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].