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Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2024-10-31 · 158 added, 229 removed, 227 unchanged (63% of the section changed)

2 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “Form 10-K”).

There have been no material changes as of September 29, 2024 to the application of our critical accounting policies as described in Item 7 of the Form 10-K.

There have been no material changes as of March 30, 2025 to the application of our critical accounting policies as described in Item 7 of the Form 10-K.

Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.

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and 34 foreign countries and U.S.

territories as of September 29, 2024.

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.

territories as of March 30, 2025.

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.

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The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31.

All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively.

All three-month periods presented herein contain 13 weeks.

All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Executive Overview

As of September 29, 2024, the Wendy’s restaurant system was comprised of 7,292 restaurants, with 6,011 Wendy’s restaurants in operation in the U.S.

As of March 30, 2025, the Wendy’s restaurant system was comprised of 7,308 restaurants, with 5,958 Wendy’s restaurants in operation in the U.S.

restaurants, 387 were operated by the Company and 5,571 were operated by a total of 205 franchisees.

In addition, at September 29, 2024, there were 1,281 Wendy’s restaurants in operation in 31 foreign countries and U.S.

In addition, at March 30, 2025, there were 1,350 Wendy’s restaurants in operation in 34 foreign countries and U.S.

Of the international restaurants, 1,337 were operated by a total of 110 franchisees and 13 were operated by the Company in the United Kingdom (the “U.K.”).

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(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 September 29, 2024.

Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of March 30, 2025.

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 long-term growth opportunities include delivering accelerated global growth through (1) driving same-restaurant sales momentum across all dayparts, (2) accelerating our consumer-facing digital platforms and technologies and (3) expanding the Company’s footprint across the globe.

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.

Our opportunities to execute on this framework for long-term profitable growth include (1) driving same-restaurant sales and share growth, (2) accelerating digital growth, (3) improving restaurant profitability and (4) driving global unit growth.

Key Business Measures

We track our results of operations and manage our business using the following key business measures, which includes a non-GAAP financial measure:

We track our results of operations and manage our business using the following key business measures:

• Same-Restaurant Sales – We report same-restaurant sales commencing after new restaurants have been open for 15 continuous months and as soon as reimaged restaurants reopen.

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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.

• Systemwide Sales – Systemwide sales includes sales by both Company-operated restaurants and franchised restaurants.

Franchised restaurants’ sales 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.

The Company’s royalty and advertising

funds revenues are computed as percentages of sales made by Wendy’s franchisees.

The Company’s royalty and advertising funds revenues are computed as percentages of

sales made by Wendy’s franchisees.

As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty and advertising funds revenues and profitability.

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With respect to same-restaurant sales and systemwide sales, the Company also believes that the data is useful in assessing consumer demand for the Company’s products and the overall success of the Wendy’s brand.

The non-GAAP financial measure discussed above does not replace the presentation of the Company’s financial results in accordance with GAAP.

Because all companies do not calculate non-GAAP financial measures in the same way, this measure as used by other companies may not be consistent with the way the Company calculates such measure.

Third Quarter Financial Highlights

• Revenue increased 2.9% to $566.7 million in the third quarter of 2024 compared with $550.6 million in the third quarter of 2023;

• Global same-restaurant sales increased 0.2%, U.S.

same-restaurant sales increased 0.2% and international same-restaurant sales increased 0.7% compared with the third quarter of 2023.

On a two-year basis, global same-restaurant sales increased 3.0%;

• Global Company-operated restaurant margin was 15.1% in the third quarter of 2024, an increase of 10 basis points compared with the third quarter of 2023;

• Net income decreased 13.5% to $50.2 million in the third quarter of 2024 compared with $58.0 million in the third quarter of 2023.

Year-to-Date Financial Highlights

• Revenue increased 1.9% to $1.67 billion in the first nine months of 2024 compared with $1.64 billion in the first nine months of 2023;

• Global same-restaurant sales increased 0.7%, U.S.

same-restaurant sales increased 0.5% and international same-restaurant sales increased 2.1% compared with the first nine months of 2023.

On a two-year basis, global same-restaurant sales increased 5.9%;

• Global Company-operated restaurant margin was 15.2% in the first nine months of 2024, an increase of 10 basis points compared with the first nine months of 2023;

• Net income decreased 6.8% to $146.9 million in the first nine months of 2024 compared with $157.5 million in the first nine months of 2023.

Global Same-Restaurant Sales

Wendy’s long-term growth opportunities include driving same-restaurant sales across all dayparts through quality differentiation, exciting menu innovation and compelling value offerings.

