Core Viewpoint - Wendy's plans to close hundreds of U.S. stores to address declining sales and improve its domestic business performance [1][3] Group 1: Store Closures and Sales Performance - Wendy's expects to close about 4% to 6% of its 6,011 U.S. restaurants next year, translating to a minimum of 241 store closures [1] - In the latest fiscal quarter, global sales decreased by 2.6%, with U.S. sales falling by 4.7%, primarily due to fewer customer visits, although higher spending per order partially offset this decline [3] Group 2: Strategic Initiatives - The company is focusing on enhancing sales at existing locations rather than expanding its store count, launching Project Fresh to improve performance and profitability [5] - Wendy's is making progress on initiatives aimed at enhancing customer experience, which is starting to show positive results in its company-operated U.S. restaurants [4] Group 3: Industry Context - The quick-service restaurant sector is facing pressure as consumers, particularly lower-income households, adjust their discretionary spending due to rising living costs [8][11] - Many industry players are increasing promotions to attract budget-conscious customers, indicating a potential shift in pricing strategies across the sector [11]

Financial Data and Key Metrics Changes - Global system-wide sales declined by 2.6%, primarily due to a 4.7% decline in U.S. same restaurant sales, reflecting increased industry competition and consumer pressure [14][19]. - Adjusted EBITDA rose by 2.1% to $138 million, driven by reductions in advertising and G&A expenses [17][22]. - Adjusted EPS was $0.24 per share, slightly below the previous year's $0.25 [17][22]. - Free cash flow increased to $195-$210 million, up by $35 million from prior expectations, reflecting reduced capital expenditures [18][27]. Business Line Data and Key Metrics Changes - U.S. company-operated restaurant same restaurant sales outperformed the overall U.S. system by 400 basis points, declining only 0.7% [19][20]. - International system-wide sales grew by 8.6%, with significant growth in regions like Mexico (over 18%) and Puerto Rico (over 10%) [16][20]. - Digital sales in the U.S. increased by 14.9%, reaching a digital mix of 20.3% [20]. Market Data and Key Metrics Changes - The U.S. market remains under pressure, with sales challenges noted, while international markets continue to show strong growth [5][16]. - The company anticipates international net unit growth of over 9% in 2025, with a focus on expanding in Canada and the U.K. [12][13]. Company Strategy and Development Direction - The company is prioritizing average unit volume (AUV) growth over net unit growth in the U.S. as part of Project Fresh, a comprehensive turnaround plan [5][12]. - Project Fresh focuses on brand revitalization, operational excellence, system optimization, and capital allocation to enhance customer experience and profitability [6][10][12]. - The company is working closely with franchisees to evaluate underperforming restaurants and develop action plans, which may include closures to strengthen the overall system [11][39]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the competitive landscape and consumer pressure affecting U.S. sales, while expressing confidence in the international growth trajectory [5][14]. - The company maintains its outlook for full-year global system-wide sales, adjusted EBITDA, and adjusted EPS, while increasing the free cash flow outlook [17][27]. - Management emphasized the importance of enhancing franchisee profitability and customer experience as key to long-term growth [51][52]. Other Important Information - The company has reduced its 2025 U.S. build-to-suit capital by approximately $20 million, reflecting a strategic shift towards AUV growth [12][18]. - The company has returned over $300 million to shareholders year-to-date through dividends and share repurchases, with plans to exceed $325 million for the full year [17][24]. Q&A Session Summary Question: Franchisee cash flow and balance sheet levels - The U.S. franchisee system remains healthy overall, with some facing acute financial pressure. The company is working with these franchisees on a case-by-case basis to improve restaurant-level economics [30][31]. Question: Factors leading to underperformance relative to peers - The company noted increased pressure on lower-income consumers and emphasized its value proposition, including the Biggie Bag and $8 meal deals, which performed well [36][37]. Question: Expected closures in the U.S. due to system optimization - The company estimates mid-single-digit percentage closures, which could amount to around 300 units, with a focus on improving overall system health [39][40]. Question: Clarification on U.S. AUV growth targets - The company is focused on net unit development coming in around the low end of its guidance, with gross unit development still on track [41][42]. Question: Insights from customer segmentation study - The company is conducting a comprehensive customer segmentation study to better understand consumer preferences and improve brand communication [46][47]. Question: Beverage platform performance and breakfast strategy - Recent beverage launches performed well, and breakfast remains a key focus, with flexibility allowed for franchisees with low breakfast sales [49][51].

