WEN - Earnings call 4 2023 | The Wendy's Company

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Operator

Good morning. Welcome to the Wendy's Company Earnings Results Conference Call. [Operator Instructions] Thank you. Kelsey Freed, Director of Investor Relations, you may begin your conference.

Kelsey Freed

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.

from reference earnings the Before of non-GAAP we the we results could financial forth of may at Various is certain cause those will affect of the note our today's to statements. refer forward-looking release. disclosure measures most materially our directly non-GAAP some end factors measures. safe projections comparable at harbor discuss Also, financial to our presentation this investors begin, GAAP our set statement that in information please or of the of that earnings release. should This Investors take measure comments our forward-looking. and reconciliations reminds today appears end in the differ to results

On Officer, call financial XXXX Gunther update, there, Executive will full quarter up President Kirk. Kirk Financial open hand outlook. we and will to and questions. Tanner; review give our Chief Officer, today, for things our XXXX Chief that, business and share I'll line with a fourth over Plosch, our conference And From our our results the and year

Kirk Tanner

and Thanks, everyone. good Kelsey, morning,

brand fan excited feel move to I make hearing drive success, my today, my whole we objectives. with to many future have as mindset, a my am get Wendy's how on amazing join energized members I our fired life. just am look that coupled perspective to Wendy's support am and customer-centric be up potential about I've me others I to strongly bring philosophy Before started franchisees. first coming a see And will after not our growth the pivotal you drove spending as operational I this the the execution and our Wendy's I in and my this leadership wanted just I've investment heritage, strong lead confident strategic career, for industry. I and at with a our community opportunity such business. profitable system passionate I but X brand our taken and had I and the brand. that been guide the incredible share and to deliver the about this In experience team am across growth. Throughout weeks. plans what I the days, with time Wendy's of will to opportunity was this more team of some forward in the to the to time meet iconic

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to sales unlocking business keys even growth competitor. chapter formidable never our digital our to that an our focus stronger, believe becoming I next accelerating on and commitment Our more our are footprint expanding driving same-restaurant global and been has momentum, strategic and the global

margin years Today, to an the you'll drives growth, acceleration that in invest behind plans to up build expansion growth footprint brand for a these Wendy's hear our pillars to and sales to engine come. enhancement level

growing pillars. our recognize consistent We growth progress continued strategies, year brand. and year. the and made global sales on marks This profit accomplishments growth XXth like I'd the strategic same-restaurant of execution consecutive moment our last delivered to growth, take driving dive we Before which our into we highlights to dedication Wendy's growth strong sales XXXX results, team's to as a our profitable

consecutive years. XX and coming double-digit a on a same-restaurant in business sales of X.X% growth. laddering extending XXXX, opening achieved new X-year sales international XXXX up XX.X% in to number restaurants in a to X-year supported international is This success of the enabler record international quarters key basis same-restaurant growth expansion our Our and of

record reached in almost every experiences. sales high growth mix each full resulting built X.X% more the traffic growth members business supported X-year QSR XXXX, maintain Burger basis. our well within and strength the to with nearly ahead dollar by This year-over-year digital same-restaurant original a sales personalized X.X% reached We of which billion, U.S. was year in growing XX% provide sales XX.X% meaningful digital on fourth to our all We as XXXX. $X relationships share to the quarter, our expectations. in allowed Our loyalty continue of we quarter across global across and category in-restaurant us growth delivered channels a great quarter,

profitability with perspective, restaurant Our that return year lower development of company-operated further commodity to international a XXX. achieved year pre-COVID basis, a and in sales X% a basis of U.S. closed unit margin the inflation our from XX.X%. This growth to year-over-year supported net moving expansion We sets to bringing forward. strong in growth, in XX% goal point XXX restaurant On the stage full we net even increase improvement openings our for markets. margin

million XXX% $XXX our returned Finally, and increase shareholders remain disciplined our nearly XXXX. allocation we dividend in in capital to in including policy, rate

in our it the this turn sets now a momentum I and GP results. to quarter coming financial foundation fourth year our over full will to years. of growth All for strong share