Global same-restaurant sales increased 0.2% in the third quarter of 2024 and increased 3.0% on a two-year basis.

Global same-restaurant sales increased 0.7% in the first nine months of 2024 and increased 5.9% on a two-year basis.

To drive same-restaurant sales across the breakfast daypart, the Company plans to fund approximately $22.0 million of incremental breakfast advertising in 2024.

Wendy’s long-term growth opportunities include accelerating consumer-facing digital platforms and technologies to drive global systemwide sales.

Over the past several years, the Company has invested significant resources to focus on consumer-facing 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.

First Quarter Financial Highlights

• Global systemwide sales decreased 1.1% to $3.39 billion in the first quarter of 2025 compared with $3.45 billion in the first quarter of 2024;

• Revenues decreased 2.1% to $523.5 million in the first quarter of 2025 compared with $534.8 million in the first quarter of 2024;

• Global same-restaurant sales decreased 2.1%, U.S.

same-restaurant sales decreased 2.8% and international same-restaurant sales increased 2.3% compared with the first quarter of 2024.

On a two-year basis, global same-restaurant sales decreased 1.2%;

• Global Company-operated restaurant margin was 14.3% in the first quarter of 2025, a decrease of 40 basis points compared with the first quarter of 2024;

• Income before income taxes decreased 4.4% to $54.9 million in the first quarter of 2025 compared with $57.5 million in the first quarter of 2024.

Wendy’s long-term growth opportunities include accelerating consumer-facing digital platforms and technologies.

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.

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 as a percent of global systemwide sales increased from approximately 12.8% during the first nine months of 2023 to approximately 17.1% during the first nine months of 2024.

The Company’s digital business has continued to grow and digital sales increased from approximately 16.8% of global systemwide sales during the first quarter of 2024 to approximately 20.3% during the first quarter of 2025.

New Restaurant Development

Wendy’s long-term growth opportunities include expanding the Company’s footprint across the globe.

To promote new restaurant development, the Company has provided franchisees with certain incentive programs for qualifying new restaurants, in addition to our build to suit development fund.

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 the development agreement.

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 the nine months ended September 29, 2024, Wendy’s added 52 net new restaurants across the system.

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”).

As a result of the Organizational Redesign Plan, the Company held its general and administrative expense in 2023 relatively flat compared with 2022.

Additionally, in January 2024, the Board of Directors announced the appointment of Kirk Tanner as the Company’s new President and Chief Executive Officer, effective February 5, 2024.

Tanner succeeded Todd A.

Penegor, the Company’s previous President and Chief Executive Officer, who departed from the Company in February 2024.

The Company expects to incur total costs of approximately $18 million related to the Organizational Redesign Plan, including costs related to the succession of the President and Chief Executive Officer role.

Of the total costs, approximately $15 million will be cash expenditures expected through 2026.

Costs related to the Organizational Redesign Plan are recorded to “Reorganization and realignment costs.” During the nine months ended September 29, 2024, the Company recognized costs totaling $8.3 million, which primarily included severance and related employee costs.

The Company expects to incur additional costs aggregating approximately $0.8 million, comprised primarily of share-based compensation.

The Company expects costs related to the Organizational Redesign Plan to continue into 2026.

To promote new restaurant development, the Company has provided franchisees with certain incentive programs for qualifying new and existing restaurants, in addition to our build to suit development fund.

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 the three months ended March 30, 2025, Wendy’s added 68 net new restaurants across the system.

Results of Operations

The tables included throughout this Results of Operations set forth in millions the Company’s condensed consolidated results of operations for the third quarter and the first nine months of 2024 and 2023.

Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The tables included throughout this Results of Operations section set forth in millions the Company’s condensed consolidated results of operations for the first quarter of 2025 and 2024.

First Quarter

2025 2024 Change

Sales $ 219.5 $ 225.3 $ (5.8)

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Amortization of cloud computing arrangements 4.2 3.5 0.7

System optimization gains, net (0.4) (0.1) (0.3) (0.6) (0.1) (0.5)

System optimization losses, net 0.1 0.1 —

Reorganization and realignment costs (0.7) 5.7 (6.4)

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Interest expense, net (31.5) (30.5) (1.0)

Loss on early extinguishment of debt — (0.3) 0.3 — (1.6) 1.6

Investment loss, net (1.7) — (1.7)

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Net income $ 39.2 $ 42.0 $ (2.8)

Third Quarter Nine Months

Total Revenues 2023 % of

Total Revenues 2024 % of

First Quarter

Total Revenues 2024 % of

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$ 523.5 100.0 % $ 534.8 100.0 %

Third Quarter Nine Months

Sales 2023 % of

Sales 2024 % of

First Quarter

Sales 2024 % of

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Total cost of sales $ 188.2 85.7 % $ 192.1 85.3 %

Third Quarter Nine Months

Sales 2023 % of

Sales 2024 % of

First Quarter

Sales 2024 % of

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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.

