Risk Factors.
−Removed: In addition to the information contained in this report, you should carefully consider the risk factors disclosed in our Form 10-K and our Quarterly Report on Form 10-Q for the period ended March 29, 2020, which could materially affect our business, financial condition or future results.
−Removed: Except as set forth below or as may otherwise be described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K and our Quarterly Report on Form 10-Q for the period ended March 29, 2020.
+Added: In addition to the information contained in this report, you should carefully consider the risk factors disclosed in our Form 10-K and our Quarterly Reports on Form 10-Q for the periods ended March 29, 2020 and June 28, 2020, which could materially affect our business, financial condition or future results.
+Added: Except as set forth below or as may otherwise be described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K and our Quarterly Reports on Form 10-Q for the periods ended March 29, 2020 and June 28, 2020.
The novel coronavirus (COVID-19) pandemic has disrupted and is expected to continue to disrupt our business, which has materially affected and could continue to materially affect our results of operations, financial condition and prospects for an extended period of time.
−Removed: In March 2020, the World Health Organization declared the novel coronavirus (COVID-19) a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread of COVID-19.
−Removed: These measures have adversely affected customers, workforces, economies and financial markets, and, along with decreased consumer spending, have led to an economic downturn in many of our markets.
−Removed: Governmental restrictions and public perceptions of the risks associated with COVID-19 have caused consumers to avoid or limit non-essential travel, gatherings in public places and other social interactions, which has adversely affected, and could continue to adversely affect, our business.
+Added: In March 2020, the World Health Organization declared the novel coronavirus (COVID-19) a global pandemic, and governmental authorities around the world implemented measures to reduce the spread of COVID-19.
+Added: These measures adversely affected customers, workforces, economies and financial markets, and, along with decreased consumer spending, led to an economic downturn in many of our markets.
+Added: Governmental restrictions and public perceptions of the risks associated with COVID-19 have caused consumers to avoid or limit travel, gatherings in public places and other social interactions, which has adversely affected, and could continue to adversely affect, our business.
In response to the COVID-19 pandemic, in March 2020, we updated our brand standard to include the closure of all dining rooms except where there were specific needs, or a drive-thru or pick-up window option was not available, subject to applicable federal, state and local requirements.
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During the second quarter of 2020, we began implementing our restaurant and dining room reopening process through a phased approach in accordance with federal, state and local requirements, with customer and team member safety as our top priority.
−Removed: Dining rooms have begun re-opening at each restaurant owner’s discretion, subject to applicable regulatory restrictions.
−Removed: As of August 2, 2020, over 70% of dining rooms were open across the Wendy’s system offering carryout and, in some cases, dine in services.
+Added: Dining rooms have been re-opening at each restaurant owner’s discretion, subject to applicable regulatory restrictions.
+Added: As of September 27, 2020, approximately 75% of dining rooms were open across the Wendy’s system offering carryout and, in some cases, dine in services.
The COVID-19 pandemic has also resulted in the temporary closure of certain restaurants across the Wendy’s system.
−Removed: As of August 2, 2020, approximately 98% of our global systemwide restaurants were operating.
−Removed: As a result of the COVID-19 pandemic, restaurant traffic and systemwide sales have been significantly negatively impacted.
−Removed: Even as mobility begins to increase, customers have been and may continue to be reluctant to return to in-restaurant dining, and consumer spending may be adversely impacted for an extended period of time as a result of decreased consumer confidence and the impact of lost wages due to increased unemployment.
+Added: As of September 27, 2020, approximately 99% of our global systemwide restaurants were operating.
+Added: As a result of the COVID-19 pandemic, our restaurant traffic and systemwide sales have been significantly negatively impacted.
+Added: Even as mobility continues to increase, customers have been and may continue to be reluctant to return to in-restaurant dining, and consumer spending may continue to be adversely impacted for an extended period of time as a result of decreased consumer confidence and the impact of lost wages due to increased unemployment.
+Added: During the third quarter and first nine months of 2020, global same-restaurant sales increased 6.1% and were flat, respectively, primarily driven by the positive impact of our new breakfast daypart in the U.S.
+Added: and higher average check, partially offset by a decline in customer counts.
The COVID-19 pandemic has also adversely affected new restaurant development and restaurant reimaging.
−Removed: Due to the uncertain and challenging economic and market conditions, we have delayed construction of certain new Company-operated restaurants and reimaging of existing Company-operated restaurants and have also delayed the 2020 new restaurant development and Image Activation requirements of our franchisees.
+Added: Due to the uncertain and challenging economic and market conditions, we delayed construction of certain new Company-operated restaurants and reimaging of existing Company-operated restaurants and also delayed the 2020 new restaurant development and Image Activation requirements of our franchisees.
These delays could affect our ability to drive future growth in our business.
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The impact of the COVID-19 pandemic has had, and could continue to have, an adverse effect on our franchisees’ operations and financial condition.
−Removed: Because a significant portion of restaurant operating costs are fixed or semi-fixed in nature, the loss of sales during a prolonged period of time negatively impacts operating margins and can result in restaurant operating losses.