Financial Performance - Global systemwide sales decreased by 2.6%[25], and global system same-restaurant sales (SRS) declined by 3.7%[25] - U S systemwide sales decreased by 4.4%[25], with a SRS decline of 4.7%[25] - International systemwide sales experienced growth of 8.6%[25], and SRS grew by 3.0%[25] - Adjusted EBITDA increased by 2.1% to $138 million[32] - Adjusted EPS decreased by 4.0% to $0.24[32] Capital Allocation and Cash Flow - The company returned over $40 million to shareholders through dividends and share repurchases[25] - Year-to-date free cash flow was $195.6 million[34] - The company is on track to return over $325 million to shareholders in 2025[38] Strategic Initiatives - The company launched Project FRESH, a strategic plan to drive profitable growth and long-term value across the U S system[12] - The company opened 172 new restaurants globally year-to-date through Q3[25] 2025 Outlook - Global systemwide sales growth is projected to be between (5.0)% and (3.0)%[39] - Adjusted EBITDA is expected to be between $505 million and $525 million[39] - Adjusted EPS is projected to be between $0.82 and $0.89[39] - Free cash flow is expected to be between $195 million and $210 million[39]

Core Insights - The Wendy's Company reported third-quarter results that met expectations, highlighting strong international sales growth of 8.6% and the opening of 54 new restaurants globally [1][11] - U.S. comparable sales at company-operated restaurants outperformed the system by 4%, driven by operational excellence and the successful launch of new chicken tenders [2][11] - The company is implementing Project Fresh, a comprehensive turnaround plan focused on brand revitalization and operational excellence [2] Operational Highlights - Systemwide sales growth for the third quarter was 1.8%, with U.S. sales declining by 4.4% and international sales growing by 8.6% [2][11] - Same-restaurant sales growth was 0.2% in the U.S. and 3.0% internationally for the third quarter [2] - The total number of restaurants increased to 7,363, with 54 new openings in the third quarter [11] Financial Highlights - Total revenues for the third quarter decreased by 3.0% to $549.5 million, while adjusted revenues were nearly flat at $442.5 million [4][11] - Net income fell to $44.3 million, a decrease of 11.8%, and adjusted EBITDA increased by 2.1% to $138.0 million [4][11] - Reported diluted earnings per share were $0.23, with adjusted earnings per share decreasing by 4.0% to $0.24 [4][11] Cash Flow and Shareholder Returns - Cash flow from operations was $275.3 million, while free cash flow decreased to $195.6 million [4][11] - The company returned $40.7 million to shareholders through dividends and share repurchases [11][16] - A quarterly dividend of $0.14 per share was declared, payable on December 15, 2025 [16] 2025 Outlook - The company reaffirmed its global systemwide sales growth outlook of -5.0% to -3.0% and adjusted EBITDA expectations of $505 to $525 million [17] - Free cash flow expectations were raised to $195 to $210 million, reflecting a positive adjustment in capital expenditures [18]

Core Insights - Wendy's has launched Project Fresh, a strategic initiative aimed at revitalizing the brand, driving growth, and enhancing profitability across its system [1][3][4] - The company's board and management are dissatisfied with its current valuation and are focused on creating value for franchisees, employees, and shareholders [2] Project Fresh Overview - Project Fresh is structured around four core pillars: brand revitalization, system optimization, operational excellence, and reallocation of capital and resources to foster profitable growth [3][4] - The initiative aims to redefine Wendy's operations, investments, and customer engagement to create long-term value [3][4] Key Actions Under Project Fresh - Brand revitalization will focus on enhancing brand positioning by leveraging Wendy's innovation and unique voice to connect with the next generation of customers [5] - System optimization will prioritize average-unit-volume growth in the U.S., aiming for industry-leading restaurant performance through resource reallocation, labor optimization, and close partnerships with franchisees [5] - Internationally, capital will continue to be invested to support strong net unit growth [5]

Core Insights - Wendy's is facing challenges with sales growth and a significant decline in stock price, leading to a strategic repositioning initiative called Project Fresh [3][7] - The company aims to enhance its brand image and marketing effectiveness by collaborating with Creed UnCo, a consultancy led by former Taco Bell CEO Greg Creed [3] - Wendy's average unit volume (AUV) is currently $2.3 million for company-owned locations and $2.1 million for franchised locations, which, while higher than some competitors, still lags behind McDonald's AUV of nearly $4 million [4] Strategic Goals - Project Fresh is designed to strengthen the brand, increase profitability, and return to growth after experiencing two consecutive quarters of same-store sales declines [7] - The initiative includes reallocating $20 million from development initiatives to store-level improvements and marketing efforts [6][7] - Wendy's plans to optimize labor and operating hours, alongside investing in training, equipment, technology, and process simplification to support AUV growth [5] Financial Strategy - The Build-to-Suit program, with a budget of approximately $100 million, will help fund investments aimed at increasing AUV in underdeveloped trade areas [6] - Wendy's is working with a financial advisor to explore additional capital sources to enhance AUVs [6]