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What changed in Wendy's Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Wendy's Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+350 added−404 removedSource: 10-K (2025-02-21) vs 10-K (2023-03-01)

Top changes in Wendy's Co's 2024 10-K

350 paragraphs added · 404 removed · 303 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

83 edited+12 added−16 removed49 unchanged
Biggest changeAs the Company and our communities have transitioned from pandemic crisis intervention to ongoing prevention and protection, we remain committed to continuing to do our part to support the well-being of each other, our customers and our workplaces. 13 We remain focused on our high standards of quality and cleanliness at our restaurants through processes like reviewing cleaning procedures, maintaining an adequate supply of cleaning products and conducting our annual food safety recertification for our restaurant crew and managers.
Biggest changeWe remain focused on our high standards of quality and cleanliness at our restaurants through processes like reviewing cleaning procedures and conducting our annual food safety recertification for our restaurant crew and managers. In addition, we prioritize the safety and well-being of our employees by fostering a culture of people safety awareness, responsibility and accident prevention.
With the efforts and attributes of Mr. Thomas, Wendy’s has, through its extensive investment in the advertising and promotional use of Mr. Thomas’ name, likeness, image, voice, caricature, endorsement rights and photographs (the “Thomas Persona”), made the Thomas Persona well known in the U.S. and throughout North America and a valuable asset for both Wendy’s and Mr. 8 Thomas’ estate.
With the efforts and attributes of Mr. Thomas, Wendy’s has, through its extensive investment in the advertising and promotional use of Mr. Thomas’ name, likeness, image, voice, caricature, endorsement rights and photographs (the “Thomas Persona”), made the Thomas Persona well known in the U.S. and throughout North America and a valuable asset for both Wendy’s and Mr. Thomas’ estate.
Franchised restaurants are required to be operated under uniform operating standards and specifications relating to the selection, quality and preparation of menu items, signage, decor, equipment, uniforms, suppliers, maintenance and cleanliness of premises and customer service. Wendy’s monitors franchisee operations and inspects restaurants periodically to ensure that required practices and procedures are being followed.
Franchised restaurants are required to be operated under uniform operating standards and specifications relating to the selection, quality and preparation of menu items, signage, decor, equipment, uniforms, suppliers, maintenance and cleanliness of premises and customer service. Wendy’s monitors franchisee operations and inspects restaurants periodically to ensure that 11 required practices and procedures are being followed.
Several states require registration and disclosure of the FDD in connection with franchise offers and sales and have laws regulating the franchisor-franchisee relationship. These state laws often limit, among other things, the duration and scope of non-competition provisions and the ability of franchisors to terminate franchise agreements or withhold consent to the 14 renewal or transfer of franchise agreements.
Several states require registration and disclosure of the FDD in connection with franchise offers and sales and have laws regulating the franchisor-franchisee relationship. These state laws often limit, among other things, the duration and scope of non-competition provisions and the ability of franchisors to terminate franchise agreements or withhold consent to the renewal or transfer of franchise agreements.
In certain limited instances (such as a reduced franchise agreement term, development incentive programs or other unique circumstances), Wendy’s may charge a reduced technical assistance fee or may waive the technical assistance fee. Wendy’s does not select or employ personnel on behalf of franchisees. International Franchise Arrangements Wendy’s Restaurants of Canada Inc.
In certain limited instances (such as a reduced franchise agreement term, development incentive programs or other unique circumstances), Wendy’s may charge a reduced technical assistance fee or may waive the technical assistance fee. Wendy’s does not select or employ personnel on behalf of franchisees. 10 International Franchise Arrangements Wendy’s Restaurants of Canada Inc.
Required franchisee contributions to the national advertising funds and for local and regional advertising programs are governed by the Current Franchise Agreement in the U.S. and by the Single Unit Sub-Franchise Agreement in Canada. Required contributions by Company-operated restaurants for advertising and promotional programs are at the same percentage of sales as franchised restaurants within the Wendy’s system.
Required franchisee contributions to the national advertising funds and for local and regional advertising spend are governed by the Current Franchise Agreement in the U.S. and by the Single Unit Sub-Franchise Agreement in Canada. Required contributions by Company-operated restaurants for advertising and promotional programs are at the same percentage of sales as franchised restaurants within the Wendy’s system.
Restaurant support service employees are also eligible to participate in a performance-based annual bonus plan. For our restaurant-level employees, we offer the potential for raises based on individual performance reviews throughout the year. At Wendy’s, we are committed to providing pay equity for all employees, regardless of gender or ethnicity.
Restaurant support employees are also eligible to participate in a performance-based annual bonus plan. For our restaurant-level employees, we offer the potential for raises based on individual performance reviews throughout the year. At Wendy’s, we are committed to providing pay equity for all employees, regardless of gender or ethnicity.
If our technology initiatives, digital commerce platforms or third-party delivery providers do not meet customers’ expectations in terms of security, speed, cost, attractiveness or ease of use, customers may be less inclined to use those platforms or providers and our competitive position could be adversely impacted.
If our technology initiatives, digital commerce 9 platforms or third-party delivery providers do not meet customers’ expectations in terms of security, speed, cost, attractiveness or ease of use, customers may be less inclined to use those platforms or providers and our competitive position could be adversely impacted.
Additional information about our people and human capital initiatives is available on our website at www.wendys.com/what-we-value, in our annual Corporate Social Responsibility report and on The Square Deal TM Wendy’s Blog at www.squaredealblog.com.
Additional information about our people and human capital initiatives is available on our website at www.wendys.com/what-we-value, in our annual Corporate Responsibility report and on The Square Deal TM Wendy’s Blog at www.squaredealblog.com.
Under the terms of the Assignment, Wendy’s acquired the entire right, title, interest and ownership in and to the Thomas Persona, including the sole and exclusive right to commercially use the Thomas Persona. Research and Development New product development is important to the Wendy’s system.
Under the terms of the Assignment, Wendy’s acquired the entire right, title, interest and ownership in and to the Thomas Persona, including the sole and exclusive right to commercially use the Thomas Persona. 8 Research and Development New product development is important to the Wendy’s system.
Franchisees who wish to operate Wendy’s restaurants outside of the U.S. and Canada enter into franchise or license agreements with Wendy’s that generally provide franchise rights for each restaurant for an initial term of ten years or 20 years, depending on the country, and typically include a ten-year renewal provision, subject to certain conditions.
Franchisees who wish to operate Wendy’s restaurants outside of the U.S. and Canada enter into franchise or license agreements with Wendy’s that generally provide franchise rights for each restaurant for an initial term of 10 years or 20 years, depending on the country, and typically include a 10-year renewal provision, subject to certain conditions.
The agreements grant a license to the franchisee to use the Wendy’s trademarks and know-how in the operation of a Wendy’s restaurant at a specified location. Generally, the franchisee pays Wendy’s an initial technical assistance fee or other per restaurant fee and monthly fees based on a percentage of gross monthly sales of each restaurant.
The agreements grant a license to the franchisee to use the Wendy’s trademarks and know-how in the operation of a Wendy’s restaurant at a specified location. Generally, the franchisee pays Wendy’s an initial technical assistance fee or other per restaurant fee and monthly fees based on a percentage of gross monthly sales o f each restaurant.
QSCC manages, for the Wendy’s system in the U.S. and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and equipment under national agreements with pricing based upon total system volume.
QSCC manages, for the Wendy’s system in the U.S. and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and equipment, typically under national agreements with pricing based upon total 7 system volume.
The technical assistance fee is used to defray some of the costs to Wendy’s for training, start-up and transitional services related to new and existing franchisees acquiring Company-operated restaurants and in the development and opening of new restaurants.
The technical assistance fee is used to defray some of the costs to Wendy’s for start-up and transitional services related to new and existing franchisees in the development and opening of new restaurants or acquiring Company-operated restaurants.
(“WROC”), a 100% owned subsidiary of Wendy’s, holds master franchise rights for Canada. The rights and obligations governing the majority of franchised restaurants operating in Canada are set forth in a Single Unit Sub-Franchise Agreement (the “Single Unit Sub-Franchise Agreement”) (non-traditional locations, including delivery kitchens, may operate under an amended agreement or alternate form of agreement).
(“WROC”), a 100% owned subsidiary of Wendy’s, holds master franchise rights for Canada. The rights and obligations governing the majority of franchised restaurants operating in Canada are set forth in a Single Unit Sub-Franchise Agreement (the “Single Unit Sub-Franchise Agreement”) (non-traditional locations may operate under an amended agreement or alternate form of agreement).
This agreement provides the franchisee the right to construct, own and operate a Wendy’s restaurant upon a site accepted by Wendy’s and to use the Wendy’s system in connection with the operation of the restaurant at that site. The Current Franchise Agreement provides for a 20-year term and a 10-year renewal subject to certain conditions.
This agreement provides the franchisee the right to c onstruct, own and operate a Wendy’s restaurant upon a site accepted by Wendy’s and to use the Wendy’s system in connection with the operation of the restaurant at that site. The Current Franchise Agreement provides for a 20-year term and a 10-year renewal subject to certain conditions.
Franchise Arrangements The rights and obligations governing the majority of franchised restaurants operating in the U.S. are set forth in the Wendy’s current Unit Franchise Agreement (the “Current Franchise Agreement”) (non-traditional locations, including delivery kitchens, may operate under an amended agreement or alternate form of agreement).
Franchise Arrangements The rights and obligations governing the majority of franchised restaurants operating in the U.S. are set forth in the Wendy’s current Unit Franchise Agreement (the “Current Franchise Agreement”) (non-traditional locations may operate under an amended agreement or alternate form of agreement).
Wendy’s competitive position is differentiated by a focus on high quality, craveable food, its made-to-order square hamburgers using fresh, never frozen ground beef*, its unique and diverse menu, including chicken sandwiches, freshly-prepared salads and other signature items like chili, baked potatoes and the Frosty ® dessert, its promotional products, its choice of toppings and condiments and the atmosphere and décor of its restaurants.
Wendy’s competitive position is differentiated by a focus on high quality, craveable food, its made-to-order square hamburgers using fresh beef*, its unique and diverse menu, including chicken sandwiches, freshly-prepared salads and other signature items like chili, baked potatoes, the Frosty ® dessert and the Breakfast Baconator ® , its promotional products, its choice of toppings and condiments and the atmosphere and décor of its restaurants.
In addition, there was one main in-line distributor of food, packaging and beverage products, excluding breads, that serviced approximately 67% of Wendy’s restaurants in the U.S. and four additional in-line distributors that, in the aggregate, serviced approximately 32% of Wendy’s restaurants in the U.S.
In addition, there w as one main in-line distributor of food, packaging and beverage products, excluding breads, that serviced approximately 67% of Wendy’s restaurants in the U.S. and four additional in-line distributors that, in the aggregate, serviced approximately 32% of Wendy’s restaurants in the U.S.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Item 7 herein and Note 27 of the Financial Statements and Supplementary Data contained in Item 8 herein for segment financial information. 6 The Wendy’s Restaurant System The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Item 7 herein and Note 25 to the Consolidated Financial Statements contained in Item 8 herein for segment financial information. 6 The Wendy’s Restaurant System The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, franchise fees, national advertising funds contributions and rents received from Wendy’s franchised restaurants.
Wendy’s generally retains a right of first refusal in connection with any proposed sale or transfer of franchised restaurants. The table below shows the number of restaurant acquisitions, restaurant dispositions and Franchise Flips completed in each of 2022, 2021 and 2020.
Wendy’s generally retains a right of first refusal in connection with any proposed sale or transfer of franchised restaurants. The table below shows the number of restaurant acquisitions, restaurant dispositions and Franchise Flips completed in each of 2024, 2023 and 2022.
This document provides the franchisee the right to construct, own and operate a Wendy’s restaurant upon a site accepted by WROC and to use the Wendy’s system in connection with the operation of the restaurant at that site. The Single Unit Sub-Franchise Agreement provides for a 20-year term and a ten-year renewal subject to certain conditions.
This document provides the franchisee the right to constr uct, own and operate a Wendy’s restaurant upon a site accepted by WROC and to use the Wendy’s system in connection with the operation of the restaurant at that site. The Single Unit Sub-Franchise Agreement provides for a 20-year term and a 10-year renewal subject to certain conditions.
To promote new restaurant development, Wendy’s has provided franchisees with certain incentive programs for qualifying new restaurants .
To promote new restaurant development, Wendy’s has provided franchisees with certain incentive programs for qualifying new and existing restaurants .
The Company believes that our restaurant operations comply substantially with all applicable environmental laws and regulations. Increased focus by governmental authorities on environmental matters is likely to lead to new governmental initiatives, particularly in the area of climate change.
The Company believes that our restaurant operations comply substantially with all applicable environmental laws and regulations. Increased focus by governmental authorities on environmental matters have led and will likely lead to additional new governmental initiatives, particularly in the area of climate change.
See “The Wendy’s Restaurant System—Quality Assurance” above for additional information. See Note 7 and Note 22 of the Financial Statements and Supplementary Data contained in Item 8 herein, and the information under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, for information regarding certain guarantee obligations, reserves, commitments and contingencies involving franchisees.
See “The Wendy’s Restaurant System—Quality Assurance” above for additional information. See Note 2 and Note 20 to the Consolidated Financial Statements contained in Item 8 herein, and the information under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, for information regarding certain guarantee obligations, reserves, commitments and contingencies involving franchisees.
Domestic trademarks and service marks have their next required maintenance filings at various times from 2023 to 2033 in order to keep such registrations in force, while international trademarks and service marks have various durations of seven to 15 years. Wendy’s generally intends to maintain and renew its trademarks and service mark registrations in accordance with applicable deadlines.
Domestic trademarks and service marks have their next required maintenance filings at various times from 2025 to 2035 in order to keep such registrations in force, while international trademarks and service marks have various durations of seven to 15 years. We ndy’s generally intends to maintain and renew its trademarks and service mark registrations in accordance with applicable deadlines.
While the Company has no plans to move its ownership away from approximately 5% of the Wendy’s system, it expects to continue to optimize the Wendy’s system by facilitating Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate adoption of Wendy’s Image Activation program.
While the Company has no plans to move its ownership away from approximatel y 5% of the Wendy’s system, it expects to continue to optimize the Wendy’s system by facilitating Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base and drive new restaurant development.
Diversity, Equity and Inclusion We believe our strategic focus on diversity, equity and inclusion (“DE&I”) has helped, and will continue to help, the Company remain true to our values as well as support our financial performance and global growth strategy.
Culture and Inclusion We believe our strategic focus on culture and inclusion has helped and will continue to help the Company remain true to our values as well as support our financial performance and global growth strategy.
In addition to corporate contributions, we also host an employee-driven Community Giving Program, in which employees from across the Wendy’s system nominate worthy charitable organizations to receive charitable grants from The Wendy’s Foundation. We also made grants available to charitable organizations chosen by each of our ERGs in support of their missions.
In addition to corporate contributions, we also hosted an employee-driven Community Giving Program, in which our employees nominated worthy charitable organizations to receive grants from The Wendy’s Foundation. We also made grants available to charitable organizations chosen by our ERGs in support of their missions.
Other restaurant chains have also competed by offering high quality sandwiches made with fresh ingredients and artisan breads, and there are several emerging restaurant chains featuring high quality food served at in-line locations.
Other restaurant chains, including those within the hamburger category, have also competed by offering high quality sandwiches made with fresh ingredients and artisan breads, and there are several emerging restaurant chains featuring high quality food served at in-line locations.
Non-Traditional Development Non-traditional locations, such as fuel and transportation centers, food courts and other retail locations, military bases and delivery kitchens, represent a component of Wendy’s development strategy.
Non-Traditional Development Non-traditional restaurants, such as those located in fuel and transportation centers, food courts and other retail locations, delivery kitchens and military bases, represent a component of Wendy’s global development strategy.
Of the international restaurants, 1,089 were operated by 106 franchisees and 12 were operated by the Company in the United Kingdom (the “U.K.”). The Company’s principal executive offices are located at One Dave Thomas Blvd., Dublin, Ohio 43017, and its telephone number is (614) 764-3100.
Of the international restaurants, 1,294 were operated by a total of 107 franchisees and 13 were operated by the Company in the United Kingdom (the “U.K.”). The Company’s principal executive offices are located at One Dave Thomas Blvd., Dublin, Ohio 43017, and its telephone number is (614) 764-3100.
In addition to our facility audit program, weekly samples of beef, chicken and other core menu products from our distribution centers are randomly sampled and analyzed by a third-party laboratory to test conformance to our quality specifications.
In addition to our facility audit program, weekly samples of beef, chicken and other core menu products from our distribution centers are randomly sampled and analyzed by a third-party laboratory to test conformance to our quality specifications. Samples of core menu products are also sent weekly to Wendy’s in-house quality assurance team to assess conformance to Wendy’s specifications.
The development agreement provides the franchisee with the right to develop a specified number of new Wendy’s restaurants using the Image Activation program design within a stated, non-exclusive territory for a specified period, subject to the franchisee meeting interim new restaurant development requirements.
The development agreement provides the franchisee with the right to develop a specified number of new Wendy’s restaurants using Wendy’s current design standards and specifications within a stated, non-exclusive territory for a specified period, subject to the franchisee meeting interim new restaurant development requirements.
Today, Wendy’s is the second largest quick-service restaurant company in the hamburger sandwich segment in the United States (the “U.S.”) based on traffic share, and the third largest globally with 7,095 restaurants in the U.S. and 31 foreign countries and U.S. territories as of January 1, 2023.
Today, Wendy’s is the second largest quick-service restaurant company in the hamburger sandwich segment in the United States (the “U.S.”) based on traffic and dollar share, and the third largest globally with 7,240 restaurants in the U.S. and 31 foreign countries and U.S. territories as of December 29, 2024.