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

Key business measures:

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(a) Excludes Argentina due to the impact of that country’s highly inflationary economy.

(b) During the third quarter of 2024 and 2023, global systemwide sales increased 1.8% and 4.8%, respectively, U.S.

systemwide sales increased 0.9% and 3.6%, respectively, and international systemwide sales increased 7.7% and 13.6%, respectively, on a constant currency basis.

During the first nine months of 2024 and 2023, global systemwide sales increased 2.3% and 7.2% respectively, U.S.

systemwide sales increased 1.4% and 6.0%, respectively, and international systemwide sales increased 8.3% and 15.6%, respectively, on a constant currency basis.

Third Quarter

(b) During the first quarter of 2025 and 2024, global systemwide sales decreased 1.1% and increased 2.6%, respectively, U.S.

systemwide sales decreased 2.6% and increased 1.7%, respectively, and international systemwide sales increased 8.9% and 8.8%, respectively, on a constant currency basis.

First Quarter

Company-operated U.S.

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Restaurant count:

Restaurant count at June 30, 2024

399 5,614 12 1,236 7,261

Opened — 22 1 41 64

Closed — (24) — (9) (33)

Net (sold to) purchased by franchisees (1) 1 — — —

Restaurant count at September 29, 2024

398 5,613 13 1,268 7,292

Company-operated U.S.

Franchised International Company-operated International Franchised Systemwide

Restaurant count at December 29, 2024

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Net (sold to) purchased by franchisees (2) 2 — — —

Restaurant count at September 29, 2024

Restaurant count at March 30, 2025

387 5,571 13 1,337 7,308

Sales Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

Sales First Quarter

2025 2024 Change

Sales $ 219.5 $ 225.3 $ (5.8)

The decrease in sales during the third quarter and the first nine months of 2024 was primarily due to (1) a 1.6% and 1.3% decrease in global Company-operated same-restaurant sales of $4.1 million and $9.4 million, respectively, and (2) net closures of Company-operated restaurants of $0.3 million and $2.2 million, respectively.

Company-operated same-restaurant sales decreased due to a decrease in customer count, partially offset by higher average check.

Franchise Royalty Revenue and Fees Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The decrease in sales during the first quarter of 2025 was primarily due to (1) net closures of Company-operated restaurants of $3.9 million and (2) a 1.2% decrease in Company-operated same-restaurant sales of $2.0 million.

Company-operated same-restaurant sales decreased due to a decrease in traffic, partially offset by higher average check.

Franchise Royalty Revenue and Fees First Quarter

2025 2024 Change

Franchise royalty revenue $ 121.7 $ 125.7 $ (4.0)

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$ 145.1 $ 146.6 $ (1.5)

Franchise royalty revenue during the third quarter of 2024 increased $2.5 million, of which (1) $2.1 million was due to net new restaurant development and (2) $0.7 million was due to a 0.4% increase in global franchise same-restaurant sales.

Franchise royalty revenue during the first nine months of 2024 increased $10.3 million, of which (1) $6.1 million was due to net new restaurant development and (2) $3.9 million was due to a 0.8% increase in global franchise same-restaurant sales.

Franchise same-restaurant sales during the third quarter and first nine months of 2024 increased due to higher average check, partially offset by a decrease in customer count.

The increase in franchise fees during the third quarter and the first nine months of 2024 was primarily due to (1) higher fees for providing information technology services to franchisees of $0.5 million and $1.3 million, respectively, and (2) an increase in other miscellaneous franchise fees of $1.5 million and $2.4 million, respectively.

Franchise Rental Income Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

Franchise royalty revenue during the first quarter of 2025 decreased $4.0 million primarily due to a 2.2% decrease in global franchise same-restaurant sales.

Franchise same-restaurant sales during the first quarter of 2025 decreased due to a decrease in traffic, partially offset by higher average check.

The increase in franchise fees during the first quarter of 2025 was primarily due to higher fees for providing information technology services to franchisees.

Franchise Rental Income First Quarter

2025 2024 Change

Franchise rental income $ 58.5 $ 58.0 $ 0.5

The increase in franchise rental income during the third quarter and the first nine months of 2024 was primarily due to (1) the impact of amending certain existing leases of $1.3 million and $2.8 million, respectively, (2) the impact of entering into new leases of $0.6 million and $1.6 million, respectively, and (3) an increase in executory costs of $0.3 million and $0.7 million, respectively.

