Q3 2023 The Wendy's Co Earnings Call
Yeah.
Good morning, welcome to the Wendy's Company earnings results Conference call all lines have been placed on mute to prevent any background noise.
Speaker 1: Good morning. Welcome to the Wendy's company earnings results conference.
Speaker 1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone key.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star followed by the number too.
Speaker 1: Kelsey Fried, Director of Investor Relations. You may begin your-
Kelsey freed director of Investor Relations you May begin your conference.
Speaker 2: Thank you and good morning everyone. Today's conference call and webcast includes a PowerPoint presentation.
Thank you and good morning, everyone. Today's conference call and webcast includes a powerpoint presentation, which is available on our Investor Relations website, IR Wendy's Dot com.
Speaker 2: on our investor relations website IRWendys.com
Speaker 2: Before we begin, please take note of the Safe Harbor statement that appears at the end of our...
Before we begin please take note of the Safe Harbor statement that appears at the end of our earnings release. This disclosure reminds investors that certain information. We may discuss today is forward looking various factors could affect our results and cause those results to differ materially from the projections set forth in our forward looking statements also some of today's comments will reference non-GAAP financial measures.
Speaker 2: disclosure reminds investors that certain information we may discuss today is...
Speaker 2: Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also, some of today's comments may be
Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in our earnings release on our conference call today are President and Chief Executive Officer, Todd <unk> will give a business update and our Chief Financial Officer counter Plush will review, our 2023 third quarter.
Speaker 2: Investors should refer to our reconciliations of non-GAT financial measures to the most directly comparable GAT measure at the end of this presentation or in earnest.
Speaker 2: On our conference call today, our president and chief executive officer Todd Panagore will give a business update and our chief financial officer, Gunter Plush, will review our 2023 third quarter result and provide an update on our outlook for the year. From there, we will open up the line for questions. With that, I will hand things over to Todd. Thanks, Kelsey, and good morning, everybody.
Our results and provide an update on our outlook for the year from there we will open up the line for questions with that I will hand things over to Todd. Thanks, Kelcey and good morning, everyone. We continued to make meaningful progress across our strategic growth pillars. During the third quarter, which drove continued sales and profit growth.
Speaker 3: We continue to make meaningful progress across our strategic growth pillars during the third quarter, which drove continued sales and profit.
Speaker 3: Our global same restaurant sales grew 2.8% on a one-year basis, and our two-year result of 9.7% represents an acceleration of almost 100%
Our global same restaurant sales grew two 8% on a one year basis and our two year result of nine 7% represents an acceleration of almost 100 basis points versus the second quarter.
Speaker 3: Our international business delivered same restaurant sales growth of 7.8% and achieved an incredible 10th consecutive quarter of double digit same restaurant sales growth on a two year basis.
Our international business delivered same restaurant sales growth of seven 8% and achieved an incredible 10th consecutive quarter of double digit same restaurant sales growth on a two year basis, reaching 18, 6%.
Speaker 3: We continue to see strong results across our key international growth markets with many achieving double digit one year same restaurant sales growth.
We continued to see strong results across our key international growth markets with many achieving double digit one year same restaurant sales growth during the quarter.
Speaker 3: The ongoing success of our international segment is driven by strong execution and momentum across our globe.
The ongoing success of our international segment is driven by strong execution and momentum across our global growth pillars.
Speaker 3: Our U.S. business achieved same-restrawn sales growth of 2.2%, and a two-year result of 8.5%, which represents an acceleration versus...
Our U S business achieved same restaurant sales growth of two 2% and a two year result of eight 5%, which represents an acceleration versus the second quarter.
Speaker 3: During the quarter we benefited from our strategic pricing actions partially offset by an expected decline. In year over your customer counts and a slight decline.
During the quarter, we benefited from our strategic pricing actions, partially offset by an expected decline in year over year customer counts and a slight decline in mix. However.
Speaker 3: However, beginning in mid-August, we drove year over your customer count growth through quarter-
However, beginning in mid August we drove year over year customer count growth through quarter end.
Speaker 3: Our digital business accelerated in the third quarter. With global digital sales mix reaching 13%, and total digital sales growing 30%, year over year as our loyalty program continued to gain.
Our digital business accelerated in the third quarter with global digital sales mix, reaching 13% and total digital sales growing 30% year over year.
Our loyalty program continued to gain momentum. These successes supported yet another quarter of profit expansion, resulting in an 80 basis point year over year increase in U S Company operated restaurant margin to 15, 6% as sales growth drove P&L leverage and commodity inflation eased further.
Speaker 3: These successes supported yet another quarter of profit expansion, resulting in an 80 basis point year-over-year increase in U.S. company operated restaurant margin to 15.6%. As sales...