Fiscal Year The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended January 1, 2023” or “2022,” which consisted of 52 weeks, (2) “the year ended January 2, 2022” or “2021,” which consisted of 52 weeks, and (3) “the year ended January 3, 2021” or “2020,” which consisted of 53 weeks.
Fiscal Year The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 29, 2024” or “2024,” (2) “the year ended December 31, 2023” or “2023,” and (3) “the year ended January 1, 2023” or “2022,” all of which consisted of 52 weeks.
Patent and Trademark Office and in international jurisdictions, some of which include Wendy’s ® , Quality Is Our Recipe ® and the Wendy Cameo design. Wendy’s believes that these and other related marks are of material importance to its business.
Trademarks and Service Marks Wendy’s or its subsidiaries have registered certain trademarks and service marks in the U.S. Patent and Trademark Office and in international jurisdictions, some of which include Wendy’s ® , Quality Is Our Recipe ® and the Wendy Cameo design. Wendy’s believes that these and other related marks are of material importance to its business.
Supply Chain, Distribution and Purchasing As of January 1, 2023 , three independent processors (five total production facilities) supplied all of the beef used by Wendy’s restaurants in the U.S. In addition, seven independent processors (14 total production facilities) supplied all of the chicken used by Wendy’s restaurants in the U.S.
Supply Chain, Distribution and Purchasing As of December 29, 2024, three independent processors (five total production facilities) supplied all of the fresh beef used by Wendy’s restaurants in the U.S. In addition, five independent processors (seven total production facilities) supplied all of the chicken used by Wendy’s restaurants in the U.S.
Non-traditional locations, including delivery kitchens, may be subject to adjusted requirements for national, local and regional advertising contributions. See Note 25 of the Financial Statements and Supplementary Data contained in Item 8 herein for additional information regarding advertising.
Non-traditional locations, including delivery kitchens, may be subject to adjusted requirements for national, local and regional advertising contributions. See Note 23 to the Consolidated Financi al Statements contained in Item 8 herein for additional information regarding advertising.
As of January 1, 2023, the contribution rate for U.S. restaurants was generally 3.5% of sales for national advertising and 0.5% of sales for local and regional advertising.
As of December 29, 2024, the contribution rate for U.S. restaurants was generally 3.5% of sales for national advertising and 0.5% of sales for local and regional advertising.
Because our business is moderately seasonal, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year. Competition Each Wendy’s restaurant is in competition with other food service operations within the same geographical area. The quick-service restaurant segment is highly competitive and includes well-established competitors.
Because our business is moderately seasonal, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year. Competition Each Wendy’s restaurant is in competition across all dayparts with other food service operations within the same geographical area.
As of January 1, 2023, the contribution rate for Canadian restaurants was generally 3.0% of sales for national advertising and 1.0% of sales for local and regional advertising, with the exception of Quebec, for which there is no national advertising contribution rate and the local and regional advertising contribution rate is 4.0% of sales.
As of December 29, 2024, the contribution rate for Canadian restaurants was approximately 3% of sales for national advertising and approximately 1% of sales for local and regional advertising, with the exception of Quebec, for which there is no national advertising contribution rate and the local and regional advertising contribution rate is 4% of sales.
Suppliers and distributors to the Wendy’s system must comply with U.S. Department of Agriculture (“USDA”) and U.S. Food and Drug Administration (“FDA”) regulations governing the manufacture, packaging, storage, distribution and sale of all food and packaging products. 7 Wendy’s has a purchasing co-op relationship structure with its franchisees that establishes Quality Supply Chain Co-op, Inc. (“QSCC”).
Food and Drug Administration (“FDA”) regulations governing the manufacture, packaging, storage, distribution and sale of all food and packaging products. Wendy’s has a purchasing co-op relationship structure with its franchisees that establishes Quality Supply Chain Co-op, Inc. (“QSCC”).
The agreement also typically requires that the franchisee pay Wendy’s an initial technical assistance fee. In the U.S., the standard technical assistance fee required under a newly executed Current Franchise Agreement is currently $50,000 for each new restaurant opened.
In the U.S., the standard technical assistance fee required under a newly executed Current Franchise Agreement is currently $50,000 for each new restaurant opened.
Year Ended 2022 2021 2020 Restaurant acquisitions 1 93 — Restaurant dispositions 1 47 1 Franchise Flips (a) 79 34 54 _______________ (a) Represents franchisee-to-franchisee restaurant transfers for which the Company received advisory fees, which include valuation services and fees for selecting pre-approved buyers.
Year Ended 2024 2023 2022 Restaurant acquisitions — — 1 Restaurant dispositions 3 — 1 Franchise Flips (a) 50 99 79 _______________ (a) Represents franchisee-to-franchisee restaurant transfers for which the Company received advisory fees, which include valuation services and fees for selecting pre-approved buyers.
System Optimization The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as by facilitating Franchise Flips.
System Optimization The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as by facilitating Franchise Flips. As of December 29, 2024, Company-operated restaurant ownership was approximately 5% of the total system.
International Operations Internationally, the Company and our franchisees are subject to national, provincial and local laws and regulations that often are similar to those impacting us and our franchisees in the U.S., including laws and regulations concerning franchises, labor and employment, building and zoning, health, fire and safety, sanitation, food preparation, nutritional content, menu labeling, advertising, information security, privacy and consumer protection.
The Company believes that our FDD, together with applicable state versions or supplements, and franchising procedures comply in all material respects with the FTC’s franchise rules and applicable state franchise laws. 14 International Operations Internationally, the Company and our franchisees are subject to national, provincial and local laws and regulations that often are similar to those impacting us and our franchisees in the U.S., including laws and regulations concerning franchises, labor and employment, building and zoning, health, fire and safety, sanitation, food preparation, nutritional content, menu labeling, advertising, information security, privacy and consumer protection.
In 2022, Wendy’s made charitable donations to a variety of organizations across the globe, highlighted by our continued support of the Dave Thomas Foundation for Adoption, a charitable foundation created by our founder, Dave Thomas, which has been our signature charitable cause for more than 25 years.
In 2024, Wendy’s made charitable donations to a variety of organizations across the globe, highlighted by our ongoing and significant support of the Dave Thomas Foundation for Adoption, a charitable foundation created by our founder, Dave Thomas, which has been our signature charitable cause for more than 30 years and celebrated its 15,000 th adoption.
Except as discussed below, Wendy’s and its franchisees have not experienced any material shortages of food, equipment, fixtures or other products that are necessary to maintain restaurant operations, and Wendy’s anticipates no such shortages of products and believes that alternate suppliers and distribution sources are available.
Wendy’s and its franchisees have not experienced any material shortages of food, equipment, fixtures or other products that are necessary to maintain restaurant operations, and Wendy’s anticipates no such shortages of products and believes that alternate suppliers and distribution sources are available. Suppliers and distributors to the Wendy’s system must comply with U.S. Department of Agriculture (“USDA”) and U.S.
Creating and fostering inclusive work environments allows us to create an engaging and welcoming culture for our employees, which we believe positively affects the quality of products, service and experience we deliver to our customers.
Creating and fostering inclusive work environments allows us to create an engaging and welcoming culture for our employees, which we believe positively affects the quality of products, service and experience we deliver to our customers. We also believe that our Company workforce should be representative of our customer base, in order to best serve them.
Wendy’s quality assurance personnel regularly conduct sanitation and production audits for all of our core menu product processing facilities, which include beef, chicken, egg, pork, buns, french fries, Frosty ® dessert ingredients and produce. Animal welfare audits are also conducted at all beef, chicken and pork facilities to confirm compliance with our required animal welfare and handling policies and procedures.
Wendy’s quality assurance personnel regularly conduct sanitation and production audits for all of our core menu product processing facilities, which include beef, chicken, eggs, pork, buns, french fries, Frosty ® dessert ingredients and produce.
At January 1, 2023, there were 5,994 Wendy’s restaurants in operation in the U.S. Of these restaurants, 403 were operated by the Company and 5,591 were operated by a total of 217 franchisees. In addition, at January 1, 2023, there were 1,101 Wendy’s restaurants in operation in 31 foreign countries and U.S. territories.
At December 29, 2024, there were 5,933 Wendy’s restaurants in operation in the U.S. Of these restaurants, 381 were operated by the Company and 5,552 were operated by a total of 207 franchisees. In addition, at December 29, 2024, there were 1,307 Wendy’s restaurants in operation in 31 foreign countries and U.S. territories.
Our restaurants, our food and the value and service we provide to our customers are all integral to our long-term success, but ultimately it is our people that help us deliver our brand promise of “Fast Food Done Right” every single day.
Our restaurants, our food and the value and service we provide to our customers are all integral to our long-term success, but ultimately it is our people that help us deliver our brand promise every single day. We continue to invest in our Company employees to ensure we are able to attract, hire and retain great talent throughout our organization.
Business Segments The Company is comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants.
Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, franchise fees and national advertising fund collections from franchised restaurants.
Safety and Well-Being We are committed to providing our employees with safe and comfortable work environments and offering resources that our employees can use to help promote their well-being. We are extremely proud of the work our employees have done to support our restaurants, employees, customers and communities that we serve throughout the COVID-19 pandemic.
Safety and Well-Being We are committed to providing our employees with safe and comfortable work environments and offering resources that our employees can use to help promote their well-being.
Franchising As of January 1, 2023, 217 Wendy’s U.S. franchisees operated 5,591 franchised restaurants in 50 states and the District of Columbia, and 106 Wendy’s international franchisees operated 1,089 franchised restaurants in 31 foreign countries and U.S. territories. U.S.
Franchising A s of December 29, 2024, 207 Wendy’s U.S. franchisees operated 5,552 franchised restaurants in 50 states and the District of Columbia, and 107 Wendy’s international franchisees operated 1,294 franchised restaurants in 31 foreign countries and U.S. territories. U.S.
Competition with these chains, providers and other outlets could increase based on the gap between the price of food prepared at home compared to the price of food purchased at restaurants. Technology and delivery are becoming increasingly critical parts of the restaurant consumer experience.
Wendy’s also competes with grocery chains, food delivery providers and other retail outlets that sell food to be prepared at home. Competition with these chains, providers and other outlets could increase based on the gap between the price of food prepared at home compared to the price of food purchased at restaurants.
We offer several ben efits to support the health and well-being of our employees, including our employee assistance program (EAP), available at no cost to all Company Employees and their household members, as well as other training and resources related to overall health and well-being.
We also recognize that the well-being of our employees goes beyond work and our work environments. We offer several benefits to support the health and well-being of our employees, including our employee assistance program (EAP), available at no cost to Company employees and their household members.
The relationship agreement addresses other aspects of the franchisor-franchisee relationship, such as restrictions on operating competing restaurants, participation in brand initiatives such as the Image Activation program, employment of approved operators, confidentiality and restrictions on engaging in sale/leaseback or debt refinancing transactions without Wendy’s prior consent.
The relationship agreement addresses other aspects of the franchisor-franchisee relationship, such as restrictions on operating competing businesses, participation in brand initiatives such as national marketing promotions, technology upgrades, business plans, satisfaction of certain financial covenants, employment of approved operators, confidentiality and restrictions on engaging in certain securities offerings, ownership changes or debt refinancing transactions without Wendy’s prior consent.
Wendy’s menu also includes chicken nuggets, chili, french fries, baked potatoes, freshly prepared salads, soft drinks, Frosty ® desserts and kids’ meals. In addition, Wendy’s restaurants sell a variety of promotional products on a limited time basis. In March 2020, Wendy’s entered the breakfast daypart across the U.S. system and, in May 2022, launched breakfast in Canada.
In addition, Wendy’s restaurants sell a variety of promotional products on a limited time basis. In March 2020, Wendy’s entered the breakfast daypart across the U.S. system and, in May 2022, launched breakfast in Canada. Wendy’s breakfast menu features a variety of breakfast sandwiches such as the Breakfast Baconator ® and sides such as seasoned potatoes.
In the quick-service restaurant category, technology initiatives include mobile interactive technology for brand and menu search information, mobile ordering, mobile payment, mobile offers, mobile order pick-up and carryout, customer loyalty and rewards programs and other self-service technologies. An increasing number of restaurant chains have also introduced or expanded their restaurant delivery arrangements as another strategy to increase market share.
Technology and delivery are critical parts of the restaurant consumer experience. In the quick-service restaurant category, technology initiatives include mobile interactive technology for brand and menu search information, mobile ordering, mobile payment, mobile offers, mobile order pick-up and carryout, customer loyalty and rewards programs, artificial intelligence (“AI”) and other self-service technologies.
Additional competitive pressures for prepared food purchases come from operators outside the restaurant industry. A number of major grocery chains offer fresh deli sandwiches and fully prepared food and meals to go as part of their deli sections.
Additional competitive pressures for prepared food purchases come from operators outside the restaurant industry. A number of major grocery chains offer fresh deli sandwiches and fully prepared food and meals, including takeout options. Additionally, convenience stores and retail outlets at gas stations frequently offer a wide variety of sandwiches and other foods.
The price charged for each menu item may vary from market to market (and within markets) depending on competitive pricing and the local cost structure. Wendy’s competes within the food service industry and the quick-service restaurant sector for customers as well as for personnel, suitable real estate sites and qualified franchisees.
Wendy’s competes within the food service industry and the quick-service restaurant sector for customers as well as for personnel, suitable real estate sites and qualified franchisees.
Our ERGs serve an important role in support of our DE&I strategy, creating forums for learning and inclusion, providing opportunities to celebrate different backgrounds, empowering employees to bring their authentic self to work, and creating leadership and professional development opportunities.
We are fortunate to have several thriving Employee Resource Groups (“ERGs”), which are voluntary employee-led groups, each sponsored by a Wendy’s senior leadership team member. Our ERGs serve an important role in creating forums for learning and inclusion, providing opportunities to celebrate different backgrounds, empowering employees to bring their authentic selves to work and creating leadership and professional development opportunities.
Talent Development To set our employees up for success and help them achieve their personal development needs and career growth, we invest in training and development programs at all levels within the Company. We also leverage annual processes that support individual performance planning, individual professional development planning and a broad review of talent development throughout the Company.
We are also proud to offer paid sick time at all levels within our restaurants to ensure employees can prioritize their health and the health of their families. 13 Talent Development To set our employees up for success and support their personal development and career growth, we invest in training and development programs at all levels within the Company.
Wendy’s competes with other restaurant companies and food outlets, primarily through the quality, variety, convenience, price and value perception of food and beverage products offered. The number and location of restaurants, quality and speed of service, attractiveness of facilities, effectiveness of marketing and new product development by Wendy’s and its competitors are also important factors.
The quick-service restaurant segment is highly competitive and includes well-established competitors. Wendy’s competes with other restaurant companies and food outlets, primarily through the quality, variety, convenience, price and value perception of food and beverage products offered.
We believe our digital platforms are critical to creating a more seamless user experience, providing insights to enhance our relationship with customers and meeting consumer demand for customization, speed and convenience. In December 2019, we implemented a plan to realign and reinvest resources in our IT organization to strengthen our ability to accelerate growth.
We believe our digital platforms are critical to creating a more seamless user experience, providing insights to enhance our relationship with customers and meeting consumer demand for customization, speed and convenience. We have a partnership with a third-party global cloud provider to enhance our restaurant experience and unlock new customer, restaurant and employee experiences through data-driven insights.
Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of January 1, 2023 . Restaurant Openings and Closings During 2022 , Wendy’s opened 14 new Company-operated restaurants and closed seven generally underperforming Company-operated restaurants. During 2022 , Wendy’s franchisees opened 262 new restaurants and closed 123 generally underperforming restaurants.
Company-operated restaurants comprised approximatel y 5% of the total Wendy’s system as of December 29, 2024 . Restaurant Openings and Closings During 2024, Wendy’s opened 276 new restaurants, of which three were Company-operated and 273 were franchisee-operated. During 2024, Wendy’s closed 276 generally underperforming restaurants, of which 21 were Company-operated and 255 were franchisee-operated.
In February 2023, Wendy’s announced a new restaurant development incentive program in the U.S. and 11 Canada that provides for waivers of royalty, national advertising and technical assistance fees for up to the first three years of operation for qualifying new restaurants (“Pacesetter”).
In July and September 2024, Wendy’s announced a new development incentive structure in the U.S. and Canada and select international markets, respectively, that provides for reductions in royalty and national advertising fees for qualifying new restaurants for two, three or four years of operation based on the number of restaurants committed to under a development agreement .
The following table sets forth the number of Wendy’s restaurants in operation at the beginning and end of each fiscal year from 2020 to 2022 : 2022 2021 2020 Restaurants open at beginning of period 6,949 6,828 6,788 Restaurants opened during period 276 210 147 Restaurants closed during period (130) (89) (107) Restaurants open at end of period 7,095 6,949 6,828 Restaurant Operations Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring filet of chicken breast sandwiches, which are prepared to order with the customer’s choice of toppings and condiments.
The following table sets forth the number of Wendy’s restaurants in operation at the beginning and end of each fiscal year from 2022 to 2024 : 2024 2023 2022 Restaurants open at beginning of period 7,240 7,095 6,949 Restaurants opened during period 276 248 276 Restaurants closed during period (276) (103) (130) Restaurants open at end of period 7,240 7,240 7,095 Restaurant Operations Wendy’s develops, operates and franchises restaurants across the globe.
Outside of our Company-operated restaurants, our 12 largest population of employees work in our restaurant support organization, which includes employees across the globe and at our restaurant support center in Dublin, Ohio. We are proud to have a workforce with diverse backgrounds and experiences. Respectful Workplace From day one, the Wendy’s business has always been of, for and about people.
The vast majority of our employees are located in the United States and work in our Company-operated restaurants within our Wendy’s U.S. business segment. Outside of our Company-operated restaurants, our largest population of employees are part of our restaurant support organization, which includes employees across the globe and at our restaurant support center in Dublin, Ohio.