Gunther Plosch

Kirk. Thanks,

global growth XXXX. global growth. net sales adjusted quarter, close global same-restaurant X%, fourth unit We quarter over are another to deliver the to and growth systemwide sales our by sales and of grew of EBITDA our In benefit the pleased supported continued

a inflation offset by contracted year, check customer of by in average digits, the These company-operated quarter-over-quarter approximately acceleration to U.S. inflation labor a were X.X%. benefit X%. versus mid-single prior cumulative XX.X% commodity primarily pricing of higher partially the declines margin driven almost due count and restaurant Our of to of

by higher and $XXX benefits. EBITDA partially Adjusted franchise company's incremental X.X% revenue, a employee and and expense. the other G&A offset in investment in royalty G&A and margin in U.S. lower approximately to decrease a compensation decrease from decreased X%, franchise restaurant resulting in company-operated costs. driven primarily decrease These breakfast support advertising higher primarily by approximately increased a were million,

came the with an at costs cloud computing year strong a execution tax performance. in $X.XX, adjusted by of decrease Across increase partially compelling EPS year amortization arrangement plans prior rate. versus and in drove by strategic higher financial driven higher full our Adjusted were offset and EBITDA. of XXXX, These

supported mid-single-digit systemwide alongside global X.X%, same-restaurant grew sales net X% Our global by global our sales unit growth. growth the

$XXX EPS to increased X.X% XX.X% despite $X.XX. levels returned Our almost while pre-COVID U.S. inflationary EBITDA to pressures. million, of adjusted XX% approximately restaurant ongoing Adjusted to company-operated increased margin over

I'll Finally, cash demonstrating turn our to cash in flow approximately XXXX. the to generating increased flow free drive XX% $XXX over of With further that, abilities business. to Kirk talk back it our now growth about plans million, high to

Kirk Tanner

Thanks, GP.

said the value. to driving chapter expansion on for this excited global significant brand our restaurant accelerating I I am a long-term margin begin with As Wendy's focus shareholder and earlier, growth, delivering

company new over will years. model. To to Canada, the meaningful acceleration without our acceleration levers let's of across The the plans adding the daypart split this and pillar. planning heights, an advertising support our of investment turn incremental media, U.S. which always-on in approach our are further This margin story. drives evenly approximately of when our to we as daypart to improvement the X next can breakfast most strategic We growth across incremental growth each and economic grow business fuel tell compelling we and sales million plans and opportunities. invest significantly Now our partnerships breakfast amplify considering restaurant labor, of $XX activations X breakfast is

growth are will on we quality to our be breakfast great driving we customers craveable bacon, of amazing our by We the at fresh innovation level everyone satisfaction back price, now our a The ensure and providing scores, mission provide from food Wendy's, has eggs menu our the throughout at and cracked know that customer daypart on everyday again once and they alongside year. because tried are breakfast highest a at further supports we crispy experience again. try

investments can growth-minded doing execute the you franchisees, they and I the they the committed had breakfast all-in tell highest our meeting some can and to morning. are privilege of supporting at with by on in are level to further I've of everything our

investment drive per the our forward weekly weekly fair on journey our increase earning U.S. per over breakfast daypart X $X,XXX share XX% plans expect restaurant sales in a towards we breakfast restaurant. charge We our and as will next approximately of years

on We makes also place have to double plans brand in Wendy's down what iconic.

Wendy's key we our March is of high-impact never our fresh, that day. beef every Madness on the remind frozen of this do. fans of platform again And a level Nobody biggest we every to we use scale once that delivers quality hamburger competitive this at X utilize as First, advantages difference.

drive continue existing will orders. check. our category lead platform. programs including big to in that both news the popular and It and on on Crave premium we build new In and it that lineup. add-ons our innovative Frosty, game-changing special XXXX, to flavors will means drive means innovation Second, traffic Made And flavors visits ownable new means on to and that chicken

continue to we Bag Biggie platform to Finally, compelling everyday offer will our value. leverage very ownable

this than compromising with XXXX. to XXXX, on visits Wendy's value in customer means competitors, which This our quality us trending on way, platform do positioning never always the better in will drove and we success Importantly, ratings win quality.

now great than progress same-restaurant our in expect previous X,XXX will in every total, low global our Critically single increase an X% investments of this customer experience satisfaction, on and important, day. and taste, we made restaurants. In will In on long-term growth in-restaurant speed, continue global every excellence we expect build execute forward. drive we we more to delight and digits, X% accuracy plans of XXXX, to expectation to we elevate moving momentum with to will customer versus and XXXX, sales our our

to journey XXXX. XXXX we've our on under our a accelerate from progress plans $XXX in our of million business. almost made $X digital in sales let's billion Now grown ton to turn We've digital to as

