, an reason believe with be financial that’s are a not of are the the we absolutely behind for themselves those and return. investments. funding The great stepping

Greg Lemenchick

our GP, great for day. speaking to Day and everyone, call. We thank a again you, participating you, Thank question June the That at Xth. Pete. and was this forward of Have you, last Thank Investor morning. on with look Todd you our

may You disconnect. now

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