Wendy’s has invested significant resources to focus on consumer-facing technology, including installing a single point-of-sale system for Wendy’s restaurants, activating mobile ordering via Wendy’s mobile apps, launching the Wendy’s Rewards loyalty program and establishing delivery arrangements with third-party vendors for Wendy’s U.S. and Canadian restaurants.
Wendy’s has invested significant resources to focus on consumer-facing and other technology, including investments to support restaurant stability, enterprise resource planning, enhancements to Wendy’s mobile apps and loyalty programs, data infrastructure to support customer relationship management and personalized marketing capabilities and delivery arrangements with third-party vendors for Wendy’s U.S. and Canadian restaurants.
We continue to invest in employees to ensure we are able to attract, hire and retain great talent throughout our organization. We measure our effectiveness in these areas using various tools and metrics, including administering employee engagement surveys annually and tracking our employee turnover rates compared to others in the restaurant industry.
We measure our effectiveness in these areas using various tools and metrics, including administering an employee engagement survey annually and tracking our employee turnover rates compared to others in the restaurant industry. As of December 29, 2024 , the Company was comprised of approximately 14,500 employees, of which approximately one-third were full-time, and two-thirds were part-time.
Community-Based Giving Wendy’s maintains a charitable giving program that supports four core categories: (1) foster care adoption; (2) hunger and food integrity; (3) youth and families; and (4) vibrant communities.
Our leadership development program for Company employees (WeLead) uses a cohort learning strategy for emerging leaders over a six-month curriculum designed to build on our performance-driven culture and develop talent across the organization. Community-Based Giving Wendy’s maintains a charitable giving program that supports four core categories: foster care adoption; hunger and food integrity; youth and families; and vibrant communities.
Restaurant-level employees have the opportunity to take advantage of an extensive online learning curriculum, as well as hands-on training led by crew trainers, managers and field support staff. Restaurant managers and multi-unit operators participate in Wendy’s University, which includes targeted training to develop management and leadership skills.
We also leverage annual processes that support individual performance planning, individual professional development planning and a broad review of talent development throughout the Company. Restaurant team members have the opportunity to take advantage of an online learning curriculum, as well as hands-on training led by crew trainers, managers and field support staff.
The initial term may be extended up to 25 years and the renewal extended up to 20 or 25 years for qualifying restaurants under the new restaurant development incentive and reimage programs described below in “Franchise Development and Other Relationships.” Wendy’s has in the past franchised under different agreements on a multi-unit basis; however, Wendy’s now grants new Wendy’s franchises on a unit-by-unit basis. 10 The Current Franchise Agreement requires that the franchisee pay a monthly royalty of 4.0% of sales, as defined in the agreement, from the operation of the restaurant.
The initial term may be extended up to 25 years at the franchisee’s option. The Current Franchise Agreement requires that the franchisee pay a monthly royalty of 4.0% of sales, as defined in the agreement, from the operation of the restaurant. The agreement also typically requires that the franchisee pay Wendy’s an initial technical assistance fee.
Respect and fair treatment for our team members, franchisees, supplier partners and vendors are a central part of our business. So is staying true to the values established by our founder Dave Thomas more than 50 years ago, which include Doing the Right Thing, Treating People with Respect and Giving Something Back.
We are proud to have a workforce with diverse backgrounds and experiences. 12 Respectful Workplace From day one, the Wendy’s business has always been of, for and about people. More than 50 years ago, our founder, Dave Thomas, established this Company based on certain core values, including Doing the Right Thing, Treating People with Respect and Giving Something Back.
Wendy’s previously offered and will continue to offer a restaurant development incentive program that provides for reductions in royalty and national advertising fees for up to the first two years of operation for qualifying new restaurants (“Groundbreaker”).
Franchisees who open a restaurant on or before November 30th of the calendar year prior to the restaurant’s required open date receive a technical assistance fee waiver. Wendy’s also provides franchisees with its base-level incentive that provides for reductions in royalty and national advertising fees for up to the first two years of operation for qualifying approved replacement restaurants.
Our ERGs focus on employees and allies who identify as Women (W omen of Wendy’s), LGBTQ+ (WeQual), Military Veterans & Families (WeVets), Culturally Diverse (WCD), Black (WeBERG) and Young Professionals (WenGEN). In 2022, we added our newest ERG, GiveCare, with a focus on caretakers for children, siblings, parents, partners and other family members.
We have seven ERGs which focus on Women (Women of Wendy’s), LGBTQ+ (WeQual), Military Veterans & Families (WeVets), Culturally Diverse (WCD), Black (WeBERG), Young Professionals (WenGEN) and Care Givers (GiveCare). All employees are welcome in our ERGs. In 2024, we hosted over 100 wide-ranging programs facilitated by our ERGs.
The Image Activation program also differentiates the Company from its competitors by its emphasis on selection and performance of restaurant employees that provide friendly and engaged customer service in Wendy’s restaurants. Many of the leading restaurant chains continue to focus on new restaurant development as one strategy to increase market share through increased consumer awareness and convenience.
(*Fresh beef available in the contiguous U.S. and Alaska, as well as Canada, Mexico, Puerto Rico, the United Kingdom and other select international markets.) Many of the leading restaurant chains continue to focus on new restaurant development as one strategy to increase market share through increased consumer awareness and convenience.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese factors include, among others: (i) our ability to attract new franchisees; (ii) the availability of site locations for new restaurants; (iii) the ability of restaurant owners to obtain financing; (iv) the ability of restaurant owners to attract, train and retain qualified operating personnel; (v) construction and development costs; (vi) the ability of restaurant owners to secure required governmental approvals and permits in a timely manner, or at all; (vii) the ability of us and our franchises to execute our development strategy for non-traditional restaurants, such as fuel and transportation centers, food courts and other retail locations, military bases and delivery kitchens; and (viii) adverse weather conditions.
Biggest changeThese factors include, among others: (i) our ability to attract new franchisees; (ii) the level of participation in, and success of, our build to suit development fund and other development programs; (iii) the attractiveness of our development incentive initiatives to new and existing franchisees; (iv) the availability of site locations for new restaurants; (v) the ability of restaurant owners to obtain financing; (vi) the ability of restaurant owners to attract, train and retain qualified operating personnel; (vii) construction and development costs; (viii) the ability of restaurant owners to secure required governmental approvals and permits in a timely manner, or at all; (ix) the ability of us and our franchises to execute our development strategy for non-traditional restaurants, such as those located in fuel and transportation centers, food courts and other retail locations, delivery kitchens and military bases; (x) the profitability of existing and new restaurants; and (xi) adverse weather conditions.
Moreover, because franchisees contribute to advertising funds based on a percentage of sales at their franchised restaurants, advertising fund expenditures are dependent upon sales volumes across the Wendy’s system. If systemwide sales decline, this could result in a reduced amount of funds available for our marketing and advertising programs.
Moreover, because franchisees contribute to advertising funds based on a percentage of sales at their franchised restaurants, our advertising fund expenditures are dependent upon sales volumes across the Wendy’s system. If systemwide sales decline, this could result in a reduced amount of funds available for our marketing and advertising programs.
There has been increasing public focus by investors, environmental activists, the media and governmental and nongovernmental organizations on environmental, social and governance matters, including packaging and waste, animal health and welfare, human rights, diversity, climate change, greenhouse gases and land, energy and water use.
There has been increasing public focus by investors, activists, the media and governmental and nongovernmental organizations on environmental, social and governance matters, including packaging and waste, animal health and welfare, human rights, diversity, climate change, greenhouse gases and land, energy and water use.
Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in materially different amounts of expense, which could harm our business and adversely affect our results of operations and financial condition. We also currently maintain insurance coverage to address cyber incidents.
Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in materially different expense amounts, which could harm our business and adversely affect our results of operations and financial condition. We also currently maintain insurance coverage to address cyber incidents.
Changes in the legal framework of employment or franchise liability could negatively impact our business, particularly if such 27 changes result in any law, rule, regulation, governmental policy or interpretation or judicial decision determining that Wendy’s is an employer of its franchisees or a joint employer with our franchisees or otherwise imposing liability for employment-related claims or impacting our employment relationships based on theories of joint employer liability or other theories of vicarious liability.
Changes in the legal framework of employment or franchise liability could negatively impact our business, particularly if such changes result in any law, rule, regulation, governmental policy or interpretation or judicial decision determining that Wendy’s is an employer of its franchisees or a joint employer with our franchisees or otherwise imposing liability for employment-related claims or impacting our employment relationships based on theories of joint employer liability or other theories of vicarious liability.
Some of our competitors have substantially greater financial, marketing, personnel and other resources than we do, which may allow them to react to changes in pricing and marketing strategies better than we can and drive higher levels of brand awareness among consumers. This product and price competition could result in reduced revenues and loss of market share.
Some of our competitors have substantially greater financial, marketing, personnel and other resources than we do, which may allow them to react to changes in pricing, marketing and operational strategies better than we can and drive higher levels of brand awareness among consumers. This product and price competition could result in reduced revenues and loss of market share.
Our business involves the collection and retention of customer data, including, in some instances, credit and debit card numbers and other personally identifiable information, in various information systems that we and our franchisees maintain and in those maintained by third parties with whom we and our franchisees contract to provide credit card processing, digital ordering and related services.
Our business involves the collection and retention of sensitive customer data, including, in some instances, credit and debit card numbers and other personally identifiable information, in various information systems that we and our franchisees maintain and in those maintained by third parties with whom we and our franchisees contract to provide credit card processing, digital ordering and related services.
If our estimates or underlying assumptions change in the future, or if the operating performance or cash flows of our business decline, we may be 28 required to record impairment charges, which could have a significant adverse effect on our reported results for the affected periods.
If our estimates or underlying assumptions change in the future, or if the operating performance or cash flows of our business decline, we may be required to record impairment charges, which could have a significant adverse effect on our reported results for the affected periods.
In addition, such loss of rights could permit competing uses of such intellectual property which, in turn, could harm our business and adversely impact our results of operations and financial condition. 18 Food safety events or health concerns regarding our products could create negative publicity and adversely affect our brand, business and results of operations.
In addition, such loss of rights could permit competing uses of such intellectual property which, in turn, could harm our business and adversely impact our results of operations and financial condition. Food safety events or health concerns regarding our products could create negative publicity and adversely affect our brand, business and results of operations.
In addition, to the extent we use value offerings or other promotions or discounts in our marketing and advertising 17 programs to drive customer counts, these actions may condition our customers to resist higher menu prices or result in reduced demand for premium products.
In addition, to the extent we use value offerings or other promotions or discounts in our marketing and advertising programs to drive customer counts, these actions may condition our customers to resist higher menu prices or result in reduced demand for premium products.
Any of these risks and uncertainties, and other factors we cannot anticipate, could have a material adverse impact on our business, results of operations and financial condition. Risks Related to Supply Chain and Labor Changes in commodity costs and other operating costs could adversely affect our results of operations.
Any of these risks and uncertainties, and other factors we cannot anticipate, could have a material adverse impact on our business, results of operations and financial condition. 21 Risks Related to Supply Chain and Labor Changes in commodity costs and other operating costs could adversely affect our results of operations.
Additionally, evolving laws and regulations could require us and our franchisees to change or limit the way we collect or use information in operating our business, which may result in additional costs, limit our marketing or growth strategies and adversely affect our business and results of operations.
Additionally, evolving laws and regulations could require us and our franchisees to change or limit the way we 27 collect or use information in operating our business, which may result in additional costs, limit our marketing or growth strategies and adversely affect our business and results of operations.
If franchisees are unable to obtain financing at commercially reasonable rates, or at all, they may be unwilling or unable to invest in the reimaging of their existing restaurants or the development of new restaurants, and our future growth and results of operations could be adversely affected.
If franchisees are unable to obtain financing at commercially reasonable rates, or at all, they may be unwilling or unable to invest in their existing restaurants or the development of new restaurants, and our future growth and results of operations could be adversely affected.
Certain of the products sold in our restaurants, such as beef and chicken, are sourced from a limited number of suppliers, which may increase our reliance on those suppliers. In addition, our system relies on a limited number of in-line distributors to deliver certain food, packaging and beverage products to our restaurants.
Certain products sold in our restaurants, such as beef and chicken, are sourced from a limited number of suppliers, which may increase our reliance on those suppliers. In addition, our system relies on a limited number of in-line distributors to deliver certain food, packaging and beverage products to our restaurants.
Technology and consumer offerings continue to develop and evolve, and we expect that new and enhanced technologies and consumer offerings will be available in the future, including those with a focus on restaurant modernization, restaurant technology, digital engagement and integration, online ordering and delivery.
Technology and consumer offerings continue to develop and evolve, and we expect that new and enhanced technologies and consumer offerings will be available in the future, including those with a focus on restaurant modernization, restaurant technology, digital engagement and integration, AI, online ordering and delivery.
Regardless of whether any claims against us are valid or whether we are found to be liable, claims may be expensive to defend and may divert management’s attention away from operations, hurt our performance and have a negative impact on our brand.
Regardless of whether any claims against us are valid or whether we are found to be liable, claims may be expensive to defend and may divert 26 management’s attention away from operations, hurt our performance and have a negative impact on our brand.
Our leasing and ownership of significant amounts of real estate exposes us to possible liabilities and losses, including liabilities associated with environmental matters. We have significant real estate operations in connection with our business and are subject to the normal risks associated with owning, leasing and subleasing real estate.
Our leasing and ownership of significant amounts of real estate exposes us to possible liabilities and losses, including liabilities associated with environmental matters. We have significant real estate operations in connection with our restaurant business and are subject to the normal risks associated with owning, leasing and subleasing real estate.
We also maintain important internal data, such as personally identifiable information about our employees and franchisees and information relating to our operations. Our use of personally identifiable information is regulated by international, federal and state laws, as well as by certain third-party agreements.
We also maintain important internal data, such as personally identifiable information about our employees and franchisees and information relating to our operations. Our use and retention of personally identifiable information is regulated by international, federal and state laws, as well as by certain third-party agreements.
Applicable insurance policies contain customary limitations, conditions and exclusions, and there can be no assurance that our cyber insurance policies will cover substantially all of the costs and expenses related to any previous or future cyber incidents.
Applicable insurance policies contain customary limitations, conditions and exclusions, and there can be no assurance that our cyber or other insurance policies will cover substantially all of the costs and expenses related to any previous or future incidents.
In addition, Wendy’s from time to time evaluates and may pursue other opportunities for growth, including through new and existing franchise partners, joint venture investments, expansion of our brand through other opportunities and strategic mergers, acquisitions and divestitures.
In addition, Wendy’s from time to time evaluates and may pursue other opportunities for growth, including through new and existing franchise partners, joint venture investments, the expansion of our brand through other opportunities and strategic mergers, acquisitions and divestitures.
Accordingly, our 26 Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power and other rights of the holders of our common stock.
Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power and other rights of the holders of our common stock.
The success of this initiative 20 is dependent upon many factors, such as the availability of sellers and buyers, the availability of financing, the ability to negotiate transactions on terms deemed acceptable and the ability to successfully transition and integrate restaurant operations.
The success of this initiative is dependent upon many factors, such as the availability of sellers and buyers, the availability of financing, the ability to negotiate transactions on terms deemed acceptable and the ability to successfully transition and integrate restaurant operations.
Unforeseen events, such as adverse weather conditions (including related to climate change), natural disasters, hostilities (including acts of war, terrorist activities and public or workplace violence), social unrest, health epidemics or pandemics or other catastrophic events can adversely affect consumer spending, consumer confidence, restaurant sales and operations, supply chains and our ability to perform corporate or support functions at our restaurant support center, any of which could affect our business, results of operations and financial condition.
Unforeseen events, such as adverse weather conditions (including related to climate change), natural disasters, hostilities (including acts of war, terrorist activities and public or workplace violence), social unrest, health epidemics or pandemics (such as COVID-19) or other catastrophic events can adversely affect consumer spending, consumer confidence, restaurant sales and operations, supply chains and our ability to perform corporate or support functions at our restaurant support center, any of which could affect our business, results of operations and financial condition.
For example, our brand could be damaged by claims or perceptions about the quality or safety of our products or the quality or reputation of our franchisees or other business partners, regardless of whether such claims or perceptions are true.
For example, our brand could be damaged by claims or perceptions about the quality or safety of our products or the quality or reputation of our employees, franchisees or other business partners, regardless of whether such claims or perceptions are true.
We wish to caution readers that in addition to the important factors described elsewhere in this Form 10-K, we have included below certain material factors that have affected, or in the future could affect, our actual results and could cause our actual consolidated results during fiscal 2023, and beyond, to differ materially from those expressed in or implied by any forward-looking statements made by us or on our behalf.
We wish to caution readers that in addition to the important factors described elsewhere in this Form 10-K, we have included below certain material factors that have affected, or in the future could affect, our actual results and could cause our actual consolidated results during fiscal 2025, and beyond, to differ materially from those expressed in or implied by any forward-looking statements made by us or on our behalf.
In addition, our competitors, some of whom have greater resources than we do, may be better able to benefit from changes in technologies or consumer acceptance of such changes, which could harm our competitive position and brand. An increasing amount of our sales and revenues is derived from digital orders, which includes online ordering and delivery.
In addition, our competitors, some of whom have greater resources than we do, may be better able to benefit from changes in technologies or consumer acceptance of such changes, which could harm our competitive position and brand. An increasing amount of our sales and revenues is derived from digital orders, including online ordering and delivery.
In addition, Wendy’s current franchise model, and the way our brand strategies are executed across the system, may make it difficult for our brand to respond and adapt to the speed of change in technology, consumer preferences or other factors as quickly as may be required to maintain and grow market share and remain competitive.