See Note 11 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information.

Advertising Funds Revenue Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The increase in franchise rental income during the first quarter of 2025 was primarily due to the impact of amending certain existing leases of $1.1 million, partially offset by the impact of terminating certain existing leases of $0.3 million.

Advertising Funds Revenue First Quarter

2025 2024 Change

Advertising funds revenue $ 100.4 $ 104.9 $ (4.5)

The increase in advertising funds revenue during the third quarter of 2024 was primarily due to promotional activity of $12.0 million.

During the first nine months of 2024, advertising funds revenue also increased due to (1) net new restaurant development of $4.5 million and (2) an increase in franchise same-restaurant sales in the U.S.

and Canada of $2.3 million.

Cost of Sales, as a Percent of Sales Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The decrease in advertising funds revenue during the first quarter of 2025 was primarily due to (1) a net decrease in franchise same-restaurant sales in the U.S.

and Canada of $2.6 million and (2) net closures of U.S.

restaurants of $1.1 million.

Cost of Sales, as a Percent of Sales First Quarter

2025 2024 Change

Food and paper 30.8 % 30.7 % 0.1 %

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85.7 % 85.3 % 0.4 %

The decrease in cost of sales, as a percent of sales, during the third quarter and the first nine months of 2024 was primarily due to (1) higher average check and (2) labor efficiencies.

These impacts were partially offset by (1) an increase in restaurant labor rates and (2) a decrease in customer count.

Franchise Support and Other Costs Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The increase in cost of sales, as a percent of sales, during the first quarter of 2025 was primarily due to (1) higher commodity costs, (2) a decrease in traffic and (3) an increase in restaurant labor rates.

These impacts were partially offset by (1) higher average check and (2) labor efficiencies.

Franchise Support and Other Costs First Quarter

2025 2024 Change

Franchise support and other costs $ 16.6 $ 14.7 $ 1.9

The increase in franchise support and other costs during the third quarter and the first nine months of 2024 was primarily due to an increase in costs incurred to provide information technology and other services to franchisees.

Franchise Rental Expense Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The increase in franchise support and other costs during the first quarter of 2025 was primarily due to (1) an increase in costs associated with the Company’s build to suit development fund and (2) an increase in other miscellaneous costs for providing services to franchisees.

Franchise Rental Expense First Quarter

2025 2024 Change

Franchise rental expense $ 30.7 $ 31.8 $ (1.1)

The increase in franchise rental expense during the first nine months of 2024 was primarily due to an increase in executory costs.

See Note 11 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information.

Advertising Funds Expense Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The decrease in franchise rental expense during the first quarter of 2025 was primarily due to the impact of terminating certain existing leases.

Advertising Funds Expense First Quarter

2025 2024 Change

Advertising funds expense $ 101.5 $ 107.4 $ (5.9)

On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue.

The Company expects advertising funds expense to be higher than advertising funds revenue by approximately $22.0 million for 2024, which represents the Company’s plan to fund incremental breakfast advertising.

The increase in advertising funds expense during the third quarter and the first nine months of 2024 was primarily due to (1) the same factors as described above for “Advertising Funds Revenue” and (2) the recognition of the expected Company breakfast advertising spend in excess of advertising funds revenue of $6.6 million and $14.8 million, respectively.

General and Administrative Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The decrease in advertising funds expense during the first quarter of 2025 was primarily due to (1) the same factors as described above for “Advertising Funds Revenue” and (2) a decrease in the recognition of the Company breakfast advertising spend in excess of advertising funds revenue when compared to the prior year.

General and Administrative First Quarter

2025 2024 Change

Employee compensation and benefits $ 38.5 $ 34.6 $ 3.9

Share-based compensation 6.7 6.4 0.3 17.8 15.7 2.1

Incentive compensation 2.5 5.4 (2.9) 15.0 20.4 (5.4)

Professional fees 14.9 13.2 1.7 42.2 42.8 (0.6)

Other, net 29.7 29.2 0.5

$ 68.2 $ 63.8 $ 4.4

The increase in general and administrative expenses during the third quarter of 2024 was primarily due to (1) higher employee compensation and benefits and (2) an increase in professional fees.

These increases were partially offset by a decrease in incentive compensation accruals, reflecting lower operating performance as compared to plan in 2024 versus 2023.

The increase in general and administrative expenses during the first nine months of 2024 was primarily due to (1) higher employee compensation and benefits and (2) higher share-based compensation.