Speaker 3: We also continue to make progress against their development goal, opening 72 new restaurants across the globe, totaling 152 openings year to date through the third quarter.
We also continue to make progress against our development goal opening 72, new restaurants across the globe totaling 152 openings year to date through the third quarter.
Speaker 3: We continue to expect to reach our 2023 development target as we now have 100% of our current year pipeline open or under construction.
We continue to expect to reach our 2023 development targets as we now have 100% of our current year pipeline open or under construction.
Speaker 3: Access we've driven over the years supports our best in class franchise eSatisfaction and alignment. Looking forward, we remain relentlessly focused on delivering meaningful global growth, supported by compelling restaurant economic model improvement and acceleration across our strategic pillars. Our focus...
The success, we've driven over the year supports our best in class franchisee satisfaction in alignment looking forward, we remain relentlessly focused on delivering meaningful global growth supported by compelling restaurant economic model improvement and acceleration across our strategic pillars.
Our focused approach to driving same restaurant sales momentum.
Speaker 3: and two-year same-restron fails growth, and supported our strong performance in the context of the QSR Burger category, within which...
We delivered an acceleration in two year same restaurant sales growth and supported our strong performance in the context of the <unk> Burger category within which we maintained our dollar and traffic share category.
Speaker 3: Category traffic was challenged throughout the quarter, and this impacted our early results. But following the mid-August launch of several successful innovations and promotions, we deviated from the cast
Traffic was challenged throughout the quarter and this impacted our early results, but following the mid August launch of several successful innovations and promotions, we deviated from the category trend and achieved positive customer counts in the latter half of the quarter. This led to an acceleration in one and two year same restaurant sales growth each month of Q3.
Speaker 3: led to an acceleration in one and two year same restaurants sales growth each month of Q3.
Now, let's turn to some of our specific sales drivers, we continue to make meaningful progress in our pursuit of operational excellence and posted another quarter of year over year improvements in customer satisfaction and speed of service.
Speaker 3: continue to make meaningful progress in our pursuit of operational excellence and posted another quarter of year over year.
Speaker 3: I am very proud that our efforts in this area have been recognized in the latest QSR magazine drives...
I'm very proud that our efforts in this area have been recognized in the latest <unk> magazine drive through report, where Wendy's ranked in the top five brands across service time order accuracy and satisfaction.
Speaker 3: where Wendy's ranked in the top five brands across service time, order accuracy and satisfaction.
Speaker 3: We once again leaned into our ownable platforms, new products and partnerships during the third
We once again leaned into our <unk> platforms, new products and partnerships during the third quarter. The launch of our loaded Nacho cheese Burger and Fries continued innovation on the frosty line with Strawberry and Pumpkin Spice flavors are bogle for one dollar promotion and our ongoing partnership with college football all supported our progress looking.
Speaker 3: The launch of our loaded nacho cheeseburger and fries. Continued innovation on the frosty line with strawberry and pumpkin spice flavors. Our ba-
Speaker 3: and our ongoing partnership with college football all supported our proud.
Speaker 3: Looking ahead to the rest of the year, you can expect more cravable innovation alongside value that supports the restaurant economic model as we run our high low.
Looking ahead to the rest of the year you can expect more craveable innovation alongside value that supports the restaurant economic model as we run our high low strategy.
Speaker 3: At the breakfast day part, we continue to execute against our playbook of driving sales through innovation.
At the breakfast day part, we continue to execute against our playbook of driving sales through innovation and promotions. We once again expanded our menu with the launch of our new frosty cream cold Brew and English Muffin sandwiches. We also launched a new value offering are two for three biggie bundles, which drove a meaningful sequential sales increase following its introduction.
Speaker 3: again expanded our menu with the launch of our new frosty cream cold brew and English muffin.
Speaker 3: We also launched a new value offering, our two-for-three biggie bundles, which drove a meaningful sequential sales increase following its introduction and contributed to an acceleration in breakfast sales in the back half of the quarter. We know that value remains very important.
Duction and contributed to an acceleration in breakfast sales in the back half of the quarter.
We know that value remains very important to the breakfast consumer and we plan to more consistently offered compelling value promotions to drive trial and repeat at this highly profitable day part through year end and beyond.
Speaker 3: plan to more consistently offer compelling value promotions to drive trial and repeat at this highly profitable day part through year
Speaker 3: Finally, our late-night efforts accelerated versus the second quarter and drove a mid-teens year-over-year sale.
Finally, our late night efforts accelerated versus the second quarter and drove a mid teens year over year sales increase for the day part.
Speaker 3: Our sales performance at late night has far surpassed our pre-pandemic average and we expect to continue benefiting from outsized growth at this date.