In addition, Wendy’s current franchise model, and the way our brand strategies are executed across the system, may make it difficult for our brand to respond and adapt to the speed of changes in technology, consumer preferences or other factors as quickly as may be required to maintain and grow market share and remain competitive.
Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could adversely impact our brand, business and results of operations. Social media platforms, including forms of internet-based communications, allow individuals access to a broad audience.
Our inability or failure to recognize, respond to and effectively manage the impact of social or digital media could adversely impact our brand, business and results of operations. Social media platforms, including forms of internet-based communications, allow individuals access to a broad audience.
Our ability to efficiently manage our business depends significantly on the reliability and performance of our systems and technology.
Our ability to efficiently manage our business depends significantly on the reliability and performance of these systems and technology.
If the third-party delivery services that we utilize cease or curtail their operations, increase their fees or give greater priority or promotions on their platforms to our competitors, our delivery business and our sales may be negatively impacted.
If the third-party delivery services that we utilize cease or curtail their operations, increase their fees or provide greater priority or promotions on their platforms to our competitors, our delivery business and our sales may be negatively impacted.
In addition, the failure of franchisees to adequately engage in succession planning may adversely affect their restaurant operations and development of new Wendy’s restaurants, which in turn could hurt our business and results of operations.
In addition, the failure of franchisees to adequately engage in capital planning and/or succession planning may adversely affect their restaurant operations and development of new Wendy’s restaurants, which in turn could hurt our business and results of operations.
In addition, we may be unable to obtain desirable locations for new restaurants at reasonable prices, or at all, and restaurants may have higher construction, occupancy, food and labor costs than we currently anticipate.
In addition, we and our franchisees may be unable to obtain desirable locations for new restaurants at reasonable prices, or at all, and restaurants may have higher construction, occupancy, food and labor costs than we currently anticipate.
Not all of the trademarks that are used in the Wendy’s system have been registered in all of the countries in which we do business or may do business in the future, and some trademarks will never be registered in all of these countries.
Not all of the trademarks or domain names that are used in the Wendy’s system have been registered in all of the countries in which we do business or may do business in the future, and some trademarks will never be registered in all of these countries.
The Wendy’s system may also be adversely impacted by consumer concerns regarding the nutritional aspects of the products we sell, the ingredients in our products or the cooking processes used in our restaurants.
The Wendy’s system may also be adversely impacted by consumer or regulatory concerns regarding the nutritional aspects of the products we sell, the ingredients in our products or the cooking processes or packaging used in our restaurants.
If our security and information systems are compromised or if our employees or franchisees fail to comply with these laws, regulations or contract terms, and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation, disrupt our operations, damage our relationship with customers, franchisees or employees and result in costly litigation, judgments, or penalties resulting from violation of applicable laws and payment card industry regulations.
If our security and information systems are compromised or if our employees or franchisees fail to comply with, or fail to successfully implement processes related to, these laws, regulations or contract terms, and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation, disrupt our operations, damage our relationship with customers, franchisees or employees and result in costly litigation, judgments, or penalties resulting from violation of applicable laws and payment card industry regulations.
We currently maintain insurance that we believe to be adequate for businesses of our size and type. However, there are types of losses we could encounter that cannot be insured against or that we believe are not economically reasonable to insure, such as losses due to natural disasters, acts of terrorism or the declaration of war.
We currently maintain insurance that we believe to be adequate for businesses of our size and type. However, we could encounter losses that cannot be insured against or that we believe are not economically reasonable to insure, such as losses due to certain natural disasters, acts of terrorism or the declaration of war.
For example, Wendy’s recently entered the breakfast daypart in the United States and Canada with a breakfast program designed to drive incremental sales and profits through a strong economic model.
For example, Wendy’s has entered the breakfast daypart in the United States and Canada with a breakfast program designed to drive incremental sales and profits through a strong economic model.
Our brand could also be adversely impacted by other incidents described in this risk factors section, including incidents related to customer service, health or safety, a failure to attract and retain qualified employees, food safety or other health concerns regarding our products, the impact of social media, data privacy violations, cyber incidents, environmental, social and governance matters or reports of our employees, franchisees or business partners taking controversial positions or acting in an unethical, illegal or socially irresponsible manner.
Our brand could also be adversely impacted by other incidents described in this risk factors section, including incidents related to customer service, health or safety, a failure to attract and retain qualified employees, food safety or other health concerns regarding our products, the impact of social media, digital engagement, our use of emerging technologies, data privacy violations, cyber incidents, environmental, social and governance matters or reports of our employees, franchisees or business partners taking controversial positions or acting in an unethical, illegal or socially irresponsible manner.
If franchisees do not successfully operate their restaurants in a manner consistent with required standards, their royalty payments to us could be adversely affected and our brand’s image and reputation could be harmed, which in turn, could hurt our business and results of operations.
If franchisees do not successfully operate their restaurants in a manner consistent with required standards, the royalty payments they make to us could be adversely affected and our brand’s image and reputation could be harmed, which in turn, could hurt our business and results of operations.
However, we may be unable to deliver accelerated global sales growth or achieve or maintain market share across our dayparts due to competitive pressures and other factors, such as consumer tastes and preferences, the effectiveness of our marketing and advertising programs, the successful development and launch of new products, commodity and labor costs, providing fast and accurate customer experiences, further accelerating our digital business, driving new restaurant development and ensuring the support and engagement of franchisees.
However, we may be unable to deliver global sales growth or maintain or grow market share across our dayparts due to competitive pressures and other factors, such as consumer tastes and preferences, the effectiveness of our marketing and advertising programs, the successful development and launch of new products, commodity and labor costs, providing fast and accurate customer experiences, further accelerating our digital business and technological enhancements, driving new restaurant development and ensuring the support and engagement of franchisees.
We may also be subject to a variety of other claims arising in the ordinary course of our business, including personal injury claims, contract claims, claims from franchisees, intellectual property claims, data privacy claims and claims alleging violations of law regarding workplace and employment matters, discrimination and similar matters, including class action lawsuits.
We may also be subject to a variety of other claims arising in the ordinary course of our business, including personal injury claims, contract claims, marketing or advertising claims, claims from franchisees, intellectual property claims, stockholder claims, data privacy claims and claims alleging violations of law regarding workplace and employment matters, discrimination and similar matters, including class action lawsuits.
These or similar concerns could result in less demand for our products and a decline in sales at Company-operated restaurants and in royalties from sales at franchised restaurants. Risks Related to Our Business Strategy We may be unable to deliver accelerated global sales growth or achieve or maintain market share across our dayparts.
These or similar concerns could result in less demand for our products and a decline in sales at Company-operated restaurants and in royalties from sales at franchised restaurants. 18 Risks Related to Our Business Strategy We may be unable to deliver global sales growth or maintain or grow market share across our dayparts.
We have implemented technology and targeted advertising and promotions to support the growth of our digital business. If we are unable to continue to grow our digital business, it may be difficult for us to achieve our planned sales growth.
We have implemented and will continue to implement technology investments and targeted advertising and promotions to support the growth of our digital business. If we are unable to continue to grow our digital business, it may be difficult for us to achieve our planned sales growth.
The failure of our systems and technology to operate effectively, or an interruption or degradation in our systems or technology could be harmful and cause delays in customer service, result in the loss of digital sales or data, reduce efficiency or cause delays in operations.
The failure of these systems and technology to operate effectively, or an interruption or degradation in 23 these systems or technology could be harmful and cause delays in customer service, result in the loss of digital sales or data, reduce efficiency or cause delays in operations.
Social media risks could also arise from employees not following defined policies for the use of social media during business operations, or actions taken by employees during personal activities outside of their employment, but which could still reflect negatively on the Wendy’s brand.
Social media risks could also arise from our employees, franchisees or business partners not following defined policies for the use of social 17 media during business operations, or actions taken by employees during personal activities outside of their employment, but which could still reflect negatively on the Wendy’s brand.
We continue to optimize the Wendy’s system through our system optimization initiative, which includes facilitating the transfer of restaurants between and among franchisees, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate adoption of our Image Activation program.
We continue to optimize the Wendy’s system through our system optimization initiative, which includes facilitating the transfer of restaurants between and among franchisees, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base and drive new restaurant development.
Our real estate values and the costs associated with our real estate operations are impacted by a variety of factors, including changes in the investment climate for real estate, macroeconomic trends, governmental regulations, infrastructure, condemnation or eminent domain, insurance, demographic trends, supply chain management, supply and demand for the ownership and operation of restaurants and environmental matters.
Our real estate values and the costs associated with our real estate operations are impacted by a variety of factors, including changes in the investment climate for real estate, macroeconomic trends, governmental regulations, infrastructure, zoning, condemnation or eminent domain, insurance, demographic trends, supply chain management, supply and demand for the ownership and operation of restaurants, franchisee commitments, 20 payments and performance and environmental matters.
Foreign Corrupt Practices Act or similar laws of other countries, the inability to adapt to differing cultures or consumer preferences, inadequate brand infrastructure to support our international activities, inability to obtain adequate supplies meeting our quality standards and product specifications or interruptions in obtaining such supplies, 21 challenges and risks associated with managing and monitoring suppliers, restrictions on our ability to move cash out of certain foreign countries, currency regulations and fluctuations, diverse government regulations and tax systems, uncertain or differing interpretations of rights and obligations in connection with international franchise agreements, the collection of royalties and other fees from international franchisees, the inability to protect technology, data or intellectual property rights, compliance with international privacy and information security laws and regulations, the availability and cost of land, construction costs, other legal, financial or regulatory impediments to the development or operation of restaurants, the inability to identify, attract and retain experienced management, qualified franchisees and joint venture partners and ongoing disruptions and impacts from the COVID-19 pandemic.
Foreign Corrupt Practices Act or similar anti-corruption and anti-bribery laws of other countries, the inability to adapt to differing cultures or consumer preferences, inadequate brand infrastructure to support our international activities, inability to obtain adequate supplies meeting our quality standards and product specifications or interruptions in obtaining such supplies, challenges and risks associated with managing and monitoring suppliers, restrictions on our ability to move cash out of certain foreign countries, currency regulations and fluctuations, tariffs and trade barriers or foreign policy changes, diverse government regulations and tax systems, uncertain or differing interpretations of rights and obligations in connection with international franchise agreements, the collection of royalties and other fees from international franchisees, the inability to protect technology, data or intellectual property rights, compliance with international privacy and information security laws and regulations, the availability and cost of land, construction costs, other legal, financial or regulatory impediments to the development or operation of restaurants, the inability to identify, attract and retain experienced management, qualified franchisees and joint venture partners.
If franchisees fail to renew their franchise agreements or fail to perform under or extend their leases or subleases with us, or if we are unable to identify, attract and retain new franchisees who meet our criteria, then our royalty and rental revenues may decrease and our future growth could be adversely affected.
If franchisees fail to renew their franchise agreements or fail to perform under or extend their leases or subleases with us, or if we are unable to identify, attract and retain new franchisees who meet our criteria and can successfully implement development agreements and expansion plans, then our royalty and rental revenues may decrease and our future growth could be adversely affected.
Our business and results of operations could be adversely affected if a significant number of franchisees do not participate in brand strategies, such as new restaurant development, Image Activation, marketing and menu programs and digital commerce platforms and technologies, 19 which in turn may harm our business and financial condition.
Our business and results of operations could be adversely affected if a significant number of franchisees do not participate in brand strategies, such as new restaurant development, restaurant remodeling initiatives, marketing and menu programs and digital commerce platforms and other restaurant technologies, which in turn may harm our business and financial condition.
Acquisitions of franchised restaurants pose various risks to our operations, including (i) diversion of management’s attention to the integration of acquired restaurant operations; (ii) increased operating expenses and the inability to achieve expected cost savings and operating efficiencies; (iii) exposure to liabilities arising out of prior operations of acquired restaurants; and (iv) the assumption of long-term, non-cancelable leases.
Acquisitions of franchised restaurants pose various risks to our operations, including (i) diversion of management’s attention to the integration of acquired restaurant operations; (ii) increased operating expenses and the inability to achieve expected cost savings and operating efficiencies; and (iii) the assumption of long-term, non-cancelable leases.
Risks Related to Technology and Cybersecurity There are risks and uncertainties associated with our increasing dependence on digital commerce platforms and technologies and alternative methods of delivery. Advances in technologies, including advances in digital food ordering and delivery technologies, and changes in consumer behavior driven by such advances could have a negative effect on our business.
Risks Related to Technology and Cybersecurity There are risks and uncertainties associated with our digital commerce strategies, platforms and technologies. Advances in technologies, including advances in digital food ordering and delivery technologies, and changes in consumer behavior driven by such advances could have a negative effect on our business.
Food safety is a top priority for Wendy’s, and we dedicate substantial resources to food safety matters to ensure our customers enjoy safe, quality food products. However, food safety events, including instances of food-borne illness (such as salmonella or E. coli), have occurred in the food industry in the past, and could occur in the future.
Food safety is a top priority for Wendy’s, and we dedicate substantial resources to food safety matters to ensure our customers enjoy safe, quality food products. Food safety events, however, including instances of food-borne illness (such as salmonella or E. coli) can and have occurred in the food industry, including at the Company.
As of January 1, 2023, approximately 95% of restaurants in the Wendy’s system were operated by franchisees. Wendy’s franchisees are contractually obligated to operate their restaurants in accordance with the standards set forth in our franchise and other agreements with them. Wendy’s also provides training and support to franchisees.
As of December 29, 2024, approximately 95% of restaurants in the Wendy’s system were operated by franchisees. Wendy’s franchisees are contractually obligated to operate their restaurants in accordance with the standards set forth in our franchise and other agreements with them. Wendy’s also provides training and support to franchisees.
Our business could also be negatively impacted if we are unable to successfully implement or execute other consumer-facing digital initiatives, such as mobile order pick-up and carryout. We rely on third-party delivery services to fulfill delivery orders, and errors or failures by those providers to make timely deliveries could cause customers to stop ordering from us.
Our business could also be negatively impacted if we are unable to successfully implement or execute other consumer-facing digital initiatives as quickly and efficiently as our competitors. We rely on third-party delivery services to fulfill delivery orders, and errors or failures by those providers to make timely deliveries could cause customers to stop ordering from us.
If a disruption of service from any of our key suppliers or distributors was to occur, we could experience short-term increases in our costs while 22 supply and distribution channels were adjusted, and we may be unable to identify or negotiate with new suppliers or distributors on terms that are commercially reasonable to us.
If a disruption of service from any of our key suppliers or distributors was to occur, including as a result of a failure to meet our quality or safety standards, we could experience short-term increases in our costs while supply and distribution channels were adjusted, and we may be unable to identify or negotiate with new suppliers or distributors on terms that are commercially reasonable to us.
Adverse economic conditions or disruptions in the national and global economies, or in regions that have a high concentration of Wendy’s restaurants, could adversely impact our business, results of operations and financial condition.
All such competition may adversely affect our brand, business, results of operations and financial condition. Adverse economic conditions or disruptions in the national and global economies, or in regions that have a high concentration of Wendy’s restaurants, could adversely impact our business, results of operations and financial condition.
In addition, changes to our leadership and organizational structure can be inherently difficult to manage, and if we are unable to implement such changes effectively, our business, results of operations and financial results could be adversely affected.
In addition, changes to our leadership and organizational structure, including changes to the Company’s senior leadership team in 2024, can be inherently difficult to manage, and if we are unable to implement such changes effectively, our business, results of operations and financial results could be adversely affected.
If an existing or future restaurant is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying rent, taxes and maintenance costs for the balance of the lease term.
If an existing or future restaurant is not profitable, and we decide to close it (or, with respect to a franchise-operated restaurant, we permit the franchisee to close the restaurant or suffer an involuntary closure of the restaurant), we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying rent, taxes and maintenance costs for the balance of the lease term.
We have a significant amount of debt outstanding, and such indebtedness could adversely affect our business, results of operations and financial condition. As of January 1, 2023, the Company had approximately $2.9 billion of outstanding debt on its balance sheet.
We have a significant amount of debt outstanding, and such indebtedness could adversely affect our business, results of operations and financial condition. As of December 29, 2024, the Company had approximately $2.7 billion of outstanding debt on its balance sheet.
For example, Wendy’s entered the United Kingdom in 2021, plans to expand into other anchor markets in Europe utilizing a franchise model and intends to accelerate restaurant development in other existing international markets.
For example, Wendy’s entered the United Kingdom in 2021 and intends to accelerate restaurant development in other new and existing international markets utilizing a franchise model.
As a result, we have experienced increased pressure and expectations to provide expanded disclosure and establish commitments, goals or targets with respect to various environmental, social and governance issues and to take the actions necessary to meet those commitments, goals and targets.
As a result, we are subject to evolving disclosure obligations promulgated by governmental and regulatory organizations and we have experienced increased pressure and expectations to provide expanded disclosure and establish commitments, goals or targets with respect to various environmental, social and governance issues and to take the actions necessary to meet those commitments, goals and targets.
Any significant increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our results of operations and financial condition. Our operations are subject to fluctuations in foreign currency exchange rates.
Any significant increases in income tax rates, new or increased import duties or tariffs, changes in income tax laws, 28 U.S. trade or tax policy or unfavorable resolution of tax matters could have a material adverse impact on our results of operations and financial condition. Our operations are subject to fluctuations in foreign currency exchange rates.
Furthermore, the standards by which certain environmental, social and governance issues are measured are evolving and subject to frequent change. If we are not effective, or perceived to be effective, in achieving our commitments, goals or targets or otherwise addressing various environmental, social and governance matters, consumer trust in our brand may suffer.
Furthermore, the standards by which certain environmental, social and governance issues are measured are evolving and subject to frequent change. If we are not effective, or perceived to be effective, in meeting our commitments, goals or targets or otherwise addressing various environmental, social and governance matters, this could result in negative publicity, decreased consumer trust in our brand or litigation.