These increases were partially offset by a decrease in incentive compensation accruals, reflecting lower operating performance as compared to plan in 2024 versus 2023.

Depreciation and Amortization (exclusive of amortization of cloud computing arrangements shown separately below) Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The increase in general and administrative expenses during the first quarter of 2025 was primarily due to higher employee compensation and benefits.

Depreciation and Amortization (exclusive of amortization of cloud computing arrangements shown separately below) First Quarter

2025 2024 Change

Restaurants $ 22.8 $ 22.5 $ 0.3

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$ 36.5 $ 35.5 $ 1.0

The increase in depreciation and amortization during the third quarter and the first nine months of 2024 was primarily due to (1) asset additions for new and remodeled restaurants and (2) depreciation and amortization for technology investments.

Amortization of Cloud Computing Arrangements Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The increase in depreciation and amortization during the first quarter of 2025 was primarily due to depreciation and amortization for technology investments.

Amortization of Cloud Computing Arrangements First Quarter

2025 2024 Change

Amortization of cloud computing arrangements $ 4.2 $ 3.5 $ 0.7

The increase in amortization of cloud computing arrangements during the first nine months of 2024 was primarily due to amortization of assets associated with the Company’s human capital management (“HCM”) system implementation completed in the third quarter of 2023.

System Optimization Gains, Net Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

System optimization gains, net $ (0.4) $ (0.1) $ (0.3) $ (0.6) $ (0.1) $ (0.5)

System optimization gains, net for the third quarter and the first nine months of 2024 were primarily comprised of post-closing adjustments on sales of restaurants.

The increase in amortization of cloud computing arrangements during the first quarter of 2025 was primarily due to amortization of assets associated with the Company’s digital investments.

System Optimization Losses, Net First Quarter

2025 2024 Change

System optimization losses, net $ 0.1 $ 0.1 $ —

System optimization losses, net for the first quarter of 2025 were primarily comprised of losses on the sale of restaurants.

System optimization losses, net for the first quarter of 2024 were comprised of losses on the sale of surplus and other properties.

See Note 10 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information.

Reorganization and Realignment Costs Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

Organizational redesign $ 0.3 $ 0.6 $ (0.3) $ 8.3 $ 8.0 $ 0.3

Reorganization and Realignment Costs First Quarter

2025 2024 Change

Organizational Redesign Plan $ (1.0) $ 5.6 $ (6.6)

Other reorganization and realignment plans 0.3 0.1 0.2

$ (0.7) $ 5.7 $ (6.4)

During the first nine months of 2024 and 2023, the Company recognized costs under the Organizational Redesign Plan of $8.3 million and $8.0 million, respectively, which primarily included severance and related employee costs.

During the first quarter of 2025, the Company recognized costs under the Organizational Redesign Plan of ($1.0) million, which primarily included a reversal of a severance accrual as a result of a change in estimate.

During the first quarter of 2024, the Company recognized costs under the Organizational Redesign Plan of $5.6 million, which primarily included severance and related employee costs.

See Note 11 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the Organizational Redesign Plan.

Costs incurred under the Company’s other reorganization and realignment plans were not material during the three and nine months ended September 29, 2024 and October 1, 2023.

The Company does not expect to incur any material additional costs under these plans.

Impairment of Long-Lived Assets Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

Impairment of Long-Lived Assets First Quarter

2025 2024 Change

Impairment of long-lived assets $ 1.4 $ 2.0 $ (0.6)

The increase in impairment of long-lived assets during the first nine months of 2024 was primarily due to higher impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants.

Other Operating Income, Net Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

Lease buyout $ 1.7 $ (0.2) $ 1.9 $ 2.2 $ (0.2) $ 2.4

Equity in earnings in joint venture, net 3.1 3.0 0.1 8.6 8.0 0.6

The decrease in impairment of long-lived assets during the first quarter of 2025 was primarily due to lower impairment charges resulting from the deterioration in operating performance of certain Company-operated restaurants.

Other Operating Income, Net First Quarter

2025 2024 Change

Claim settlement $ 4.0 $ — $ 4.0

Other, net 2.3 3.0 (0.7)

$ 6.3 $ 3.0 $ 3.3

The increase in other operating income during the third quarter and the first nine months of 2024 was primarily due to an increase in lease buyout activity.

Interest Expense, Net Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The increase in other operating income, net during the first quarter of 2025 was primarily due to the settlement of a claim.

Interest Expense, Net First Quarter

2025 2024 Change

Interest expense, net $ 31.5 $ 30.5 $ 1.0

The decrease in interest expense, net during the first nine months of 2024 was primarily due to lower outstanding long-term debt.