−Removed: As previously announced, we have taken certain actions to support our franchisees, including extending payment terms for royalties, extending or abating payment terms for advertising fund contributions and offering to defer base rent payments on
−Removed: properties owned by the Company and leased to franchisees.
−Removed: These actions have adversely affected and are expected to continue to adversely affect our cash flows and financial condition in the upcoming quarters.
+Added: As previously announced, we took certain actions to support our franchisees, including extending payment terms for royalties, extending or abating payment terms for advertising fund contributions and offering to defer base rent payments on properties owned by the Company and leased to franchisees.
To the extent our franchisees experience financial distress, including as a result of the COVID-19 pandemic, it could negatively affect our results of operations, cash flows and financial condition through delayed or reduced payments of royalties, advertising fund contributions or rent.
In addition, in the event our franchisees institute insolvency or bankruptcy proceedings, we could be prevented from collecting or retaining certain payments or exercising certain rights under the related franchise, development or other agreements.
−Removed: On July 1, 2020, our largest franchisee, NPC Quality Burgers, Inc.
−Removed: filed for chapter 11 bankruptcy.
−Removed: As of the date of this report, all of NPC’s Wendy’s restaurants remain open, and NPC has remained current with their continuing obligations to us and the Wendy’s system, except for certain obligations that were not yet due as of the bankruptcy filing date and for which we expect to receive payment upon resolution of the bankruptcy proceedings.
−Removed: There can be no assurances that NPC’s bankruptcy will not have an adverse impact on our results of operation, cash flows or financial condition or on the performance of the Wendy’s system.
−Removed: The COVID-19 pandemic has led, and could continue to lead, to interruptions in the delivery of food or other supplies to Wendy’s restaurants arising from delays or restrictions on shipping or manufacturing, closures of supplier or distributor facilities or financial distress or insolvency of suppliers or distributors.
+Added: The COVID-19 pandemic led, and could again lead, to interruptions in the delivery of food or other supplies to Wendy’s restaurants arising from delays or restrictions on shipping or manufacturing, closures of supplier or distributor facilities or financial distress or insolvency of suppliers or distributors.
These delays or interruptions could impact the availability of certain food items at Wendy’s restaurants, including beef, chicken, pork and other core menu products.
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If a significant percentage of our or our franchisees’ workforce is unable to work, whether because of illness, quarantine, travel limitations or other governmental actions or restrictions, our operations and the operations of our franchisees may be negatively impacted, which could materially affect our results of operations and financial condition.
−Removed: As previously disclosed, we have taken several actions to help support our employees and protect the health and safety of our employees and customers, such as implementing a new emergency sick leave policy, providing temporary wage increases to restaurant employees in April and May and purchasing additional sanitation supplies and personal protective materials, which have contributed to increased operating costs.
+Added: As previously disclosed, we took several actions to help support our employees and protect the health and safety of our employees and customers, such as implementing a new emergency sick leave policy, providing temporary wage increases to restaurant employees in April and May 2020 and purchasing additional sanitation supplies and personal protective materials, which have contributed to increased operating costs.
The impacts from the COVID-19 pandemic could have a material adverse effect on our liquidity and capital resources.
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Because the COVID-19 pandemic is unprecedented and continuously evolving, the potential impacts to the risk factors that are further described in the Form 10-K remain uncertain.
+Added: There are risks associated with the bankruptcy of our largest franchisee, NPC Quality Burgers, Inc., including the contemplated sale of its Wendy’s restaurants.
+Added: On July 1, 2020, our largest franchisee, NPC Quality Burgers, Inc.
+Added: (“NPC”) filed for chapter 11 bankruptcy and commenced a process to sell all or substantially all of its assets, including its interests in approximately 393 Wendy’s restaurants across eight different markets, pursuant to a court-approved auction process.
+Added: As of the date of this report, all of NPC’s Wendy’s restaurants remain open, and NPC has remained current with its continuing obligations to us and the Wendy’s system, except for certain obligations that were not yet due and payable as of the bankruptcy filing date that we expect to be paid upon the closing of the contemplated sale.
+Added: We are actively participating in the chapter 11 proceedings and continue to evaluate our strategic alternatives in connection with the sale process.
+Added: This includes, among other things, asserting various consent rights under franchise-related agreements as well as the possibility of submitting a consortium bid together with a group of pre-qualified franchisees to acquire NPC’s Wendy’s restaurants.
+Added: No final decision has been made by the Company as to whether we will submit any such consortium bid, but if we were to do so, we expect that several existing and new franchisees would be the ultimate purchasers of most of the NPC markets, with the Company acquiring at most one or two markets.
+Added: We remain committed to maintaining our ownership level of approximately 5% of the total Wendy’s system.
+Added: There can be no assurances regarding the outcome of NPC’s chapter 11 proceedings, including whether the Company will submit a consortium bid to acquire NPC’s Wendy’s restaurants or whether the consortium bid or any other sale will be successful.
+Added: In addition, there can be no assurances that NPC’s bankruptcy, including the contemplated sale of its Wendy’s restaurants, will not have an adverse impact on our results of operations, cash flows or financial condition or on the performance of the Wendy’s system.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.