We clearly the frequency checks are and benefits drives. digital the seeing higher that of

opportunity to expansion XXXX The consistently them know from mobile drive phase app of approximately anywhere. growth digital's access benefit we primarily even in also our planning will our customers, $XX To app capabilities. enhancement a and our enabling these new to can margin for channels step Wendy's to experience are mobile more us million massive unlock to experience to further our growth, further generate. digital anytime, seamless loyalty change invest and sales deliver a allow We enhance to there's the

evolving We act experience third-party capabilities customer our QX platform is Wendy's and also together our will in members. what initiatives accelerating in But to toolbox. learning, driving new excited increase are our digital alongside best-in-class customer segmentation our drives the ability our on data platform through data loyalty unlock meaningful in loyalty entire machine personalization implemented These digital bringing for a and way really a we're I'm in in uniquely our a about the way. new confidence partners.

top and lifetime including We frequency journey a data-centric these foundation a gain spend. started to new digital our and us infrastructure building by That allows team. talent the platforms, maximum forging benefit from engagement, out increased

and place than We the growth in systems to and expect earlier of have in global plans a phase digital over digital will billion the fuel $X now year right planned. reach people, next XXXX, full sales

We improving are more. are customer And we the in focused in that crew our and technology restaurants leveraging on experience. even spirit, always

to support over U.S. enhancements by board of $XX We global X approximately to system. million boards are end digital out planning the to roll all approximately the to years for the menu million next digital and $XX menu XXXX restaurants company-operated invest

order experience execution. expect from improve and will upselling boards sales and We digital to immediate accuracy, drive merchandising growth benefits our consistent menu crew

enhanced changes Beginning menu more along we testing begin as like as offerings, with and features XXXX, pricing early daypart AI-enabled and suggestive dynamic selling. will

of system. to the we growth As in our franchisee profit further this show restaurants, should the increase, menu sales digital supporting boards in company-operated continue and benefit interest technology across

what role technology see relationships will customer setting out plays and building again. and enabling generative the to key now high-quality restaurant preparing pace have improvement matters: back accuracy. continue several AI Wendy's restaurants the our on crew favorites them and a on in also where time focus Wendy's and fresh, FreshAI This in rolled to team, ongoing We we bring speed in

customers our We while will model everything ensure can enhancing do we is delighting our the restaurant this crew to along new way. and economic technology

the to leverage behind digital U.S. and meaningful are sales in These initiatives expect focus The in position driving in expansion our XX% technology continue growth into restaurant company-operated to further drive economic are margin. to plans overall and supporting growth future. perfectly us the to model cost and restaurant continued we to investment margin on margin outlook the restaurants. highly meaningful deliver These driving through our to sales will management breakfast, XX% in business, our strategic incremental our drivers, our alongside margin-accretive restaurant XXXX. driving incremental acceleration pricing, benefit And

over company-operated XX% top our margin. of The footprint XX% already achieved restaurant

know achievable. we is growth So significant

the to now are reach all the foundation towards We top tier. creating for restaurants performance

franchisees committed our and economics, footprint are system. This our our incremental supports our to with current to new support profit expansion working unit We improvement global further in expansion. drives margin footprint for both across which

Our expected existing expansion build paybacks across financial increasing restaurant from appetite franchisees new new margin improve our increased and over will system, and time. drive health development

accelerate unit our to waiting aren't growth. we But

growth continued expansion global support are with We now plans. our fueling of

time to drive funding Our unit even popular we drive to the add restaurants. Build-to-Suit and growth, funds continue new expect program to more incremental over to

commitments and expand compelling, footprint U.S. development These and recruiting of X% approved which have initiatives our Groundbreaker plans lead our to X% franchise and more increased net growth to in we restaurant build years. in example as resulted acceleration X% continue in on and driving hundreds of to Additionally, support unit XXXX. new franchisees Pacesetter even becomes programs our incentive the XX and the last new XXXX north global will company-operated These of by U.K. goal across in and restaurant economic of our further efforts, our model X

confidence development over solidifying our XX% pipeline new our position of today, the have of versus goals. achieving a committed This further we development represents through quarter, XX% our agreement. XXXX As in under increase a our previous in restaurant

to back our through it outlook. walk I'll financial to turn GP Now

Gunther Plosch

Thanks, Kirk.