Loss on Early Extinguishment of Debt Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

Loss on early extinguishment of debt $ — $ 0.3 $ (0.3) $ — $ 1.6 $ (1.6)

During the first nine months of 2023, the Company incurred a loss on early extinguishment of debt of $1.6 million related to the repurchase of $39.3 million in principal of the Company’s 7% debentures.

Investment Loss, Net Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The increase in interest expense, net during the first quarter of 2025 was primarily due to lower interest income as a result of amending certain sales-type and direct financing leases.

Investment Loss, Net First Quarter

2025 2024 Change

Investment loss, net $ 1.7 $ — $ 1.7

During the first nine months of 2023, the Company recorded a loss of $10.4 million due to impairment charges for the difference between the estimated fair value and the carrying value of an investment in equity securities.

Other Income, Net Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

During the first quarter of 2025, the Company recorded a loss of $1.7 million due to impairment charges for the difference between the estimated fair value and the carrying value of an investment in equity securities.

Other Income, Net First Quarter

2025 2024 Change

Other income, net $ 5.0 $ 6.8 $ (1.8)

The decrease in other income, net during the third quarter and the first nine months of 2024 was primarily due to a decrease in interest income, reflecting lower balances of cash equivalents.

Provision for Income Taxes Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

The decrease in other income, net during the first quarter of 2025 was primarily due to a decrease in interest income, reflecting lower balances of cash equivalents.

Provision for Income Taxes First Quarter

2025 2024 Change

Income before income taxes $ 54.9 $ 57.5 $ (2.6)

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28.6 % 26.9 % 1.7 %

The effective tax rates for the third quarter and the first nine months of 2024 and 2023 were impacted by variations in income before income taxes, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items.

The increase in the effective tax rate for the third quarter of 2024 was primarily due to (1) an increase in the tax effects of our foreign operations, (2) a decrease in the benefit from share-based compensation and (3) an increase in state income taxes, including discrete changes to state deferred income taxes.

The increase in the effective tax rate for the first nine months of 2024 was primarily due to (1) an increase in the tax effects of our foreign operations and (2) a decrease in the benefit from share-based compensation.

These changes were partially offset by a one-time adjustment to our foreign deferred income taxes related to prior periods.

Numerous countries have enacted the Organization of Economic Corporation and Development’s framework on a global minimum tax (referred to as “Pillar 2”), with the earliest effective date for taxable years beginning after December 31, 2023.

While the Company does not expect this enactment will have a material impact on the condensed consolidated financial statements, we will continue to evaluate and monitor as additional guidance and clarification becomes available.

The effective tax rates for the first quarter of 2025 and 2024 were impacted by variations in income before income taxes, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items.

The increase in the effective tax rate for the first quarter of 2025 compared with the first quarter of 2024 was primarily due to (1) a one-time adjustment to our deferred income taxes related to prior periods, (2) an increase in the tax effects of our foreign operations and (3) an increase in state income taxes.

Segment Information

See Note 17 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s segments.

Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

First Quarter

2025 2024 Change

Sales $ 212.7 $ 219.5 $ (6.8)

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Segment profit $ 121.0 $ 125.8 $ (4.8)

The increase in Wendy’s U.S.

revenues during the third quarter and the first nine months of 2024 was primarily due to (1) higher advertising fund revenue and (2) net new franchise restaurant development.

During the first nine months of 2024, revenues also increased due to higher franchise same-restaurant sales.

Franchise same-restaurant sales increased during the first nine months of 2024 primarily due to higher average check, partially offset by a decrease in customer count.

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 the third quarter and the first nine months of 2024 was primarily due to (1) an increase in the Company’s funding of incremental advertising and (2) a decrease in Company-operated sales.

During the first nine months of 2024, segment profit also decreased due to higher franchise support and other costs.

These changes were partially offset by an increase in franchise royalty revenue and fees.

revenues during the first quarter of 2025 was primarily due to (1) a decrease in same-restaurant sales and (2) net closures of restaurants.

Same-restaurant sales decreased during the first quarter of 2025 primarily due to a decrease in traffic, partially offset by higher average check.

The decrease in Wendy’s U.S.

segment profit during the first quarter of 2025 was primarily due to (1) higher general and administrative expense and (2) lower revenues.

Wendy’s International

Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

First Quarter

2025 2024 Change

Sales $ 6.8 $ 5.9 $ 0.9

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Segment profit $ 9.4 $ 10.7 $ (1.3)

The increase in Wendy’s International revenues during the third quarter and the first nine months of 2024 was primarily due to (1) net new restaurant development and (2) an increase in franchise same-restaurant sales.