We cannot predict whether we will be able to anticipate and react to changing commodity costs by adjusting our purchasing practices and menu prices, and a failure to do so could adversely affect our results of operations. In addition, we may not seek to or be able to pass along price increases to our customers.
We cannot predict whether we will be able to anticipate and react to changing commodity costs by adjusting our purchasing practices and menu prices, and a failure to do so could adversely affect our results of operations.
The Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Senior Notes, provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments under certain circumstances, certain indemnification payments in the event, among other things, that the assets pledged as collateral for the Senior Notes are in stated ways defective or ineffective and covenants relating to recordkeeping, access to information and similar matters.
The assets of the Securitization Entities include most of the domestic and certain of the foreign revenue-generating assets of the Company and its subsidiaries, which principally consist of franchise-related agreements, real estate assets, intellectual property and license agreements for the use of intellectual property. 24 The Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Senior Notes, provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments under certain circumstances, certain indemnification payments in the event, among other things, that the assets pledged as collateral for the Senior Notes are in stated ways defective or ineffective and covenants relating to recordkeeping, access to information and similar matters.
In addition, the delivery business has been consolidating and may continue to consolidate, which may give third-party delivery companies more leverage in negotiating the terms and pricing of contracts, which could in turn negatively impact our profits from this channel.
In addition, the delivery business continues to rapidly evolve, including through consolidation, which may give third-party delivery companies more leverage in negotiating the terms and pricing of contracts, which could in turn negatively impact our profits from this channel.
Additionally, adverse economic conditions in regions that contain a high concentration of Wendy’s restaurants, including markets in which Company-operated restaurants are located, could also have a material adverse impact on our results of operations. Changes in discretionary consumer spending, and in consumer tastes and preferences, could adversely affect our business, results of operations and financial condition.
Ongoing disruptions in the national and global economies may adversely impact our business, results of operations and financial condition. Additionally, adverse economic conditions in regions that contain a high concentration of Wendy’s restaurants, including markets in which Company-operated restaurants are located, could also have a material adverse impact on our results of operations.
Our failure to retain members of our senior leadership team or other key personnel could adversely affect our ability to achieve our growth strategy and other business initiatives.
The loss of, or failure to engage in adequate succession planning for, members of our senior leadership team or other key personnel could adversely affect our ability to achieve our growth strategy and other business initiatives.
Increased labor costs due to competition, inflationary pressures, increased wages or employee benefits costs (including various federal, state and local actions to increase minimum wages), unionization activity or other factors have adversely impacted and could continue to adversely impact our cost of sales and operating expenses.
Increased labor costs due to competition, inflationary pressures, increased wages or employee benefits costs (including various federal, state and local actions to increase minimum wages and enhance workplace conditions), health epidemics or pandemics (such as the COVID-19 pandemic) or 22 other factors have adversely impacted and could continue to adversely impact our cost of sales and operating expenses.
Additionally, when Company-operated restaurants with leased real estate are sold to franchisees, we are often required to remain responsible for lease payments for these restaurants in the event the purchasing franchisees default on their leases.
Additionally, when Company-operated restaurants with leased real estate are sold to franchisees, we are often required to remain responsible for lease payments for these restaurants in the event the purchasing franchisees default on their leases. 19 Similarly, when we lease or sublease properties to franchisees, we remain responsible for certain expenses related to the properties, such as lease payments and maintenance charges.
The success of the Wendy’s system depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income. Material declines in the amount of discretionary spending or consumer food-away-from-home spending could hurt our business, results of operations and financial condition.
Changes in discretionary consumer spending, and in consumer tastes and preferences, could adversely affect our business, results of operations and financial condition. The success of the Wendy’s system depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income.
As privacy and information security laws and regulations change, we will likely incur additional costs to ensure that we remain in compliance with those laws and regulations.
As privacy and information security laws and regulations change, including comprehensive privacy and data protection laws adopted by states or foreign countries, we will likely incur additional costs to ensure that we remain in compliance with those laws and regulations.
Our success depends in large part upon our ability to maintain and enhance the value of our brand, our customers’ loyalty to our brand and a positive relationship with our franchisees and other business partners. Brand value is based in part on consumer perceptions on a variety of subjective qualities.
Risks Related to Brand Perception and Value Our success depends substantially on our corporate reputation and on the value and perception of our brand. Our success depends in large part upon our ability to maintain and enhance the value of our brand, our customers’ loyalty to our brand and a positive relationship with our franchisees and other business partners.
Existing and changing legal and regulatory requirements, as well as an increasing focus on environmental, social and governance issues, could adversely affect our brand, business, results of operations and financial condition.
Existing and changing legal and regulatory requirements, as well as an increasing focus on environmental, social and governance issues, could adversely affect our brand, business, results of operations and financial condition. Our complex legal and regulatory environment exposes us to compliance, litigation and similar risks that could affect our operations and results in material ways.
In addition to the Company’s outstanding indebtedness, the Company is subject to risks related to certain commitments, guarantees and other liabilities. These commitments, guarantees and other liabilities include, among others, significant contractual requirements regarding the purchase of soft drinks and guarantees and contingent liabilities related to certain franchisee leases for which the Company has been indemnified.
These commitments, guarantees and other liabilities include, among others, significant contractual requirements regarding the purchase of beverages, contractual requirements regarding certain marketing and media rights and guarantees and contingent liabilities related to certain franchisee leases for which the Company has been indemnified.
In addition to the risks described above, the pandemic has had, and could continue to have, the effect of heightening other risks disclosed in this risk factors section, including, but not limited to, those related to brand value and perception, consumer preferences and spending, our ability to achieve or maintain market share, new restaurant development, commodity costs, labor, supply chain and purchasing and international operations.
Unforeseen events, including a health epidemic or pandemic, have in the past, and could again in the future, also heighten other risks disclosed in this risk factors section, including, but not limited to, those related to brand value and perception, consumer preferences, our ability to maintain or grow market share, new restaurant development, commodity costs, labor, supply chain and purchasing and international operations.
These individuals may, from time to time, acquire beneficial ownership of additional shares of common stock. On December 1, 2011, the Company entered into an agreement (the “Trian Agreement”) with Messrs. N. Peltz, May and Garden, and several of their affiliates (the “Covered Persons”).
On December 1, 2011, the Company entered into an agreement (the “Trian Agreement”) with Messrs. N. Peltz and May and several of their affiliates (the “Covered Persons”).
However, the techniques and sophistication used to conduct cyber-attacks change frequently and the measures we have taken do not guarantee that a cyber incident or security breach could not occur or that our business, reputation and financial condition will not be adversely affected. 24 Risks Related to Our Indebtedness The Company and certain of our subsidiaries are subject to various restrictions, and substantially all of the assets of certain subsidiaries are security, under the terms of a securitized financing facility.
However, the techniques and sophistication used to conduct cyber-attacks change frequently and the measures we have taken do not guarantee that a cyber incident or security breach could not occur or that our business, reputation and financial condition will not be adversely affected.
We may be unable to adequately protect our intellectual property, which could harm the value of our brand and hurt our business . Our intellectual property is material to the conduct of our business. We rely on a combination of trademarks, copyrights, service marks, trade secrets and similar intellectual property rights to protect our brand and other intellectual property.
We may be unable to adequately protect our intellectual property, which could harm the value of our brand and hurt our business . Our intellectual property is material to the conduct of our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCertain leases contain contingent rent provisions that require additional rental payments based upon restaurant sales volume in excess of specified amounts. As part of the Global Real Estate & Development segment, Wendy’s also owned 488 and leased 1,199 properties that were either leased or subleased principally to franchisees as of January 1, 2023.
Biggest changeCertain leases contain contingent rent provisions that require additional rental payments based upon restaurant sales volume in excess of specified amounts. As part of the Global Real Estate & Development segment, Wendy’s also owned 486 and leased 1,155 properties that were either leased or subleased principally to franchisees as of December 29, 2024.
Wendy’s also 29 held leases covering the land and building for each of the 12 Company-operated restaurants in the Wendy’s International segment. Lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.
Wendy’s also held leases covering the land and building for each of the 13 Company-operated restaurants in the Wendy’s International segment. Lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.
Item 2. Properties. We believe that our properties, taken as a whole, are generally well maintained and are adequate for our current and foreseeable business needs. The following table contains information about our principal office facilities as of January 1, 2023: ACTIVE FACILITIES FACILITIES LOCATION LAND TITLE APPROXIMATE SQ. FT.
Item 2. Properties. We believe that our properties, taken as a whole, are generally well maintained and are adequate for our current and foreseeable business needs. The following table contains information about our principal office facilities as of December 29, 2024: ACTIVE FACILITIES FACILITIES LOCATION LAND TITLE APPROXIMATE SQ. FT.
The Corporate Headquarters serves all of our operating segments. ** The Wendy’s Restaurants of Canada Inc. facility primarily serves the International operating segment. At January 1, 2023, Wendy’s and its franchisees operated 7,095 Wendy’s restaurants.
The Corporate Headquarters serves all of our operating segments. ** The Wendy’s Restaurants of Canada Inc. facility primarily serves the International operating segment. 31 At December 29, 2024, Wendy’s and its franchisees operated 7,240 Wendy’s restaurants.
Of the 403 Company-operated restaurants in the Wendy’s U.S. segment, Wendy’s owned the land and building for 158 restaurants, owned the building and held long-term land leases for 143 restaurants and held leases covering the land and building for 102 restaurants.
Of the 381 Company-operated restaurants in the Wendy’s U.S. segment, Wendy’s owned the land and building for 151 restaurants, owned the building and held long-term land leases for 136 restaurants and held leases covering the land and building for 94 restaurants.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePredicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.
Biggest changePredicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period. Item 4. Mine Safety Disclosures. Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the fourth fiscal quarter of 2022: Issuer Repurchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (2) October 3, 2022 through November 6, 2022 7,604 $ 19.27 — $ 198,088,626 November 7, 2022 through December 4, 2022 1,161 $ 20.83 — $ 198,088,626 December 5, 2022 through January 1, 2023 729 $ 23.22 — $ 198,088,626 Total 9,494 $ 19.77 — $ 198,088,626 (1) Represents shares of common stock reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award.
Biggest changeThe following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the fourth fiscal quarter of 2024: Issuer Repurchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (2) September 30, 2024 through November 3, 2024 150,058 $ 17.87 150,058 $ 247,683,547 November 4, 2024 through December 1, 2024 350,259 $ 18.66 347,660 $ 241,201,451 December 2, 2024 through December 29, 2024 362,073 $ 17.26 359,733 $ 235,000,021 Total 862,390 $ 17.93 857,451 $ 235,000,021 (1) Includes 4,939 shares of common stock reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award.
In January 2023, our Board of Directors authorized a repurchase program for up to $500.0 million of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”).
(2) In January 2023, our Board of Directors authorized a repurchase program for up to $500.0 million of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”).
Future dividend payments, if any, will be made at the discretion of our Board of Directors and will be based on such factors as the Company’s earnings, financial condition and cash requirements and other factors. As of February 21, 2023, there were approximately 20,115 holders of record of the Company’s common stock.
Future dividend payments, if any, will be made at the discretion of our Board of Directors and will be based on such factors as the Company’s earnings, financial condition and cash requirements and other factors. As of February 19, 2025, there were approximately 18,059 holders of record of the Company’s common stock.
During the first quarter of 2023, the Company declared a dividend of $.25 per share of common stock to be paid on March 15, 2023 to stockholders of record as of March 1, 2023.
During the first quarter of 2025, the Company declared a dividend of $.25 per share of common stock to be paid on March 17, 2025 to stockholders of record as of March 3, 2025.
The Company has no class of equity securities currently issued and outstanding except for its common stock. However, the Company is currently authorized to issue up to 100 million shares of preferred stock.
The Company has no class of equity securities currently issued and outstanding except for its common stock. However, the Company is currently authorized to issue up to 100 million shares of preferred stock. The Company paid quarterly cash dividends of $.25 per share of common stock during each of the first, second, third and fourth quarters of 2023 and 2024.
In connection with the January 2023 Authorization, the remaining portion of the February 2022 Authorization was canceled. 31 Subsequent to January 1, 2023 through February 21, 2023, the Company repurchased 0.6 million shares under the January 2023 Authorization with an aggregate purchase price of $12.9 million, excluding commissions. Item 6. [Reserved]
Subsequent to December 29, 2024 through February 19, 2025, the Company repurchased 3.4 million shares under the January 2023 Authorization with an aggregate purchase price of $50.4 million, excluding applicable excise tax and commissions. Item 6. [Reserved] 33
Removed
The Company paid quarterly cash dividends of $.09, $.10, $.12 and $.12 per share of common stock during the first, second, third and fourth quarters of 2021, respectively. The Company paid quarterly cash dividends of $.125 per share of common stock during each of the first, second, third and fourth quarters of 2022.
Removed
(2) In February 2022, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock through February 28, 2023, when and if market conditions warranted and to the extent legally permissible (the “February 2022 Authorization”).
Removed
In April 2022, our Board of Directors approved an increase of $150.0 million to the February 2022 Authorization, resulting in an aggregate authorization of $250.0 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeExcept as noted below, the Company’s consolidated results of operations described below includes the benefit of the 53 rd week in 2020. 2022 2021 2020 Amount Change Amount Change Amount Revenues: Sales $ 896.6 $ 162.5 $ 734.1 $ 11.3 $ 722.8 Franchise royalty revenue and fees 558.2 21.5 536.7 92.0 444.7 Franchise rental income 234.5 (2.2) 236.7 4.1 232.6 Advertising funds revenue 406.2 16.7 389.5 55.8 333.7 2,095.5 198.5 1,897.0 163.2 1,733.8 Costs and expenses: Cost of sales 773.2 161.5 611.7 (3.2) 614.9 Franchise support and other costs 46.7 3.8 42.9 16.4 26.5 Franchise rental expense 124.1 (8.3) 132.4 6.8 125.6 Advertising funds expense 430.8 19.0 411.8 66.4 345.4 General and administrative 255.0 12.0 243.0 36.1 206.9 Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) 133.4 7.9 125.5 (7.3) 132.8 Amortization of cloud computing arrangements 2.4 2.4 — — — System optimization gains, net (6.8) 26.7 (33.5) (30.4) (3.1) Reorganization and realignment costs 0.7 (7.8) 8.5 (7.5) 16.0 Impairment of long-lived assets 6.4 4.1 2.3 (5.7) 8.0 Other operating income, net (23.7) (9.1) (14.6) (6.1) (8.5) 1,742.2 212.2 1,530.0 65.5 1,464.5 Operating profit 353.3 (13.7) 367.0 97.7 269.3 Interest expense, net (122.3) (13.1) (109.2) 8.5 (117.7) Loss on early extinguishment of debt — 17.9 (17.9) (17.9) — Investment income (loss), net 2.1 2.1 — 0.2 (0.2) Other income, net 10.4 9.7 0.7 (0.7) 1.4 Income before income taxes 243.5 2.9 240.6 87.8 152.8 Provision for income taxes (66.1) (25.9) (40.2) (5.2) (35.0) Net income $ 177.4 $ (23.0) $ 200.4 $ 82.6 $ 117.8 36 2022 % of Total Revenues 2021 % of Total Revenues 2020 % of Total Revenues Revenues: Sales $ 896.6 42.8 % $ 734.1 38.7 % $ 722.8 41.7 % Franchise royalty revenue and fees: Franchise royalty revenue 485.5 23.2 % 460.7 24.3 % 416.5 24.0 % Franchise fees 72.7 3.4 % 76.0 4.0 % 28.2 1.7 % Total franchise royalty revenue and fees 558.2 26.6 % 536.7 28.3 % 444.7 25.7 % Franchise rental income 234.5 11.2 % 236.7 12.5 % 232.6 13.4 % Advertising funds revenue 406.2 19.4 % 389.5 20.5 % 333.7 19.2 % Total revenues $ 2,095.5 100.0 % $ 1,897.0 100.0 % $ 1,733.8 100.0 % 2022 % of Sales 2021 % of Sales 2020 % of Sales Cost of sales: Food and paper $ 292.9 32.7 % $ 224.1 30.5 % $ 221.8 30.7 % Restaurant labor 288.0 32.1 % 231.5 31.5 % 233.6 32.3 % Occupancy, advertising and other operating costs 192.3 21.4 % 156.1 21.3 % 159.5 22.1 % Total cost of sales $ 773.2 86.2 % $ 611.7 83.3 % $ 614.9 85.1 % 2022 % of Sales 2021 % of Sales 2020 % of Sales Company-operated restaurant margin: U.S. $ 125.9 14.3 % $ 124.4 17.0 % $ 108.9 15.1 % Global 123.4 13.8 % 122.4 16.7 % 107.9 14.9 % 37 The table below presents certain of the Company’s key business measures, which are defined and further discussed in the “Executive Overview” section included herein. 2022 2021 2020 Key business measures: U.S. same-restaurant sales (a): Company-operated 4.4 % 11.9 % (0.7) % Franchised 3.9 % 9.0 % 2.3 % Systemwide 3.9 % 9.2 % 2.0 % International same-restaurant sales (a) (b) 12.4 % 17.6 % (6.0) % Global same-restaurant sales (a): Company-operated 4.4 % 11.9 % (0.7) % Franchised (b) 4.9 % 9.9 % 1.4 % Systemwide (b) 4.9 % 10.0 % 1.2 % Systemwide sales (c): U.S.