Our next replaces previous enter we long-term are strong our XXXX building the foundation as outlook, financial our reflects which we outlook, chapter.

adjusted We of the X% sales same-restaurant through up deliver flows versus X% making sales million EBITDA are by growth to investments benefiting EBITDA year, company-operated as across This approximately the incremental significant our of sales million, of global X% prior driving year, and north outlook expect X%. global restaurant growth significant to of X% XXXX to this and net $XXX growth royalties our to $XXX to slightly and driven P&L, flat growth business. unit the we

sales XX% margin the are of restaurant by in We company-operated XXX expecting flat points cumulative basis and our growth, XX%. is single supported low commodity approximately to This expansion U.S. including inflation. to digits pricing

inflationary we to approximately represent We expect Please expect market and labor year X%. basis XX relatively versus to at pressures hold U.K. steady note restaurant will start-up will of a global points inflation our X% the investments prior that ongoing margin. headwind in the company-operated

advertising, our We anticipate that the in Canadian increases in royalty in restaurant and investments partially $XX fees EBITDA G&A will to U.S. be investment driven fees. breakfast net partially The in million. decrease These million talent franchise to to is increase top to million expected high-end drive lower million the in G&A by offset an $XXX and to growth $XXX are our increases expected to $XX by offset increase plans. support professional

this to year. cash expect to We million free approximately to million $XXX flow grow $XXX

cash an company-operated lower our increase completed, of and We driven partially have our implementation be will million digital to newbuilds. franchisees. U.S. in services the $XX million, these to received by to phases this our benefits cash outlays by in anticipate cloud and investments been now approximately menu ERP offset increase million and in expect to in We $XX an development app driven earnings as for activities will of our an increase of provided CapEx mobile both by restaurants, computing core rollout be boards company $XXX arrangement

year. earnings arrangements. flow expected in invest come. are adjusted an profitable cash to our supporting income, a interest an and investments our in and These business EPS we the computing amortization by $X.XX, expansion, To adjusted We're our of we balance an to investment by decrease offset decrease as years income driven building sales drive increase primarily the in XXXX growth outlook in increase and XXXX a engine cash in expect lower behind $X.XX growth for partially our in continued driven prior discussion, margin in for lapping to by close EBITDA growth increase an to and in cloud

allocation highlight strategic clear remains Investing which to capital policy, through like is our are remains to and we fuel unchanged. growth pillars. #X in I'd the growth our that priority, investments our making Finally,

Secondly, and declaration today are quarter announced we to share in We our attractive year $X.XX expect XXXX. dividend. a dividend of the an dividend first sustaining committed per of of full share per $X

to to the we and over As to next growth allocate focus maintaining turn less our yield, we repurchases. industry-leading plan year dividend and share debt cash investments an

We have $XX authorization month. XXXX $XXX our of repurchase on remaining expiring expiring February million authorization approximately approximately share on million debt repurchase and in $XXX million remaining this our

fully a formula. powerful yet remain simple, We to committed delivering

efficient system-wide flows, through predictable, meaningful significant sales shareholders driving With expanding backdrop of translating sales are which This growth footprint. an I will same-restaurant cash strong growth of into free dividend company supports things to that We cash hand global over repurchases. and is positive share the is that, our Kirk. on and return attractive to

Kirk Tanner

be as couldn't position other complement to us we our customers Thanks, often. drive ways what's Wendy's today across more build investments restaurants are [ ahead to announced for Wendy's us excited more into pillars. GP. in growth bring our fandom designed strategic plans more at I ] each and These of specifically plans that and the

high-quality our than menu to same-restaurant earlier and fueling global X%. access unit our for to acceleration easier personalized the to dayparts, it global them Our us $X plans us to bringing items, build an and X% restaurants compelling to delight growth make goal more allow with to X% to reach sales across customers drive to enabling They us and expectations and XXXX relationships X% investment our billion in enable anytime, footprint expansion, digital planned. increase exciting our sales in over brand with value world And XXXX. our our to our net fans year anywhere, global empowering Wendy's the they a of innovation

record a right the And has alongside track growth. that coming profitable to things to Kelsey working unlock months, build are foundation strong of level. I brand. of IR with the full drive upcoming our to to robust potential share will us solidifying at the already am to In Wendy's the that, will time this that hand to system the now the right we iconic investments committed next over growth plan With a calendar. I Wendy's

Kelsey Freed

Thanks, an on who of attending Kirk, To Piper will NDR York be and with then XX. road excited March to the the on get our on attend Citi March off, Sandler on all Kirk. introduce things quarter. events in We'll have UBS many by start you X. We're XX, to Conference in investor this Boston Orlando followed Conference in the New March we

quarter to a day host we and May Lastly, our plan report conference that first call earnings X. same on

everyone remind into section, transition we we With number to the analysts, take your to X I As limiting everyone be to we'll our questions. due high that ready that, Q&A to of wanted only. covering are question