Franchise same-restaurant sales increased during the third quarter and the first nine months of 2024 due to higher average check, partially offset by a decrease in customer count.

The increase in Wendy’s International segment profit during the third quarter and the first nine months of 2024 was primarily due to higher revenues.

This increase was partially offset by higher advertising fund expenses.

The increase in Wendy’s International revenues during the first quarter of 2025 was primarily due to net new restaurant development.

The decrease in Wendy’s International segment profit during the first quarter of 2025 was primarily due to higher advertising fund expenses.

Global Real Estate & Development

Third Quarter Nine Months

2024 2023 Change 2024 2023 Change

First Quarter

2025 2024 Change

Franchise fees $ 0.6 $ 1.1 $ (0.5)

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Segment profit $ 24.7 $ 24.1 $ 0.6

The increase in Global Real Estate & Development revenues during the third quarter and the first nine months of 2024 was primarily due to higher franchise rental income as a result of (1) amending certain existing leases, (2) entering into new leases and (3) an increase executory costs.

The increase in Global Real Estate & Development segment profit during the third quarter and the first nine months of 2024 was primarily due to (1) higher revenues and (2) an increase in lease buyout activity.

These increases were partially offset by higher franchise rental expense driven by the same factors as described above for “Franchise Rental Expense.”

Global Real Estate & Development revenues during the first quarter of 2025 were flat compared with the first quarter of 2024, primarily due to higher franchise rental income driven by the same factors as described above for “Franchise Rental Income,” offset by a decrease in franchise fee revenue driven by lower development-related fees.

The increase in Global Real Estate & Development segment profit during the first quarter of 2025 was primarily due to lower franchise rental expense driven by the same factors as described above for “Franchise Rental Expense.”

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 and dividends to stockholders.

Our anticipated cash requirements for the remainder of 2024, exclusive of operating cash flow requirements, consist principally of:

• capital expenditures of approximately $38.0 million to $48.0 million, resulting in total anticipated cash capital expenditures for the year of approximately $90.0 million to $100.0 million;

• cash dividends aggregating approximately $51.0 million as discussed below in “Dividends;” and

• stock repurchases under the Company’s January 2023 Authorization as discussed below in “Stock Repurchases.”

As of March 30, 2025, cash, cash equivalents and restricted cash totaled $389.0 million.

In addition, the Company maintains a revolving financing facility, which allows for the drawing of up to $300.0 million.

Based on current levels of operations, the Company expects that available cash and cash flows from operations will provide sufficient liquidity to meet operating cash requirements for the next 12 months.

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However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.

The table below summarizes our cash flows from operating, investing and financing activities for the first nine months of 2024 and 2023:

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”).

During the three months ended March 30, 2025, the Company repurchased 8.2 million shares under the January 2023 Authorization with an aggregate purchase price of $124.1 million, of which $1.4 million was accrued as of March 30, 2025, and excluding excise tax of $1.2 million and commissions of $0.1 million.

As of March 30, 2025, the Company had $110.9 million of availability remaining under the January 2023 Authorization.

Subsequent to March 30, 2025 through April 25, 2025, the Company repurchased 3.8 million shares under the January 2023 Authorization with an aggregate purchase price of $50.9 million, excluding applicable excise tax and commissions.

On March 17, 2025, the Company paid a quarterly cash dividend per share of $.25, aggregating $49.4 million.

On May 2, 2025, the Company announced a dividend of $.14 per share to be paid on June 16, 2025 to stockholders of record as of June 2, 2025.

If the Company pays regular quarterly cash dividends for the remainder of 2025 at the same rate as declared in the second quarter of 2025, the Company’s total cash requirement for dividends for the remainder of 2025 would be approximately $80.7 million based on the number of shares of its common stock outstanding at April 25, 2025.

The Company currently intends to continue to declare and pay quarterly cash dividends;

however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.

Long-Term Debt, Including Current Portion

advertising fund has a revolving line of credit of $15.0 million, which was established to support the Company’s advertising fund operations.

During the three months ended March 30, 2025, the Company drew down $15.0 million under the revolving line of credit, of which the Company repaid $8.5 million in March 2025.

As a result, as of March 30, 2025, the Company had outstanding borrowings of $6.5 million under the revolving line of credit.

Except as described above, there were no material changes to the Company’s debt obligations since December 29, 2024.

The Company was in compliance with its debt covenants as of March 30, 2025.