Biggest changeResults of Operations The tables included throughout this Results of Operations section set forth in millions (except as otherwise indicated) the Company’s consolidated results of operations for the years ended December 29, 2024, December 31, 2023 and January 1, 2023. 2024 2023 2022 Amount Change Amount Change Amount Revenues: Sales $ 925.9 $ (4.2) $ 930.1 $ 33.5 $ 896.6 Franchise royalty revenue and fees 626.0 33.7 592.3 34.1 558.2 Franchise rental income 236.5 6.3 230.2 (4.3) 234.5 Advertising funds revenue 458.1 29.1 429.0 22.8 406.2 2,246.5 64.9 2,181.6 86.1 2,095.5 Costs and expenses: Cost of sales 783.2 (11.3) 794.5 21.3 773.2 Franchise support and other costs 67.7 10.5 57.2 10.5 46.7 Franchise rental expense 127.4 2.0 125.4 1.3 124.1 Advertising funds expense 478.1 50.1 428.0 (2.8) 430.8 General and administrative 255.2 5.2 250.0 (5.0) 255.0 Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) 143.2 7.4 135.8 2.4 133.4 Amortization of cloud computing arrangements 14.7 1.9 12.8 10.4 2.4 System optimization gains, net (1.2) (0.3) (0.9) 5.9 (6.8) Reorganization and realignment costs 8.5 (0.7) 9.2 8.5 0.7 Impairment of long-lived assets 9.7 8.3 1.4 (5.0) 6.4 Other operating income, net (11.4) 2.4 (13.8) 9.9 (23.7) 1,875.1 75.5 1,799.6 57.4 1,742.2 Operating profit 371.4 (10.6) 382.0 28.7 353.3 Interest expense, net (123.9) 0.2 (124.1) (1.8) (122.3) Gain on early extinguishment of debt, net — (2.3) 2.3 2.3 — Investment income (loss), net — 10.4 (10.4) (12.5) 2.1 Other income, net 24.8 (4.8) 29.6 19.2 10.4 Income before income taxes 272.4 (7.0) 279.4 35.9 243.5 Provision for income taxes (78.0) (3.0) (75.0) (8.9) (66.1) Net income $ 194.4 $ (10.0) $ 204.4 $ 27.0 $ 177.4 38 2024 % of Total Revenues 2023 % of Total Revenues 2022 % of Total Revenues Revenues: Sales $ 925.9 41.2 % $ 930.1 42.6 % $ 896.6 42.8 % Franchise royalty revenue and fees: Franchise royalty revenue 528.4 23.5 % 512.1 23.5 % 485.5 23.2 % Franchise fees 97.6 4.4 % 80.2 3.6 % 72.7 3.4 % Total franchise royalty revenue and fees 626.0 27.9 % 592.3 27.1 % 558.2 26.6 % Franchise rental income 236.5 10.5 % 230.2 10.6 % 234.5 11.2 % Advertising funds revenue 458.1 20.4 % 429.0 19.7 % 406.2 19.4 % Total revenues $ 2,246.5 100.0 % $ 2,181.6 100.0 % $ 2,095.5 100.0 % 2024 % of Sales 2023 % of Sales 2022 % of Sales Cost of sales: Food and paper $ 287.2 31.0 % $ 297.4 32.0 % $ 292.9 32.7 % Restaurant labor 298.1 32.2 % 298.5 32.1 % 288.0 32.1 % Occupancy, advertising and other operating costs 197.9 21.4 % 198.6 21.3 % 192.3 21.4 % Total cost of sales $ 783.2 84.6 % $ 794.5 85.4 % $ 773.2 86.2 % 2024 % of Sales 2023 % of Sales 2022 % of Sales Company-operated restaurant margin: U.S. $ 143.6 16.0 % $ 138.6 15.3 % $ 125.9 14.3 % Global 142.7 15.4 % 135.6 14.6 % 123.4 13.8 % The table below presents certain of the Company’s key business measures, which are defined and further discussed in the “Executive Overview” section included herein. 2024 2023 2022 Key business measures: U.S. same-restaurant sales: Company-operated 0.0 % 2.6 % 4.4 % Franchised 1.5 % 3.8 % 3.9 % Systemwide 1.4 % 3.7 % 3.9 % International same-restaurant sales (a) 2.8 % 8.1 % 12.4 % Global same-restaurant sales: Company-operated (0.1) % 2.7 % 4.4 % Franchised (a) 1.7 % 4.4 % 4.9 % Systemwide (a) 1.5 % 4.3 % 4.9 % 39 2024 2023 2022 Key business measures (continued): Systemwide sales (b): U.S.
The table summarizing same-restaurant sales below in “Results of Operations” provides the same-restaurant sales percent changes. • Restaurant Margin - We define restaurant margin as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs.
The table summarizing same-restaurant sales below in “Results of Operations” provides the same-restaurant sales percent changes. • Company-Operated Restaurant Margin - We define Company-operated restaurant margin as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs.
Restaurant margin is influenced by factors such as price increases, the effectiveness of our advertising and marketing initiatives, featured products, product mix, fluctuations in food and labor costs, restaurant openings, remodels and closures and the level of our fixed and semi-variable costs. • Systemwide Sales - Systemwide sales is a non-GAAP financial measure, which includes sales by both Company-operated restaurants and franchised restaurants.
Company-operated restaurant margin is influenced by factors such as price increases, the effectiveness of our advertising and marketing initiatives, featured products, product mix, fluctuations in food and labor costs, restaurant openings, remodels and closures and the level of our fixed and semi-variable costs. • Systemwide Sales - Systemwide sales is a non-GAAP financial measure, which includes sales by both Company-operated restaurants and franchised restaurants.
As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty and advertising funds revenues and profitability. 33 • Average Unit Volumes - We calculate Company-operated restaurant average unit volumes by summing the average weekly sales of all Company-operated restaurants which reported sales during the week.
As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty and advertising funds revenues and profitability. • Average Unit Volumes - We calculate Company-operated restaurant average unit volumes by summing the average weekly sales of all Company-operated restaurants which reported sales during the week.
In addition, the Company is party to a revolving financing facility of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Class A-1 Notes”), which allows for the drawing of up to $300.0 million on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Class A-1 Notes during 2022.
In addition, the Company is party to a revolving financing facility of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Class A-1 Notes”), which allows for the drawing of up to $300.0 million on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Class A-1 Notes during 2024.
Franchised restaurant average unit volumes is a non-GAAP financial measure, which includes sales by franchised restaurants, which are reported by our franchisees and represent their revenues from sales at franchised Wendy’s restaurants. The Company’s consolidated financial statements do not include sales by franchised restaurants to their customers.
Franchised restaurant average unit volumes is a non-GAAP financial measure, which includes sales by franchised restaurants, which are reported by our franchisees and represent their revenue from sales at franchised Wendy’s restaurants. The Company’s consolidated financial statements do not include sales by franchised restaurants to their customers.
The Company believes its presentation of same-restaurant sales, restaurant margin, systemwide sales and average unit volumes, including franchised restaurant average unit volumes, provide a meaningful perspective of the underlying operating performance of the Company’s current business and enables investors to better understand and evaluate the Company’s historical and prospective operating performance.
The Company believes its presentation of same-restaurant sales, Company-operated restaurant margin, systemwide sales and average unit volumes, including franchised restaurant average unit volumes, provide a meaningful perspective of the underlying operating performance of the Company’s current business and enables investors to better understand and evaluate 35 the Company’s historical and prospective operating performance.
For the annual impairment test of our indefinite-lived intangible assets in the fourth quarter of 2022, we elected to perform a qualitative assessment. The qualitative assessment indicated the fair value of our indefinite-lived intangible assets was more likely than not greater than the carrying amount.
For the annual impairment test of our indefinite-lived intangible assets in the fourth quarter of 2024, we elected to perform a qualitative assessment. The qualitative assessment indicated the fair value of our indefinite-lived intangible assets was more likely than not greater than the carrying amount.
Our impairment losses principally reflect impairment charges resulting from the deterioration in operating performance of certain Company-operated restaurants. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment.
Our impairment losses principally reflect impairment charges resulting from the decision to close certain Company-operated restaurants and the deterioration in operating performance of certain other Company-operated restaurants. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment.
Therefore, as restaurant margin as presented excludes certain costs as described above, its usefulness may be limited and may not be comparable to other similarly titled measures of other companies in our industry.
Therefore, as Company-operated restaurant margin as presented excludes certain costs as described above, its usefulness may be limited and may not be comparable to other similarly titled measures of other companies in our industry.
We believe it is more likely than not that the benefit from certain net operating loss carryforwards and tax credits will not be realized. In recognition of this risk, we have provided a valuation allowance of $35.7 million. • Income tax uncertainties: We measure income tax uncertainties in accordance with a two-step process of evaluating a tax position.
We believe it is more likely than not that the benefit from certain net operating loss carryforwards and tax credits will not be realized. In recognition of this risk, we have provided a valuation allowance of $38.5 million. • Income tax uncertainties: We measure income tax uncertainties in accordance with a two-step process of evaluating a tax position.
The statute of limitations for the Company’s state tax returns vary, but generally the Company’s state income tax returns from its 2018 fiscal year forward remain subject to examination. We believe that adequate provisions have been made for any liabilities, including interest and penalties that may result from the completion of these examinations.
The statute of limitations in these jurisdictions vary but generally income tax returns from its 2019 fiscal year and forward remain subject to examination. We believe that adequate provisions have been made for any liabilities, including interest and penalties that may result from the completion of these examinations.
We attempt to manage any inflationary costs and commodity price increases through selective menu price increases and product mix. Delays in implementing such menu price increases and competitive pressures may limit our ability to recover such cost increases in the future.
We attempt to manage any inflationary costs and commodity price increases through selective menu price increases, product mix and focused execution of operational excellence. Delays in implementing such menu price increases and competitive pressures may limit our ability to recover such cost increases in the future.
New Accounting Standards See Note 1 of the Financial Statements and Supplementary Data contained in Item 8 herein for a summary of new or amended accounting standards applicable to us. 51
New Accounting Standards See Note 1 to the Consolidated Financial Statements contained in Item 8 herein for a summary of new or amended accounting standards applicable to us. 51
Constant currency results exclude the impact of foreign currency translation and are derived by translating current year results at prior year average exchange rates. The Company believes excluding the impact of foreign currency translation provides better year over year comparability. Same-restaurant sales and systemwide sales exclude sales from Argentina and Venezuela due to the highly inflationary economies of those countries.
Constant currency results exclude the impact of foreign currency translation and are derived by translating current year results at prior year average exchange rates. The Company believes excluding the impact of foreign currency translation provides better year over year comparability. Same-restaurant sales and systemwide sales exclude sales from Argentina due to that country’s highly inflationary economy.
Our quantitative goodwill impairment test for our global real estate and development operations indicated that there had been no impairment and the fair value of this reporting unit of approximately $1,400.0 million was approximately 21% in excess of its carrying value. Our indefinite-lived intangible assets represent trademarks and totaled $903.0 million as of January 1, 2023.
Our quantitative goodwill impairment test for our global real estate and development operations reporting unit indicated that there had been no impairment and the fair value of this reporting unit of approximately $1,500.0 million was approximately 29% in excess of its carrying value. Our indefinite-lived intangible assets represent trademarks and totaled $903.0 million as of December 29, 2024.
For discussion related to 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K, please refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Form 10-K, filed with the United States Securities and Exchange Commission on March 1, 2022.
For discussion related to 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K, please refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K, filed with the United States Securities and Exchange Commission on February 26, 2024.
We currently believe we have the ability to pursue additional sources of liquidity if needed or desired to fund operating cash requirements or for other purposes. However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us. Capital Expenditures In 2022, cash capital expenditures amounted to $85.5 million.
We currently believe we have the ability to pursue additional sources of liquidity if needed or desired to fund operating cash requirements or for other purposes. However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.
Guarantees and Other Contingencies Year End 2022 Lease guarantees (a) $ 102.6 Letters of credit (b) 28.6 Total $ 131.2 _______________ (a) Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees. These leases extend through 2045. (b) The Company has outstanding letters of credit with various parties.
Guarantees and Other Contingencies Year End 2024 Lease guarantees (a) $ 94.6 Letters of credit (b) 28.7 Total $ 123.3 _______________ (a) Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees. These leases extend through 2045. (b) The Company has outstanding letters of credit with various parties.
Because all companies do not calculate non-GAAP financial measures in the same way, these measures as used by other companies may not be consistent with the way the Company calculates such measures. 2022 Financial Highlights • Revenue increased 10.5% to $2.1 billion in 2022 compared to $1.9 billion in 2021; • Global same-restaurant sales increased 4.9%, U.S. same-restaurant sales increased 3.9% and international same-restaurant sales increased 12.4% compared to 2021.
Because all companies do not calculate non-GAAP financial measures in the same way, these measures as used by other companies may not be consistent with the way the Company calculates such measures. 2024 Financial Highlights • Revenue increased 3.0% to $2.25 billion in 2024 compared to $2.18 billion in 2023; • Global same-restaurant sales increased 1.5%, U.S. same-restaurant sales increased 1.4% and international same-restaurant sales increased 2.8% compared to 2023.
A tax position that meets the more-likely-than-not recognition threshold is then measured, for purposes of financial statement recognition, as the largest amount that has a greater than 50% likelihood of being realized upon effective settlement. We have unrecognized tax benefits of $17.4 million, which if resolved favorably would reduce our tax expense by $13.7 million as of January 1, 2023.
A tax position that meets the more-likely-than-not recognition threshold is then measured, for purposes of financial statement recognition, as the largest amount that has a greater than 50% likelihood of being realized upon effective settlement. We have unrecognized tax benefits of $14.8 million, which if resolved favorably would reduce our tax expense by $11.7 million as of December 29, 2024.
Should actual cash flows and our future estimates vary adversely from those estimates we use, we may be required to recognize impairment charges in future years. • Impairment of long-lived assets: As of January 1, 2023, the total net carrying value of our long-lived tangible and definite-lived intangible assets was $2,230.6 million.
Should actual cash flows and our future estimates vary adversely from those estimates we use, we may be required to recognize impairment charges in future years. • Impairment of long-lived assets: As of December 29, 2024, the total net carrying value of our long-lived tangible and definite-lived intangible assets was $2,121.8 million.
The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended January 1, 2023” or “2022,” which consisted of 52 weeks, (2) “the year ended January 2, 2022” or “2021,” which consisted of 52 weeks, and (3) “the year ended January 3, 2021” or “2020,” which consisted of 53 weeks.
The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 29, 2024” or “2024,” (2) “the year ended December 31, 2023” or “2023,” and (3) “the year ended January 1, 2023” or “2022,” all of which consisted of 52 weeks.
Today, Wendy’s is the second largest quick-service restaurant company in the hamburger sandwich segment in the U.S. based on traffic share, and the third largest globally with 7,095 restaurants in the U.S. and 31 foreign countries and U.S. territories as of January 1, 2023.
Today, Wendy’s is the second largest quick-service restaurant company in the hamburger sandwich segment in the U.S. based on traffic and dollar share, and the third largest globally with 7,240 restaurants in the U.S. and 31 foreign countries and U.S. territories as of December 29, 2024.
We believe that the following represent our more critical estimates and assumptions used in the preparation of our consolidated financial statements: • Impairment of goodwill and indefinite-lived intangible assets: Our goodwill totaled $773.1 million as of January 1, 2023, of which $620.6 million, $30.0 million and $122.5 million was allocated to our U.S.
We believe that the following represent our more critical estimates and assumptions used in the preparation of our consolidated financial statements: • Impairment of goodwill and indefinite-lived intangible assets: Our goodwill totaled $771.5 million as of December 29, 2024, of which $620.6 million, $28.4 million and $122.5 million was allocated to our U.S.
The Company does not expect any material loss to result from these letters of credit because we do not believe performance will be required. General Inflation, Commodities and Changing Prices Inflationary pressures on labor and commodity price increases directly impacted our consolidated results of operations during 2022, and we expect this to continue into 2023.
The Company does not expect any material loss to result from these letters of credit because we do not believe performance will be required. General Inflation, Commodities and Changing Prices Inflationary pressures on labor directly impacted our consolidated results of operations during 2024, and we anticipate continued labor inflation in 2025.
See “Results of Operations” below and Note 27 of the Financial Statements and Supplementary Data contained in Item 8 herein for segment financial information.
See “Results of Operations” below and Note 25 to the Consolidated Financial Statements contained in Item 8 herein for segment financial information.
All references to years, quarters and months relate to fiscal periods rather than calendar periods. 32 Executive Overview Our Business As of January 1, 2023, the Wendy’s restaurant system was comprised of 7,095 restaurants, with 5,994 Wendy’s restaurants in operation in the U.S.
All references to years, quarters and months relate to fiscal periods rather than calendar periods. Executive Overview Our Business As of December 29, 2024, the Wendy’s restaurant system was comprised of 7,240 restaurants, with 5,933 Wendy’s restaurants in operation in the U.S.
Other Operating Income, Net 2022 2021 2020 Amount Change Amount Change Amount Gain from insurance recoveries $ (8.6) $ (8.6) $ — $ — — Lease buyout (2.8) (3.8) 1.0 1.6 (0.6) Equity in earnings in joint ventures, net (9.4) 1.8 (11.2) (5.1) (6.1) Gains on sales-type leases (3.0) 1.2 (4.2) (2.2) (2.0) Other, net 0.1 0.3 (0.2) (0.4) 0.2 $ (23.7) $ (9.1) $ (14.6) $ (6.1) $ (8.5) The increase in other operating income, net during 2022 was primarily due to (1) a gain from insurance recoveries and (2) lease buyout activity.
Other Operating Income, Net 2024 2023 2022 Amount Change Amount Change Amount Gains on sales-type leases $ 0.5 $ (2.0) $ 2.5 $ (0.5) $ 3.0 Lease buyout (1.0) (0.9) (0.1) (2.9) 2.8 Equity in earnings in joint ventures, net 11.6 0.8 10.8 1.4 9.4 Gain from insurance recoveries — — — (8.6) 8.6 Other, net 0.3 (0.3) 0.6 0.7 (0.1) $ 11.4 $ (2.4) $ 13.8 $ 9.9 $ 23.7 The decrease in other operating income, net during 2024 was primarily due to prior year gains on new and modified sales-type leases.
(c) During 2022 and 2021, global systemwide sales increased 6.8% and 9.8%, respectively, U.S. systemwide sales increased 5.3% and 8.6%, respectively, and international systemwide sales increased 19.2% and 20.7%, respectively, on a constant currency basis. 38 The table below presents details regarding the change in restaurant counts of the Wendy’s system from 2020 to 2022. U.S. Company-operated U.S.
(b) During 2024 and 2023, global systemwide sales increased 3.1% and 6.1%, respectively, U.S. systemwide sales increased 2.2% and 5.1%, respectively, and international systemwide sales increased 9.0% and 14.1%, respectively, on a constant currency basis. The table below presents details regarding the change in restaurant counts of the Wendy’s system from 2022 to 2024. U.S. Company-operated U.S.
Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under our securitized financing facility. Our principal uses of cash are operating expenses, capital expenditures, repurchases of common stock, dividends to stockholders and repurchases of debt.
Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under our securitized financing facility. Our principal uses of cash are operating expenses, repurchases of common stock, dividends to stockholders and capital expenditures. As of December 29, 2024, cash, cash equivalents and restricted cash totaled $503.6 million.
Stock Repurchases In February 2022, our Board of Directors authorized a repurchase program for up to $100.0 million of our common stock through February 28, 2023, when and if market conditions warranted and to the extent legally permissible (the “February 2022 Authorization”).
Material Cash Requirements Stock Repurchases In January 2023, our Board of Directors authorized a repurchase program for up to $500.0 million of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”).
In addition, the Company has development agreements in place with a number of franchisees that contractually obligate such franchisees to open additional Wendy’s restaurants over a specified timeframe. During 2022, the Company and its franchisees added 146 net new restaurants across the Wendy’s system.
In addition, the Company has development agreements in place with a number of franchisees that contractually obligate such franchisees to open additional Wendy’s restaurants over a specified timeframe.
Should future taxable income vary from projected taxable income, we may be required to adjust our valuation allowance in future years. Net operating loss and credit carryforwards are subject to various limitations and carryforward periods. As of January 1, 2023, we have foreign tax credits of $18.2 million and state tax credits of $0.4 million.
Should future taxable income vary from projected taxable income, we may be required to adjust our valuation allowance in future years. Net operating loss and credit carryforwards are subject to various limitations and carryforward periods. As of December 29, 2024, we have foreign tax credits of $22.2 million that will begin to expire in 2027.
Cash Flows from Operating, Investing and Financing Activities The table below summarizes our cash flows from operating, investing and financing activities for each of the past three fiscal years: 2022 2021 2020 Amount Change Amount Change Amount Net cash provided by (used in): Operating activities $ 259.9 $ (85.9) $ 345.8 $ 61.4 $ 284.4 Investing activities (77.8) 76.9 (154.7) (86.4) (68.3) Financing activities 288.7 531.4 (242.7) (84.8) (157.9) Effect of exchange rate changes on cash (6.0) (6.3) 0.3 (1.0) 1.3 Net increase (decrease) in cash, cash equivalents and restricted cash $ 464.8 $ 516.1 $ (51.3) $ (110.8) $ 59.5 Operating Activities Cash provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities.
Cash Flows from Operating, Investing and Financing Activities The table below summarizes our cash flows from operating, investing and financing activities for each of the past three fiscal years: 2024 2023 2022 Amount Change Amount Change Amount Net cash provided by (used in): Operating activities $ 355.3 $ 9.9 $ 345.4 $ 85.5 $ 259.9 Investing activities (129.3) (42.8) (86.5) (8.7) (77.8) Financing activities (303.1) 201.2 (504.3) (793.0) 288.7 Effect of exchange rate changes on cash (8.1) (10.5) 2.4 8.4 (6.0) Net (decrease) increase in cash, cash equivalents and restricted cash $ (85.2) $ 157.8 $ (243.0) $ (707.8) $ 464.8 Operating Activities Cash provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities. 47 Cash provided by operating activities was $355.3 million and $345.4 million in 2024 and 2023, respectively.
Impairment of Long-Lived Assets 2022 2021 2020 Amount Change Amount Change Amount Impairment of long-lived assets $ 6.4 $ 4.1 $ 2.3 $ (5.7) $ 8.0 The increase in impairment charges during 2022 was primarily driven by the deterioration in operating performance of certain Company-operated restaurants.
Impairment of Long-Lived Assets 2024 2023 2022 Amount Change Amount Change Amount Impairment of long-lived assets $ 9.7 $ 8.3 $ 1.4 $ (5.0) $ 6.4 The increase in impairment of long-lived assets during 2024 was primarily due to (1) the decision to close certain Company-operated restaurants and (2) the deterioration in operating performance of certain other Company-operated restaurants.
Seasonality Wendy’s restaurant operations are moderately seasonal. Wendy’s average restaurant sales are normally higher during the summer months than during the winter months. Because our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Because our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Inherent volatility experienced in certain commodity markets, such as those for beef, chicken, pork, cheese and grains, could have a significant effect on our results of operations and may have an adverse effect on us in the future. The extent of any impact will depend on our ability to manage such volatility through product mix and selective menu price increases.
Inherent volatility experienced in certain commodity markets, such as those for beef, chicken, eggs, pork, cheese and grains, could have a significant effect on our results of operations and may have an adverse effect on us in the future.
We accrue interest related to uncertain tax positions in “Interest expense, net.” As of January 1, 2023, we had $0.9 million accrued for interest. The Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process (“CAP”).
We accrue interest related to uncertain tax positions in “Provision for income taxes.” As of December 29, 2024, we had $1.4 million accrued for interest. The Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process (“CAP”).
Franchise same-restaurant sales increased during 2022 due to (1) an increase in customer count and (2) higher average check. The increase in Wendy’s International segment profit during 2022 was primarily due to higher revenues.
Franchise same-restaurant sales increased during 2024 due to higher average check, partially offset by a decrease in customer count. The increase in Wendy’s International segment profit during 2024 was primarily due to higher revenues, partially offset by higher franchise support and other costs.
Company-operated and franchise restaurants and the Canada franchise restaurants, and we performed a quantitative goodwill impairment test for the global real estate and development operations. The qualitative assessment indicated the fair value of our U.S. Company-operated and franchise restaurants and our Canada franchise restaurants reporting units was more likely than not greater than the carrying amount.
The qualitative assessment indicated the fair value of our U.S. Company-operated and franchise restaurants reporting unit and our Canada franchise restaurants reporting unit was more likely than not greater than the carrying amount.
As part of CAP, tax years are examined on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. As such, our U.S. federal income tax returns for fiscal years 2009 through 2020 have been settled.
As part of the CAP, tax years are examined on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. As such, our tax returns for fiscal years through 2022 have been settled. The Company or one of its subsidiaries also files tax returns in various state, local and foreign jurisdictions.
Over the past several years, the Company has invested significant resources to focus on consumer-facing 34 technology, including activating mobile ordering via Wendy’s mobile app, launching the Wendy’s Rewards loyalty program in the U.S. and Canada and establishing delivery agreements with third-party vendors.
Over the past several years, the Company has invested significant resources to focus on consumer-facing technology, including enhancements to Wendy’s mobile apps and loyalty programs and establishing delivery arrangements with third-party vendors for Wendy’s U.S. and Canadian restaurants.
Wendy’s International 2022 2021 2020 Amount Change Amount Change Amount Sales $ 13.9 $ 10.2 $ 3.7 $ 3.7 $ — Franchise royalty revenue 61.5 8.1 53.4 10.1 43.3 Franchise fees 5.6 0.2 5.4 3.4 2.0 Advertising fund revenue 25.7 1.8 23.9 3.6 20.3 Total revenues $ 106.7 $ 20.3 $ 86.4 $ 20.8 $ 65.6 Segment profit $ 30.4 $ 3.0 $ 27.4 $ 7.3 $ 20.1 The increase in Wendy’s International revenues during 2022 was primarily due to (1) the opening of Company-operated restaurants in the U.K. beginning in the second quarter of 2021 and (2) an increase in franchise same-restaurant sales.
Wendy’s International 2024 2023 2022 Amount Change Amount Change Amount Sales $ 27.0 $ 2.6 $ 24.4 $ 10.5 $ 13.9 Franchise royalty revenue 71.7 4.2 67.5 6.0 61.5 Franchise fees 9.3 2.9 6.4 0.8 5.6 Advertising fund revenue 36.6 4.4 32.2 6.5 25.7 Total revenues $ 144.7 $ 14.2 $ 130.5 $ 23.8 $ 106.7 Segment profit $ 43.3 $ 7.6 $ 35.7 $ 5.3 $ 30.4 The increase in Wendy’s International revenues during 2024 was primarily due to (1) net new restaurant development and (2) an increase in franchise same-restaurant sales.
Purchase Obligations The Company’s purchase obligations include payment obligations to a third-party global IT consultant, purchase requirements under a beverage agreement and other obligations related primarily to marketing and information technology. As of January 1, 2023, the Company’s purchase obligations were $252.9 million, including $117.4 million payable within 12 months.
Purchase Obligations The Company’s purchase obligations include purchase requirements under a beverage agreement and other obligations related primarily to information technology and marketing. As of December 29, 2024, the Company’s purchase obligations were $214.2 million, including $77.9 million payable within 12 months.
Of the international restaurants, 1,089 were operated by 106 franchisees and 12 were operated by the Company in the United Kingdom (the “U.K.”). The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants.
The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants. Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of December 29, 2024.
Cost of Sales, as a Percent of Sales 2022 2021 2020 Amount Change Amount Change Amount Food and paper 32.7 % 2.2 % 30.5 % (0.2) % 30.7 % Restaurant labor 32.1 % 0.6 % 31.5 % (0.8) % 32.3 % Occupancy, advertising and other operating costs 21.4 % 0.1 % 21.3 % (0.8) % 22.1 % 86.2 % 2.9 % 83.3 % (1.8) % 85.1 % The increase in cost of sales, as a percent of sales, during 2022 was primarily due to (1) higher commodity costs, (2) an increase in restaurant labor rates, (3) a decrease in customer count and (4) the impact of the Company’s investments to support the entry into the U.K. market.
Cost of Sales, as a Percent of Sales 2024 2023 2022 Amount Change Amount Change Amount Food and paper 31.0 % (1.0) % 32.0 % (0.7) % 32.7 % Restaurant labor 32.2 % 0.1 % 32.1 % — % 32.1 % Occupancy, advertising and other operating costs 21.4 % 0.1 % 21.3 % (0.1) % 21.4 % 84.6 % (0.8) % 85.4 % (0.8) % 86.2 % The decrease in cost of sales, as a percent of sales, during 2024 was primarily due to (1) higher average check and (2) labor efficiencies.
Cost of Sales We expect cost of sales, as a percent of sales to be favorably impacted by many of the same factors described above under “Sales,” and to also benefit from productivity initiatives.
Franchise Royalty Revenue and Fees We expect sales at franchised restaurants to generally benefit from many of the factors described above under “Sales.” In addition, we expect franchise royalty revenue and fees to be favorably impacted by a net increase in the number of franchise restaurants in operation due to net new restaurant development. 45 Cost of Sales We expect cost of sales, as a percent of sales to be favorably impacted by many of the same factors described above under “Sales,” and to also benefit from productivity and cost management initiatives.
Of the U.S. restaurants, 403 were operated by the Company and 5,591 were operated by a total of 217 franchisees. In addition, at January 1, 2023, there were 1,101 Wendy’s restaurants in operation in 31 foreign countries and U.S. territories.
Of the U.S. restaurants, 381 were operated by the Company and 5,552 were operated by a total of 207 franchisees. In addition, at December 29, 2024, there were 1,307 Wendy’s restaurants in operation in 31 foreign countries and U.S. territories. Of the international restaurants, 1,294 were operated by 107 franchisees and 13 were operated by the Company in the U.K.
The foreign tax credits begin to expire in 2027 and the state tax credits begin to expire in 2023. In addition, as of January 1, 2023, we have deferred tax assets for foreign net operating loss carryforwards of $3.5 million and state and local net operating loss carryforwards of $35.9 million that will begin to expire in 2023.
In addition, as of December 29, 2024, we have deferred tax assets for foreign net operating loss carryforwards of $2.6 million and state and local net operating loss carryforwards of $26.8 million that will begin to expire in 2025.
Franchise Rental Expense 2022 2021 2020 Amount Change Amount Change Amount Franchise rental expense $ 124.1 $ (8.3) $ 132.4 $ 6.8 $ 125.6 The decrease in franchise rental expense during 2022 was primarily due to (1) the impact of assigning certain leases to franchisees and (2) the impact of the Company’s acquisition of franchise-operated restaurants in Florida during the fourth quarter of 2021.
Franchise Rental Expense 2024 2023 2022 Amount Change Amount Change Amount Franchise rental expense $ 127.4 $ 2.0 $ 125.4 $ 1.3 $ 124.1 The increase in franchise rental expense during 2024 was primarily due to the impact of assigning certain leases to franchisees.
Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in applying our critical accounting policies that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated 48 financial statements and the reported amount of revenues and expenses during the reporting period.
Off-Balance Sheet Arrangements Other than the obligations for guarantees described above in “Guarantees and Other Contingencies,” we do not have any off-balance sheet arrangements that have, or are, in the opinion of management, reasonably likely to have, a current or future material effect on our financial condition or results of operations. 48 Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in applying our critical accounting policies that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period.
In 2023, we expect that cash capital expenditures will amount to approximately $75.0 million to $85.0 million, principally relating to (1) technology investments, including consumer-facing digital technology, (2) the opening of new Company-operated restaurants and the reimaging of existing Company-operated restaurants, (3) restaurant equipment investments, (4) maintenance capital expenditures for Company-operated restaurants and (5) various other capital projects.
In 2025, we expect that cash capital expenditures will amount to approximately $100.0 million to $110.0 million, principally relating to (1) technology investments, including consumer-facing digital technology, (2) the opening of new Company-operated restaurants, (3) land investments and (4) various other capital projects. 46 In addition to the capital expenditures noted above, cash expenditures related to the Company’s build to suit development fund amounted to $41.2 million during 2024.
Franchise same-restaurant sales during 2022 increased due to higher average check, partially offset by a decrease in customer count. Franchise same-restaurant sales during 2021 benefited from government stimulus payments to consumers during the first quarter of 2021, which did not recur in 2022.
Franchise same-restaurant sales during 2024 increased due to higher average check, partially offset by a decrease in customer count.
Global Real Estate & Development 2022 2021 2020 Amount Change Amount Change Amount Franchise fees $ 4.1 $ (2.3) $ 6.4 $ 2.2 $ 4.2 Franchise rental income 234.5 (2.2) 236.7 4.1 232.6 Total revenues $ 238.6 $ (4.5) $ 243.1 $ 6.3 $ 236.8 Segment profit $ 108.7 $ 2.6 $ 106.1 $ 5.4 $ 100.7 The decrease in Global Real Estate & Development revenues during 2022 was primarily due to (1) the accelerated recognition of franchise agreement revenue in the prior year as a result of franchisee-to-franchisee restaurant transfers and (2) lower franchise rental income.
Global Real Estate & Development 2024 2023 2022 Amount Change Amount Change Amount Franchise fees $ 5.6 $ 0.6 $ 5.0 $ 0.9 $ 4.1 Franchise rental income 236.5 6.3 230.2 (4.3) 234.5 Total revenues $ 242.1 $ 6.9 $ 235.2 $ (3.4) $ 238.6 Segment profit $ 108.6 $ 5.1 $ 103.5 $ (5.2) $ 108.7 The increase in Global Real Estate & Development revenues during 2024 was primarily due to higher franchise rental income as a result of (1) amending certain existing leases and (2) entering into new leases.
Segment Information See Note 27 of the Financial Statements and Supplementary Data contained in Item 8 herein for further information regarding the Company’s segments.
See Note 9 to the Consolidated Financial Statements contained in Item 8 herein for further information.
Company-operated $ 882.7 $ 730.4 $ 722.8 U.S. franchised 10,811.7 10,380.3 9,508.5 U.S. systemwide 11,694.4 11,110.7 10,231.3 International Company-operated 13.9 3.7 — International franchised (b) 1,592.4 1,392.9 1,107.2 International systemwide (b) 1,606.3 1,396.6 1,107.2 Global systemwide (b) $ 13,300.7 $ 12,507.3 $ 11,338.5 Restaurant average unit volumes (in thousands) (a): U.S.
Company-operated $ 898.9 $ 905.7 $ 882.7 U.S. franchised 11,654.9 11,379.6 10,811.7 U.S. systemwide 12,553.8 12,285.3 11,694.4 International Company-operated 27.0 24.4 13.9 International franchised (a) 1,906.6 1,778.0 1,592.4 International systemwide (a) 1,933.6 1,802.4 1,606.3 Global systemwide (a) $ 14,487.4 $ 14,087.7 $ 13,300.7 Restaurant average unit volumes (in thousands): U.S.
Franchise Royalty Revenue and Fees 2022 2021 2020 Amount Change Amount Change Amount Franchise royalty revenue $ 485.5 $ 24.8 $ 460.7 $ 44.2 $ 416.5 Franchise fees 72.7 (3.3) 76.0 47.8 28.2 $ 558.2 $ 21.5 $ 536.7 $ 92.0 $ 444.7 Franchise royalty revenue during 2022 increased $24.8 million, of which (1) $21.8 million was due to a 4.9% increase in global franchise same-restaurant sales and (2) $3.1 million was due to a net increase in the number of franchise restaurants in operation during 2022 compared to 2021.