Operator

We [Operator our have from question, Danilo comes Gargiulo Bernstein. Instructions] do from first

Danilo Gargiulo

quick all, A And welcome on the of you. first expectations question Kirk, Thank XXXX. aboard. unit for growth

just from excited accelerating why the XXXX? in has you beyond? development into And what about development your prevented recently us and potentially Wendy's been unit the help You've XXXX understand, are growth you Can in growth business. potential the view, in

Kirk Tanner

our in the meet XXXX, Thanks expansion. about Yes, we're to excited for you. nice welcome. Danilo,

'XX plan. development to XX% think between thing first we the is our 'XX, commitments think through about and I have

really we about That because me that me lot a I really of deal great In gives good and see see north which the into feel feel gives future. we of is acceleration So moving X%, 'XX that an a can I beyond XXXX, good confidence. of we've and XXXX. and about momentum, confidence. that, got on momentum that

Operator

from Inc. Our Joshua next question Long comes from Stephens

Joshua Long

and as Curious, if date to going be you and little talk you second sales of seek you or how the about maybe XXXX beyond. bit might Curious the to what breakfast the learned and the awareness on drive category? differ of we've in interested hear have the can all what to with it focused a round first the of awareness about you're trends kind drive marketing that round that to incremental overall to investment, from learned maybe

Gunther Plosch

On breakfast business. breakfast, with we're really our happy

since it in As we you know, -- for years. X are

our now We of created have in this prepared there's fair business restaurant States. And you on lot United opportunity, $X,XXX per share heard the market the week. right? have is on #X a position per As the remarks,

do more We growing doing by definitely And are sales the that, X we definitely investment, that about next We with in years. XX% how innovation. right? do are

have launch resonate a [ for seen will that breakfast with consumers. You ] well video us

to again, further. will to, Cinnabon are Cinnabon trial launch that breakfast and Pull drive an We leveraging the Aparts fulfill and the business [ repeat also unmet brand drive need ] will

important. Secondly, EBITDA definitely of I would that say is is learned we have kind value really

they seen the us $X second to for you breakfast. on to learned consumer that stay. year have here last Meal has The now half Bundle are So in X that of

our So best whenever obviously, say they is in the choose morning I we also super find will daypart, us find they the category. investments is in about and value community great the breakfast excited making. that are breakfast they would franchise the food

all they So in. are

while the As support and you to to of us. franchisees support the for have and Kirk business continue are breakfast a excited to and they drive lot investment talked heard,

Kirk Tanner

Yes.

things. this growth the XXXX for excitement XXXX. this Look, opportunity Wendy's. innovation add compelling and Just the let franchise from few community, for and investment, opportunity a is real most the with a is me the the And

in So you breakfast. just of think about the our X/X about this growth SRS represents growth,

us, big system certainly upside a we have lot of it's So and for bet really for a us, excitement.

excited about this opportunity. So really I'm

Operator

question from from comes Citi. next Jon Our Tower

Jon Tower

the question, regarding rest breakfast quarter Great. maybe how just in and breakfast can of do Josh's shifts on on curious, fourth and us think -- there going And Are and performed third about 'XX? the Why dinner you why following spending up of quarter-to-date? lunch give reiterating context incremental some dayparts? in it what's just how the -- piece. maybe looks what Maybe any to And you for breakfast? just

Gunther Plosch

enough sales we question. side, add do think adding from we franchisees we answering obviously, it us, for of super without liking point and really the the the incremental a breakfast again, XX% we'll are spending And on view because additional Jon, any labor. of profitability time for be Yes, can

it's great for for model. us. super driver say would day, the rest a obviously, I So of on economic important restaurant

this are iconic, beef, never scale We do we. day, makes down nobody Fresh, to innovation. to that We're right? going frozen every whole that brand definitely double going same the on as the everything lineup, drive can on

You're going to Made to news Crave. say see -- on

flavors. innovation You And will on the see news on you will Frosty see chicken lineup.

progress Also would driving huge say, execution obviously, those value, last important, Kirk, in deal. else pressure. for for very ownable is the consumer the can execution, economic looking a needs model And restaurant and is focus least, are our We've meeting faster satisfaction, consumers under accuracy got us in better, is a you Biggie quarter And not of but for and great Bag made add? customer the restaurants. went We us. X. execution, anything that

Kirk Tanner

Yes.