See Note 5 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

Cash Flows from Operating, Investing and Financing Activities

The table below summarizes our cash flows from operating, investing and financing activities for the first three months of 2025 and 2024:

First Quarter

2025 2024 Change

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Effect of exchange rate changes on cash 0.8 (2.3) 3.1

Net decrease in cash, cash equivalents and restricted cash $ (34.3) $ (158.9) $ 124.6

Net (decrease) increase in cash, cash equivalents and restricted cash $ (114.6) $ 4.3 $ (118.9)

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 provided by operating activities was $286.7 million and $269.5 million in the first nine months of 2024 and 2023, respectively.

The change was primarily due to (1) a decrease in cash paid for cloud computing arrangements and (2) the timing of payments for marketing expenses of the national advertising funds.

These changes were partially offset by lower net income, adjusted for non-cash expenses.

Cash provided by operating activities was $85.4 million and $100.0 million in the first three months of 2025 and 2024, respectively.

The change was primarily due to the timing of payments for marketing expenses of the national advertising funds.

Investing Activities

Cash used in investing activities was $68.8 million and $55.5 million in the first nine months of 2024 and 2023, respectively.

The change was primarily due to an increase in expenditures associated with the Company’s franchise development fund of $19.1 million, partially offset by (1) a decrease in capital expenditures of $3.3 million and (2) an increase in proceeds from dispositions of $2.9 million.

Cash used in investing activities was $21.5 million and $20.8 million in the first three months of 2025 and 2024, respectively.

The change was primarily due to an increase in expenditures associated with the Company’s franchise development fund of $1.1 million.

Financing Activities

Cash used in financing activities was $250.6 million and $373.2 million in the first nine months of 2024 and 2023, respectively.

The change was primarily due to (1) a decrease in repurchases of the Company’s common stock of $82.4 million and (2) a decrease in repayments of long-term debt of $39.3 million, reflecting the impact of repurchases of the Company’s 7% debentures during the first nine months of 2023.

Long-Term Debt, Including Current Portion

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.

No debt repurchases were made during the nine months ended September 29, 2024.

Future repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Whether or not to repurchase any debt and the size and timing of any such repurchases will be determined at our discretion.

There were no material changes to the Company’s debt obligations since December 31, 2023.

The Company was in compliance with its debt covenants as of September 29, 2024.

On March 15, 2024, June 17, 2024, and September 17, 2024, the Company paid quarterly cash dividends per share of $.25, aggregating $153.4 million.

On October 31, 2024, the Company announced a dividend of $.25 per share to be paid on December 16, 2024 to stockholders of record as of December 2, 2024.

As a result, the Company expects that its total cash requirement for the fourth quarter of 2024 will be approximately $51.0 million based on the number of shares of its common stock outstanding at October 24, 2024.

The Company currently intends to continue to declare and pay quarterly cash dividends;

however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.

Stock Repurchases

During the nine months ended September 29, 2024, the Company repurchased 3.4 million shares under the January 2023 Authorization with an aggregate purchase price of $59.6 million, of which $0.2 million was accrued as of September 29, 2024, and excluding excise tax and commissions.

As of September 29, 2024, the Company had $250.4 million of availability remaining under the January 2023 Authorization.

Subsequent to September 29, 2024 through October 24, 2024, the Company repurchased 0.2 million shares under the January 2023 Authorization with an aggregate purchase price of $2.7 million, excluding applicable excise tax and commissions.

Cash used in financing activities was $179.3 million and $72.6 million in the first three months of 2025 and 2024, respectively.

The change was primarily due to an increase in repurchases of the Company’s common stock of $115.5 million, partially offset by a net increase in cash provided by long-term debt activities of $6.5 million, reflecting the impact of the draw on the Company’s U.S.

advertising fund revolving line of credit.

General Inflation, Commodities and Changing Prices

Inflationary pressures on labor directly impacted our consolidated results of operations during the nine months ended September 29, 2024, and we expect this to continue throughout the remainder of 2024.

We attempt to manage any inflationary costs and commodity price increases through selective menu price increases and product mix.

Inflationary pressures on labor directly impacted our consolidated results of operations during the three months ended March 30, 2025, and we anticipate continued labor inflation throughout the remainder of 2025.

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.

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.

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.

The extent of any impact will depend on our ability to manage such volatility through product mix and selective menu price increases.

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Quantitative and Qualitative Disclosures about Market Risk.

As of September 29, 2024 there were no material changes from the information contained in the Company’s Form 10-K for the fiscal year ended December 31, 2023.

As of March 30, 2025 there were no material changes from the information contained in the Company’s Form 10-K for the fiscal year ended December 29, 2024.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis