The Wendy's Stock

The Wendy's Company engages in developing, operating, and franchising a system of quick-service restaurants in the United States (the U.S.).

Business Strategy

Wendy's long-term growth opportunities include delivering accelerated global growth through driving same-restaurant sales momentum across all dayparts; accelerating its consumer-facing digital platforms and technologies; and expanding the company's footprint across the globe.

Segments

The company operates through Wendy's U.S.; Wendy's International; and 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, franchise fees and national advertising fund collections from franchised restaurants.

Wendy's International includes the operation and franchising of Wendy's restaurants in countries and territories other than the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants.

Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes the company's share of the income of its Canadian restaurant real estate joint venture (TimWen).

In addition, Global Real Estate & Development earns fees from facilitating franchisee-to-franchisee restaurant transfers (Franchise Flips) and providing other development-related services to franchisees.

The Wendy's Restaurant System

The revenues from the company's restaurant business are derived from two principal sources, such as sales at Company-operated restaurants and franchise-related revenues, including royalties, franchise fees, national advertising funds contributions and rents received from Wendy's franchised restaurants. Company-operated restaurants comprised approximately 5% of the total Wendy's system as of December 31, 2023.

Restaurant Openings and Closings

During 2023, Wendy's opened four new Company-operated restaurants and closed four generally underperforming Company-operated restaurants. During 2023, Wendy's franchisees opened 244 new restaurants and closed 99 generally underperforming restaurants.

Restaurant Operations

Each Wendy's restaurant offers an extensive menu specializing in hamburger sandwiches and featuring chicken sandwiches, which are prepared to order with the customer's choice of toppings and condiments. 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. Wendy's breakfast menu features a variety of breakfast sandwiches, such as the Breakfast Baconator and sides such as seasoned potatoes.

Free-standing Wendy's restaurants generally include a pick-up window in addition to a dining room. In 2021, 2022 and 2023 pick-up window sales represented approximately 82%, 77% and 74% of sales at company-operated restaurants, respectively. Prior to the impact of COVID-19, approximately two-thirds of sales at company-operated restaurants occurred through the pick-up window.

Wendy's strives to maintain quality and uniformity throughout all restaurants by publishing detailed specifications for food products, preparation and service, continual in-service training of employees, restaurant operational audits and field visits from Wendy's supervisors. In the case of franchisees, field visits are made by Wendy's personnel who review restaurant operations, including quality, service and cleanliness, and make recommendations to assist in compliance with Wendy's specifications.

Supply Chain, Distribution and Purchasing

As of December 31, 2023, three independent processors (five total production facilities) supplied all of the fresh beef used by Wendy's restaurants in the U.S. In addition, seven independent processors (17 total production facilities) supplied all of the chicken used by Wendy's restaurants in the U.S. 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. 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 the U.S. 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). 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 system volume. QSCC's supply chain management facilitates the continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy's supply chain in the U.S. and Canada. Wendy's and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC. Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC's operations. Should QSCC's sourcing fees exceed its expected needs, QSCC's board of directors may return some or all of the excess to its members in the form of a patronage dividend.

Suppliers

Wendy's has a purchasing co-op relationship structure with its franchisees that establishes Quality Supply Chain Co-op, Inc. (QSCC). 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 system volume.

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. Domestic trademarks and service marks have their next required maintenance filings at various times from 2024 to 2034 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. 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.

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.

Governmental Regulations

The company's franchising activities are subject to the rules and regulations of the Federal Trade Commission and various state laws regulating the offer and sale of franchises.

History

The company was founded in 1969. It was formerly known as Wendy's/Arby's Group, Inc. and changed its name to The Wendy's Company in 2011.