for which some and breakfast in use platforms upside potential I industry talked think, at we can like our upside to I about Never sure. profitability our for the the truly, talk hamburgers, add, the Frozen scale the that I would Madness of are think about we've just Fresh, we'll the provide. best March

but be celebrate thing excited important certainly not But breakfast. will certainly only we'll X most what for that's of we about the and XXXX drivers growth we're again, Again, for. talking about, XXXX. famous So that's very the

Gunther Plosch

first answer terms trends sales question didn't I in the your Yes, of of just I quarter. realized beginning Jon,

you don't little we I give out, this know, can a bit but of give you As color.

guidance are X% to increasing have the you SRS low As single previous with we this digit. guidance was The to X%. heard, outlook

I lower. And fiscal X view, point a ] than year slightly little be So quarter X shake quarter bit steady then from guidance. higher of definitely there's can behind definitely an will say be quarter I say a investment. acceleration the of can and [ and will X kind the

You them ask the might question.

we quarter bit of lower? a why things. So little are Couple saying is X

conditions And of the the difficult that we United was our momentum out. first First with sales recent accelerate that, didn't in weather also help. offer growth the are clearly, of the last can global have in X%. definitely with weeks. we guidance States all, we quarter I SRS given comparisons confident have seen all year, And in of sales

Operator

Our next Oppenheimer. Brian from question from comes Bittner

Brian Bittner

there's a guidance setting on just system X% to just what I want I in quarters. to want average Pricing I on to did does up understand understand comps. couple XQ, X% Thanks. guys bar. And off. GP, the last that. but 'XX sales seem you to coming for comps rolling drive investments to growth, of be assume X% just follow The the does confidence the comps high is in X% do

to why of gate a X% be with for to understand sales and a us conservatism help and bold same-store reflects more maybe out a 'XX So deliver target over the and the for bit promise X% assumption what to maybe seems pretty maybe a on you come that the is maybe not range under gives chance comps. sales same-store you why

Gunther Plosch

guidance. The obviously, we guidance That reason the money more contemplated, Brian. previous was in behind not increased why Yes, growth. put to drive we've that is the

So it's kind the of main reason.

a be category about company we slightly to at looking positive in are research next really assessment. assessment That's that our What it will break traffic assumptions ]. thought good is we also this the obviously about plans, bit. them. look at that [ down year. definitely underlying hamburger are of the guidance for That's the market little expect we and As feel our We

right? building we you drive expecting Again, frequency, building in And are growth. at we're frequently [ single-digit traffic we in ], building digital if We're to are definitely low frequency breakfast, traffic SRS on look us. U.S. for

expect We single-digit low prices.

correct. is observation Your

[indiscernible]. of a have We price carryover

increase price of a the We for up year. set have small middle the

we expect low about flat. it digit, and single So be about that makes mix the to

haven't our that's given all commercial you on the So We plans. details the obviously story. all

But huge obviously We it's day, portion. again, are rest highlighting breakfast. of a

and for very news realistic. [indiscernible] We consumer lot have our confident makes us approaches of a exciting that

Operator

question next from comes Our Dennis UBS. Geiger from

Dennis Geiger

mentioned congratulations. changing? a Great. think, spending Wondering the context. as anything And could behaviors whether as just and talk if value I GP, far you guys within little consumer your customer about about talked you're you think I a more you customer, that bit or seeing patterns around pressure, bit little

curious high maybe kind that So just and on anything offering, at expand us? up maybe more a level, value also to on anything of if a way there's value value to perception the the if frame for for year, scores brand's plans

Gunther Plosch

start and I anything. then with we forget chip the have if answer, in me Kirk Let

under with So less the which pressure, lower you're right? of definitely that define The them. as pressure. down than with a trend under income be The household we $XX,XXX. to right, somebody consumer income is is consumer, Traffic continues

is unchanged. Our share

are not there. losing So we

household Traffic Same there again, thing consumer. And on the share is income is unchanged. higher up. our

traffic overall So and that's the unchanged. quarter, my share was our in dollar

value going be is So to important.

our of up higher-priced ] to is definitely the offering with tending Bag consumer helping Crave, our the items menu think bases. I probably Biggie consumer premium super I Made barbell high-income is The would all [ I a more in vice and versa. strategy call what think to to

dynamics. the of that's So kind consumer

clearly pretty slightly If at disposable the disposable right? this? income category, miles we is you up you expectation driven net net pretty income correlators. look big And believe well. sequentially, history should that the do doing and Economy is are go find of definitely that Why

down. are Gross We coming in inflation employment. basically full is

bit Fuel into to costs versus more quarter see richer start come come mobility down like, what, a income should bit came treat has a restaurant. quarter, little can know often a So yes, the driving disposable up I around consumer little little that bit feel a little better. so a bit, slightly, and coming feel net myself you and the bit little

and perform expect that the of position all a category. do with in least bit line category bit should a explains So better, that absolutely we little would the on little would at we our