Franchise Royalty Revenue and Fees 2024 2023 2022 Amount Change Amount Change Amount Franchise royalty revenue $ 528.4 $ 16.3 $ 512.1 $ 26.6 $ 485.5 Franchise fees 97.6 17.4 80.2 7.5 72.7 $ 626.0 $ 33.7 $ 592.3 $ 34.1 $ 558.2 Franchise royalty revenue during 2024 increased $16.3 million, of which (1) $9.3 million was due to a 1.7% increase in global franchise same-restaurant sales and (2) $8.3 million was due to net new restaurant development.
These increases were partially offset by the sale of 47 Company-operated restaurants in New York during the second quarter of 2021. Same-restaurant sales increased during 2022 primarily due to higher average check, partially offset by a decrease in customer count.
Franchise same-restaurant sales increased during 2024 primarily due to higher average check, partially offset by a decrease in customer count.
Organizational Redesign On February 16, 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making.
Global restaurant counts as of December 29, 2024 were flat compared to December 31, 2023 as a result of our actions to strengthen the system by closing certain underperforming restaurants during 2024. 36 Organizational Redesign In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”).
Provision for Income Taxes 2022 2021 2020 Amount Change Amount Change Amount Income before income taxes $ 243.5 $ 2.9 $ 240.6 $ 87.8 $ 152.8 Provision for income taxes (66.1) (25.9) (40.2) (5.2) (35.0) Effective tax rate on income 27.2 % 10.5 % 16.7 % (6.2) % 22.9 % The increase in the provision for income taxes and effective tax rate during 2022 was primarily due to (1) an increase in state income taxes, including an increase in state deferred income taxes, (2) a decrease in the tax benefit from share-based compensation and (3) an increase in tax on our foreign operations.
Provision for Income Taxes 2024 2023 2022 Amount Change Amount Change Amount Income before income taxes $ 272.4 $ (7.0) $ 279.4 $ 35.9 $ 243.5 Provision for income taxes (78.0) (3.0) (75.0) (8.9) (66.1) Effective tax rate on income 28.7 % 1.9 % 26.8 % (0.4) % 27.2 % The increase in the provision for income taxes and the effective tax rate during 2024 was primarily due to a discrete state tax item.
The Company is also partnering with key technology providers to help execute our digital, restaurant technology and enterprise technology initiatives and support our technology innovation and growth. The Company’s digital business represented approximately 10.3% of global systemwide sales during 2022. New Restaurant Development Wendy’s long-term growth opportunities include expanding the Company’s footprint through global restaurant expansion.
The Company is also continuing to make digital investments and is partnering with key technology providers to help execute our digital, restaurant technology and enterprise technology initiatives and support our technology innovation and growth. The Company’s digital business has continued to grow and digital sales increased from approximately 13.2% of global systemwide sales during 2023 to approximately 17.6% during 2024.
Depreciation and Amortization (exclusive of amortization of cloud computing arrangements shown separately below) 2022 2021 2020 Amount Change Amount Change Amount Restaurants $ 84.0 $ 7.6 $ 76.4 $ (8.5) $ 84.9 Technology support, corporate and other 49.4 0.3 49.1 1.2 47.9 $ 133.4 $ 7.9 $ 125.5 $ (7.3) $ 132.8 The increase in depreciation and amortization during 2022 was primarily due to depreciation and amortization on assets acquired from a franchisee in Florida during the fourth quarter of 2021.
Depreciation and Amortization (exclusive of amortization of cloud computing arrangements shown separately below) 2024 2023 2022 Amount Change Amount Change Amount Restaurants $ 87.4 $ 1.6 $ 85.8 $ 1.8 $ 84.0 Technology support, corporate and other 55.8 5.8 50.0 0.6 49.4 $ 143.2 $ 7.4 $ 135.8 $ 2.4 $ 133.4 The increase in depreciation and amortization during 2024 was primarily due to (1) depreciation and amortization for technology investments and (2) asset additions for new and remodeled restaurants. 42 Amortization of Cloud Computing Arrangements 2024 2023 2022 Amount Change Amount Change Amount Amortization of cloud computing arrangements $ 14.7 $ 1.9 $ 12.8 $ 10.4 $ 2.4 The increase in amortization of cloud computing arrangements was primarily due to amortization of assets associated with the Company’s HCM system implementation completed in 2023.
Whether or not to repurchase any debt and the size and timing of any such repurchases will be determined at our discretion.
Whether or not to repurchase any debt and the size and timing of any such repurchases will be determined at our discretion. See Note 9 to the Consolidated Financial Statements contained in Item 8 herein for further information related to our long-term debt obligations and the timing of expected payments.
The result of applying the guideline company approach is adjusted based on the incremental value associated with a controlling interest in the business.
The result of applying the guideline company approach is adjusted based on the incremental value 49 associated with a controlling interest in the business. This “control premium” represents the amount a new controlling stockholder would pay for the benefits resulting from synergies and other potential benefits derived from controlling the enterprise.
Subsequent to January 1, 2023, Wendy’s repurchased $25.0 million in principal of its 7% debentures at par value. We may from time to time seek to repurchase additional portions of our outstanding long-term debt, including our 7% debentures and/or our senior secured notes, through open market purchases, privately negotiated transactions or otherwise.
We may from time to time seek to repurchase portions of our outstanding long-term debt, including our 7% debentures and/or our senior secured notes, through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
On a two-year basis, global same-restaurant sales increased 14.9%; • Global Company-operated restaurant margin was 13.8% in 2022, a decrease of 290 basis points compared to 2021; and • Net income decreased 11.5% to $177.4 million in 2022 compared to $200.4 million in 2021.
On a two-year basis, global same-restaurant sales increased 5.8%; • Global Company-operated restaurant margin was 15.4% in 2024, an increase of 80 basis points compared to 2023; and • Net income decreased 4.9% to $194.4 million in 2024 compared to $204.4 million in 2023. Digital Wendy’s long-term growth opportunities include accelerating consumer-facing digital platforms and technologies.
On January 13, 2023, the Company announced a dividend of $.25 per share to be paid on March 15, 2023 to stockholders of record as of March 1, 2023.
Dividends On March 15, 2024, June 17, 2024, September 17, 2024 and December 16, 2024, the Company paid quarterly cash dividends per share of $.25, aggregating $204.4 million. On February 13, 2025, the Company announced a dividend of $.25 per share to be paid on March 17, 2025 to stockholders of record as of March 3, 2025.
The increase in sales during 2022 was partially offset by the sale of 47 Company-operated restaurants in New York during the second quarter of 2021 of $42.9 million. Company-operated same-restaurant sales increased due to higher average check, partially offset by a decrease in customer count.
Company-operated same-restaurant sales decreased due to a decrease in customer count, partially offset by higher average check.
For 2021, same-restaurant sales compared the 52 weeks from January 4, 2021 through January 2, 2022 to the 52 weeks from January 6, 2020 through January 3, 2021. This methodology is consistent with the metric used by our management for internal reporting and analysis.
Restaurants temporarily closed for more than one week are excluded from same-restaurant sales. This methodology is consistent with the metric used by our management for internal reporting and analysis.
Advertising Funds Expense 2022 2021 2020 Amount Change Amount Change Amount Advertising funds expense $ 430.8 $ 19.0 $ 411.8 $ 66.4 $ 345.4 The increase in advertising funds expense during 2022 was primarily due to (1) an increase in franchise same-restaurant sales in the U.S. and Canada and (2) timing of promotions.
Advertising Funds Revenue 2024 2023 2022 Amount Change Amount Change Amount Advertising funds revenue $ 458.1 $ 29.1 $ 429.0 $ 22.8 $ 406.2 The increase in advertising funds revenue during 2024 was primarily due to (1) promotional activity of $12.0 million, (2) an increase in franchise same-restaurant sales in the U.S. and Canada of $6.9 million and (3) net new restaurant development of $5.6 million.
We expect cost of sales, as a percent of sales to be negatively impacted by (1) an increase in commodity costs and (2) higher restaurant labor rates. General and Administrative We expect general and administrative expenses to be relatively flat, despite elevated inflationary pressures, primarily as a result of the Company’s organizational redesign.
We expect cost of sales, as a percent of sales to be negatively impacted by higher restaurant labor rates. General and Administrative We expect general and administrative expenses to be higher primarily due to increases in (1) employee compensation and benefits, including investments in field resources to drive operational excellence, and (2) incentive compensation.
See Note 20 of the Financial Statements and Supplementary Data contained in Item 8 herein for further information related to our finance and operating lease obligations and the timing of expected payments.
As of December 29, 2024, the Company’s future minimum rental payments for non-cancelable leases were $1,978.3 million, including $148.4 million payable within 12 months. See Note 5 to the Consolidated Financial Statements contained in Item 8 herein for further information related to our finance and operating lease obligations and the timing of expected payments.
The increase in Wendy’s U.S. segment profit during 2022 was primarily due to (1) higher revenues and (2) a decrease in the Company’s funding of incremental advertising.
These increases were partially offset by a decrease in Company-operated sales driven by the same factors as described above for “Sales.” The decrease in Wendy’s U.S. segment profit during 2024 was primarily due to (1) an increase in the Company’s funding of incremental advertising, (2) a decrease in Company-operated sales and (3) higher franchise support and other costs.
Wendy’s U.S. 2022 2021 2020 Amount Change Amount Change Amount Sales $ 882.7 $ 152.3 $ 730.4 $ 7.6 $ 722.8 Franchise royalty revenue 424.0 16.7 407.3 34.1 373.2 Franchise fees 63.0 (1.2) 64.2 42.1 22.1 Advertising fund revenue 380.5 14.9 365.6 52.3 313.3 Total revenues $ 1,750.2 $ 182.7 $ 1,567.5 $ 136.1 $ 1,431.4 Segment profit $ 480.5 $ 30.4 $ 450.1 $ 56.8 $ 393.3 43 The increase in Wendy’s U.S. revenues during 2022 was primarily due to (1) the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021 and (2) an increase in same-restaurant sales.
Wendy’s U.S. 2024 2023 2022 Amount Change Amount Change Amount Sales $ 898.9 $ (6.8) $ 905.7 $ 23.0 $ 882.7 Franchise royalty revenue 456.6 11.9 444.7 20.7 424.0 Franchise fees 82.7 14.0 68.7 5.7 63.0 Advertising fund revenue 421.5 24.8 396.7 16.2 380.5 Total revenues $ 1,859.7 $ 43.9 $ 1,815.8 $ 65.6 $ 1,750.2 Segment profit $ 526.0 $ (2.4) $ 528.4 $ 47.9 $ 480.5 44 The increase in Wendy’s U.S. revenues during 2024 was primarily due to (1) higher advertising fund revenue, (2) an increase in franchisee fees, (3) an increase in franchise same-restaurant sales and (4) restaurant development activity.
Franchise Rental Income 2022 2021 2020 Amount Change Amount Change Amount Franchise rental income $ 234.5 $ (2.2) $ 236.7 $ 4.1 $ 232.6 The decrease in franchise rental income during 2022 was primarily due to the impact of terminating existing leases where the Company was lessor of $5.2 million, primarily in connection with the Company’s acquisition of franchise-operated restaurants in Florida during the fourth quarter of 2021.
Franchise Rental Income 2024 2023 2022 Amount Change Amount Change Amount Franchise rental income $ 236.5 $ 6.3 $ 230.2 $ (4.3) $ 234.5 The increase in franchise rental income during 2024 was primarily due to the impact of (1) amending certain existing leases of $4.0 million and (2) entering into new leases of $2.2 million.
Long-Term Debt, Including Current Portion As of January 1, 2023, the Company’s long-term debt obligations totaled $2,851.4 million, including $29.3 million payable within 12 months.
In 2025, we expect to invest approximately $70.0 million in the development fund to drive new restaurant growth. Long-Term Debt, Including Current Portion As of December 29, 2024, the Company’s long-term debt obligations totaled $2,740.3 million, including $78.2 million payable within 12 months.
Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of January 1, 2023. Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and consumer spending levels, general economic and market trends and weather.
Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and consumer spending levels, general economic and market trends and weather. 34 Wendy’s strategic framework includes providing fresh, famous food to consumers, delivering an exceptional customer experience through operational excellence and expanding the Company’s footprint across the globe.
Franchised International Company-operated International Franchised Systemwide Restaurant count: Restaurant count at January 3, 2021 361 5,520 — 947 6,828 Opened 7 116 5 82 210 Closed (8) (58) — (23) (89) Net purchased from (sold by) franchisees 43 (43) — — — Restaurant count at January 2, 2022 403 5,535 5 1,006 6,949 Opened 7 132 7 130 276 Closed (7) (76) — (47) (130) Restaurant count at January 1, 2023 403 5,591 12 1,089 7,095 Sales 2022 2021 2020 Amount Change Amount Change Amount Sales $ 896.6 $ 162.5 $ 734.1 $ 11.3 $ 722.8 The increase in sales during 2022 was primarily due to (1) the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021 of $162.7 million, (2) a 4.4% increase in Company-operated same-restaurant sales of $27.9 million and (3) net new restaurant development of $11.4 million.
Franchised International Company-operated International Franchised Systemwide Restaurant count: Restaurant count at January 1, 2023 403 5,591 12 1,089 7,095 Opened 3 94 1 150 248 Closed (3) (58) (1) (41) (103) Restaurant count at December 31, 2023 403 5,627 12 1,198 7,240 Opened 2 99 1 174 276 Closed (21) (177) — (78) (276) Net (sold to) purchased by franchisees (3) 3 — — — Restaurant count at December 29, 2024 381 5,552 13 1,294 7,240 40 Sales 2024 2023 2022 Amount Change Amount Change Amount Sales $ 925.9 $ (4.2) $ 930.1 $ 33.5 $ 896.6 The decrease in sales during 2024 was primarily due to (1) net closures of Company-operated restaurants of $3.1 million and (2) a 0.1% decrease in Company-operated same-restaurant sales of $2.4 million.
In connection with the January 2023 Authorization, the remaining portion of the February 2022 Authorization was canceled. Subsequent to January 1, 2023 through February 21, 2023, the Company repurchased 0.6 million shares under the January 2023 Authorization with an aggregate purchase price of $12.9 million, excluding commissions.
During 2024, the Company repurchased 4.3 million shares under the January 2023 Authorization with an aggregate purchase price of $75.0 million, excluding excise tax of $0.6 million and commissions of $0.1 million. As of December 29, 2024, the Company had $235.0 million of availability remaining under the January 2023 Authorization.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSee Note 12 of the Financial Statements and Supplementary Data contained in Item 8 herein for further information on the Company’s debt structure and its securitized financing facility. In addition, certain of the Company’s loan documents determine interest based on LIBOR, and we currently intend to renegotiate such loan documents prior to LIBOR being discontinued.
Biggest changeSee Note 9 to the Consolidated Financial Statements contained in Item 8 herein for further information on the Company’s debt structure and its securitized financing facility.
We purchase certain food products, such as beef, chicken, pork, cheese and grains, that are affected by changes in commodity prices and, as a result, we are subject to variability in our food costs.
Commodity Price Risk We purchase certain food products, such as beef, chicken, eggs, pork, cheese and grains, that are affected by changes in commodity prices and, as a result, we are subject to variability in our food costs.
The exposure to Canadian dollar exchange rates on the Company’s cash flows primarily includes imports paid for by Canadian operations in U.S. dollars and payments from the Company’s Canadian operations to the Company’s U.S. operations in U.S. dollars. Revenues from our Canadian operations for the year ended January 1, 2023 represented approximately 5% of our total revenues.
The exposure to Canadian dollar exchange rates on the Company’s cash flows primarily includes imports paid for by Canadian operations in U.S. dollars and payments from the Company’s Canadian operations to the Company’s U.S. operations in U.S. dollars. Revenues from our Canadian operations for the year ended December 29, 2024 represented approximately 5% of our total revenues.
Interest Rate Risk Our objective in managing our exposure to interest rate changes is to limit the impact on our earnings and cash flows. Our policies prohibit the use of derivative instruments for trading purposes, and we had no outstanding derivative instruments as of January 1, 2023.
Interest Rate Risk Our objective in managing our exposure to interest rate changes is to limit the impact on our earnings and cash flows. Our policies prohibit the use of derivative instruments for trading purposes, and we had no outstanding derivative instruments as of December 29, 2024.
An immediate 10% change in Canadian dollar exchange rates versus the U.S. dollar from their levels at January 1, 2023 would not have a material effect on our consolidated financial position or results of operations. 52
An immediate 10% change in Canadian dollar exchange rates versus the U.S. dollar from their levels at December 29, 2024 would not have a material effect on our consolidated financial position or results of operations. 52
Our long-term debt, including the current portion, aggregated $2,895.8 million as of January 1, 2023 (excluding unamortized debt issuance costs and the effect of purchase accounting adjustments). The Company’s predominantly fixed-rate debt structure has reduced its exposure to interest rate increases that could adversely affect its earnings and cash flows.
Our long-term debt, including the current portion, aggregated $2,767.6 million as of December 29, 2024 (excluding unamortized debt issuance costs and the effect of purchase accounting adjustments). The Company’s predominantly fixed-rate debt structure has reduced its exposure to interest rate increases that could adversely affect its earnings and cash flows.
The Company could be exposed to interest rate increases under its Class A-1 Notes and other lines of credit; however, the Company had no outstanding borrowings under the Class A-1 Notes or its other lines of credit as of January 1, 2023.
The Company could be exposed to interest rate increases under its Class A-1 Notes, its U.S. advertising fund revolving line of credit and certain other lines of credit; however, the Company had no outstanding borrowings under the Class A-1 Notes or such other lines of credit as of December 29, 2024.
Removed
At this time, we cannot predict what alternative index would be negotiated with our lenders or the resulting impact on our interest expense. Commodity Price Risk Commodity price increases directly impacted our consolidated results of operations during 2022, and we expect this to continue into 2023.

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