Kirk Tanner

would I seeing consumer at Look, early just the Biggie Bag, and feedback. consumer in Yes. here, looking I'm days trends add, my

that is so love platform Our this a consumers Biggie. continue important. we're personalized we Value to And on. we'll loyalty. be in to the also We digital that confidence that real build going also can momentum give capability value. gives and incredibly can why create loyalty me It have of building is

us drive the that and So Wendy's. another for we to digital avenue at value is have quality

Operator

Chris from Stifel. Our O'Cull from next question comes

Christopher O'Cull

or example, the about the priorities company's that. a multiple plans should international to your whether this, domestic about brands? are information But the the call. company focused outside America mean of longer-term for is the thoughts is at to evaluate in be on the I thoughts franchising it things welcome what 'XX. strategy least like of are or kind love your Kirk, through whether growth place. like priorities strategic the on North the by for would long-term Thanks. development And right maybe going company for to process I right consider I'd should whether Thanks if hear

Kirk Tanner

Yes, for our sight to can good me the 'XX. yes, of certainly things XX% have. profitable opportunities development, up mentioned earlier of full the expansion X that Wendy's of potential to was we we line attracted to I growth that meet Chris, the you. that see and

certainly One is of the big growth international opportunities expansion. both and domestic

capability We provide and certainly have and value that the a franchisees. brand outside has and travels to the great U.S. to profitability returns

drive real to franchisees international approved and a on at brought group XX of recently another we've another We're that looking development. opportunity. as development So franchisees

excited growth, about addition digital driving domestically will the me clear -- us. That We that joining both X and is Yes, countries drive priority to unit build a that internationally, SRS in in growth. you, Wendy's. got several put in brand profitable I the we for -- that that platform, things can awareness, is growth our the is to is different flag of build tell most

Operator

Gonzalez Our next Eric KeyBanc. question from comes from

Eric Gonzalez

really welcome, about we talked daypart. remarks. Kirk. the Thanks that My for prepared much question I the is on late-night think it question, at and don't the

you and how that to continue growth as discuss quarter a view the maybe driver So in 'XX. during whether performed can fourth that you

Gunther Plosch

we've in Yes, a with in for quarter time sales That the nice late-night fourth really in mid-teens about happy grown year-over-year. was the us XXXX. -- the really daypart

It's As you [ our company, has good really know, even are right, really open for to It franchisees we've managed rest on later. the now our good of to get a high delivery little the that midnight The restaurants bit or business. of average check. last business. ] XX% initiative. About from support

all I that's base. however, So would, of we say the like in that. is

seen going to XXXX. layer sales to that be we repeat a going have in growth high but the would not it's I forward, teen valuable itself in outsized think rate 'XX expect I

Operator

from question Ivankoe Our from John next JPMorgan. comes

John Ivankoe

In to of of mature the I it's flag especially have U.K. if have a cases, number X, lot market. a some -- that question idea on of markets question the and international, opportunity. So you drive don't mind. putting market. and a specifically, a international certain that The There's in in competitors scale

are very You market. -- relatively very new that and in subscale

in has of competitors. got been market a break may in experience. where You of established? PepsiCo Wendy's and scale type some mature be you How already very long-term So some your come applying can

to give us Just don't if success, kind mind. of you path that

Kirk Tanner

love, we the what we But you're wow, the U.K., our to the think quality love something awareness, about real and for along brand Yes. in what the over seen -- consumer. with U.K. to which and that we have very differentiated, you're I enough, winning those I with enough is famous this other evidence something have momentum with in that things have in U.K. enough momentum. Well, think evidence example, really differentiation, that quality meaningful that's that markets. momentum, -- have differentiation with that's thing we growth, where enough which are for, and the And build is continue the market on especially One is We've a in here, have building we we have that we market awareness. a you you're is, plays We've seen brand customers market. that when about will

going is future. So internationally. we're very for U.K. a good your about really the I strong to and the tons potential And market of feel where has example,

Gunther Plosch

that -- to We to something grow much and resonate market. add units. help we increased franchisees look, there that the Kingdom. XX that are results in units [indiscernible] that saw also I excited, John, company U.K. initial our XX the United super And XX right? wanted the franchise to excited have our also Plus franchisees And restaurants the actually commitments so additional them so really confident development there's consumers, U.K. with are we sign so want you in commitments and the the like

another So our shareholders. is probably Europe entry and going investment U.K., that I think us nicely good really off pay It's the about right? got to to data into springboard it's for the think the and us think a for we point for into

Operator

comes Our question Strelzik from from next Andrew BMO.

Andrew Strelzik

business, is Great. outlook there. margin margin the provided the U.S. obviously, on expecting restaurant My question expansion some you nice for

I guess 'XX? is as that and commodity you're mix don't balancing if that more I thought hoping the in side, just a about I think little down texture So margin you you know I'm be have to much a was curious could that a break And do value on you or breakfast expecting inflation are How to little premium, on contributor mentioned? going positive you negative. for visibility you the just bit. outlook. expecting How the much contribute

Gunther Plosch

about guidance leverage, to breakfast basis XX% of of drives It's of to confident know, really you that drives right? check the sales the Same us. next over So XXX remains feel digital, profitability. things elevated X we growth XX%. definitely some up XX% Yes, the with As nondigital years, the points the versus right? check for

to to labor commodity bit in A definitely chicken be an deflationary for history, of to X%. of inflation be of pricing projects front. to fries, X% is on help management that flat for XXXX color expansion We inflationary. us, the commodities I us low in kind expectation get couple about single-digit expect a little and for about there context with us. Pricing, pure out cost going line the on and margin in of have going We beef talked right?

that of out locked and flat. point balances XX% lock that remaining pricing throughout down. is year. visibility about view, the XX%, of The decent of cannot as down we a commodity amount our you of beef, know, to a From is that All

color margin So it's kind for of the you. on restaurant

Operator

Markets. from Carril Chris comes question next Our from RBC Capital

Christopher Carril

an you increase believe I newbuilds. company in GP, mentioned So

there, a the you company-owned and the whether over detail franchise maybe on expand what term? builds to long that, mix, the Just those is term both time? impact maybe on plan talk of further more can refranchise near strategy? plan you Just new So on bit any

Gunther Plosch

Yes.

departure in, our little light. It's a asset overall, not of So is. a bit our stay money where mouth strategy. putting to We're it's of going our leaning

the same you level. hover know, end at X.X% the around rest restaurant company our system the the about It As will about of is of ownership year. last growth this of the to

You can that footprint. to expect to definitely going out continue the we're build U.K.

little about some -- further. years, the XX In to bit couple at expect markets We're that's we're next our So a XX existing build a the growth currently. restaurants. of also of to out about you can restaurants sitting in going U.S.

on from of departure not in. the us kind asset-light an a that's So structure. is leading color It

great be with we build We the be we restaurants that and through we return demonstrating are have there's a money made. that that have the days just when structures to and the we have. outlook That's that franchisees these to had financial margin AUVs margin

Operator

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

Sara Senatore

third a with traffic. the quarter, wanted on I positive environment. question Just follow-up know you competitive I think, exited,

talked maintained You kind dipped negative. your traffic, and about think, fourth of I the quarter, share you

the improvement too? you but environment the not think Is about with some marketing ahead, the as was the maybe menu the much expecting press market could about if dollars versus you how on or belabor -- in of this, just -- the could maybe that operating And year or traffic of levers? maybe just you So you some marketing? talk competitive news are or to it in perhaps getting your to positive

Gunther Plosch

Yes, it's category X, the The I quarter a We comment relatively performed would line was really category. with soft. say on it's in the category. the

pushed great a program for the think on bit Muffin that will $X there X, deal English is value. a expectation had with consumers a obviously, with in I the out starting and meal X we representing pretty quarter little to decent be breakfast instill

color we main lower a I one. would the enough say business. breakfast about we didn't again, only but year. is we're thought. That's within given the X% And the the product the that to the next There the we amount softer of together X%, miss quarter I probably across And side on we fuel of the important. obviously bit that doing. on with side, that We than and digital encouraged of is fourth not slightly that's all sales a are are programming give decent innovation guidance lines category So Breakfast can kind had the little it. ended going day stayed thing was in but for rest to of business on our on obviously

Kelsey Freed

Kirk Thank and the call. question thank Sara. you, Thank GP, participating was That right. for our morning. and everyone, you, this All last of you,

our speaking again We to first great call quarter on May. will with day. forward a in Have you look

disconnect. You may now

Operator

this gentlemen, and Ladies concludes Thank today's you joining. for call.

You now your lines. you. may Thank disconnect

The Wendy's Company (WEN) 15 Feb 242023 Q4 Earnings call transcript