Our sales performance at late night has far surpassed our pre pandemic average and we expect to continue benefiting from outsized growth at this day part through the end of 2023.
Speaker 3: We continue to expect mid-single-digit global same-restaurant sales growth for full year 2020.
We continue to expect mid single digit global same restaurant sales growth for full year 2023, and now expect our fourth quarter same restaurant sales will land in the low single digit range. We are confident in our ability to breakthrough with consumers and are committed to driving profitable sales growth.
Speaker 3: and now expect our fourth-quarter same restaurant sales will land in the low single-digit range. We are confident in our ability to break through with consumers and are committed
Our digital business accelerated in the third quarter with global sales mix, reaching 13% and total sales growing 30% year over year.
Speaker 3: global sales mix reaching 13% and total sales growing 30% year-over-year. Internationally, we continue to see strong adoption of digital channels, leading to a sales mix
Internationally, we continue to see strong adoption of digital channels, leading to a sales mix of over 18%.
We continued to significantly grow our Canadian digital business and we now hold the number two position in digital traffic share across the <unk> Burger segment in that market.
Speaker 3: We now hold the number two position in digital traffic share across the QSR burger segment.
Speaker 3: We also achieved another quarter of outstanding digital mix in the UK.
We also achieved another quarter of outstanding digital mix in the U K now reaching over 90% are.
Speaker 3: Our U.S. digital sales mix grew to over 12% with growth versus the prior quarter driven by a meaningful uptick in our
Our U S digital sales mix grew to over 12% with growth versus the prior quarter driven by a meaningful uptick in our loyalty program.
Speaker 3: Total U.S. loyalty members reached over 35 million, and monthly active users grew almost 40% quarter over quarter.
Total U S loyalty members reached over $35 million in monthly active users grew almost 40% quarter over quarter to over $5 million as we exited the third quarter.
Speaker 3: This growth was driven by offers that are truly resonating with our customers, like our OneCentJVC promotion celebrating National Cheeseburger Day.
This growth was driven by offers that are truly resonating with our customers like our one cent JBC promotion celebrating national cheeseburger, Dave and allowing for in store offer redemptions, which has expanded our loyalty reach we.
Speaker 3: We will continue to lean into impactful offers to drive further loyalty program growth.
We will continue to lean into impactful offers to drive further loyalty program growth moving forward.
Speaker 3: On a year-over-year basis, our almost 30% U.S. digital sales growth was driven by strength across all digital markets.
On a year over year basis are almost 30% U S. Digital sales growth was driven by strength across all digital channels, including delivery.
Speaker 3: Our strong partnerships with third-party delivery providers continue to benefit us as we activated compelling ads and exclusive offers that tied into our college football messaging and new products.
Our strong partnerships with third party delivery providers continue to benefit us as we activated compelling ads and exclusive offers that tied into our college football messaging and new product launches I am proud of the ongoing digital growth. We have achieved over the last few years, our successes to date supported an increase in our global digital sales expectation to approximately <unk>.
Speaker 3: I am proud of the ongoing digital growth we have achieved over the last few years. Our successes to date support an increase in our global digital sales expectation to approximately $1.8 billion this year, which represents
$1 $8 billion, this year, which represents over 20% growth year over year.
Speaker 3: Looking ahead, there is still significant digital growth to be captured. The large uptick in monthly active users last quarter and the increase in our digital sales expectation is just the tip of the iceberg.
Looking ahead, there is still significant digital growth to be captured the large uptick in monthly active users last quarter and the increase in our digital sales expectation is just a taste of what's in front of us I am confident that continued execution of our plans alongside our key partners will drive our digital business in the years to come.
Speaker 3: I am confident that continued execution of our plans alongside our key partners will drive our digital...
Tom.
Speaker 3: Our development pace accelerated in the third quarter as we opened 72 new restaurants and we are tracking towards our 2023 global net unit growth.
Our development pace accelerated in the third quarter as we opened 72, new restaurants, and we are tracking towards our 2023 global net unit growth target of approximately 2% with 100% of our current year pipeline open or under construction.
Speaker 3: approximately 2% with 100% of our current year pipeline.
Speaker 3: Looking towards the future, we made meaningful progress towards further solidifying our long-term development pipeline by securing incremental commitments with new and existing franchisees across every region.
Looking towards the future, we made meaningful progress towards further solidifying our long term development pipeline by securing incremental commitments with new and existing franchisees across every region in which we operate with international markets, leading the way.
Speaker 3: In the UK, we recently added a new franchisee to the market, and our three existing traditional franchisees have increased their development agreements, highlighting their confidence in the long-term.
In the U K, we recently added a new franchisee to the market and our three existing traditional franchisees have increased their development agreements highlighting their confidence in the long term trajectory of the brand. Additionally, our existing franchisee in Japan has significantly accelerated their agreement as operations normalize following the pandemic and sales.
Speaker 3: Additionally, our existing franchisee in Japan has significantly accelerated their agreement as operations normalize following the pandemic and sales.
Continue to improve.
Speaker 3: We also added an incremental development agreement in Mexico, a key growth market that continues to gain momentum.
We also added an incremental development agreement in Mexico, a key growth market that continues to gain sales momentum and new franchisee interest.
Speaker 3: Across the U.S. and Canada, we experienced a significant uptick in agreements across our suite of development.
Across the U S and Canada, we experienced a significant uptick in agreements across our suite of development programs with new sign ups for the pace setter and groundbreaker incentives and growing commitments through our build to suit fund, which is now 70% committed.
Speaker 3: new sign-ups for the Pacesetter and Groundbreaker incentives, and growing commitments to our Build the Soup Fund, which we're working on.
Speaker 3: Our efforts drove a substantial increase in the share of our long-term development pipeline under an agreement to approximate...
Our efforts drove a substantial increase in the share of our long term development pipeline under an agreement to approximately 70%.
Speaker 3: higher than historical norms, and builds an additional layer of certainty into our democracy.
This is higher than historical norms and builds an additional layer of certainty into our development outlook.
Speaker 3: all of this progress is in addition to our previously announced Master Franchise Agreement with Flynn Group to develop 200 Wendy's restaurants in Australia, which bolsters our development plan.
All of this progress is in addition to our previously announced Master franchise agreement with Flint group to develop 200, Wendy's restaurants in Australia, which bolsters our development plans past 2025.
Speaker 3: Finally, we remain very active on the franchise recruiting front and our team is continually adding franchise candidates to the pipeline and new franchisees to the system. We look forward to sharing more news in the coming months as we continue to progress towards our long-term global goal.
Finally, we remain very active on the franchise recruiting front and our team is continually adding franchise candidates to the pipeline and new franchisees to the system. We look forward to sharing more news in the coming months as we continue to progress towards our long term global net unit growth targets of 2% to 3% in 2024, and 3% to 4% in 2000.
25.
Speaker 3: playbook of driving meaningful global growth behind our three long-term
Our playbook of driving meaningful global growth behind our three long term strategic pillars remain the same our ongoing success would not be possible without the partnership we have with our franchisees. We recently received the results of the 2023 franchise business review survey, reflecting another year of Wendy's far exceeding industry benchmarks.
Speaker 3: Our ongoing success would not be possible without the partnership we have with our
Speaker 3: We recently received the results of the 2023 Franchise Business Review Survey.
Speaker 3: I am especially pleased with our rating on overall satisfaction, which paces more than 10%.
I am, especially pleased with our rating on overall satisfaction, which pieces more than 10 percentage points ahead of the industry in both the U S and internationally.
Speaker 3: We also continue to outpace the industry on financial opportunity and lead
We also continued to outpace the industry and financial opportunity and leadership scores further highlighting our system alignment.
Speaker 3: We recently held our annual franchise convention, and I could not be more pleased with the excitement we built across the country.
We recently held our annual franchise convention and I could not be more pleased with the excitement we built across the system. We look forward to sharing more details on our plans to drive compelling restaurant economic model improvement on the back of acceleration across our growth pillars, and providing our outlook when we release, our fourth quarter earnings on February the 15th.
Speaker 3: We look forward to sharing more details on our plans to drive compelling restaurant economic models.
Speaker 3: on the back of acceleration across our growth pillars and providing our outlook when we release our fourth quarter earnings on February .
Through the partnerships with our franchisees and the dedication of our restaurant crews and support center teams. We will continue our march towards achieving our vision of becoming the world's most driving and beloved restaurant brand I will now hand, it over to GP to share our third quarter financial performance. Thanks, Todd our third quarter results continued to highlight the consistency.
Speaker 3: Through the partnerships with our franchisees and the dedication of our restaurant crews and support center teams, we will continue our march towards achieving our vision of becoming the world's most thriving and beloved restaurant brand. I will now hand it over to GP.
Speaker 4: Thanks, Todd. Our third quarter results continued to highlight the consistency of our financial formula as progress against our strategic growth initiatives once again drove sales and profit growth. Our global system-wide sales grew 4.8 percent.
Our financial Formula as progress against our strategic growth initiatives. Once again drove sales and profit growth our global system wide sales grew four 8% achieving 13, 7% growth on a two year basis supported by global same restaurant sales growth across both our U S and international segments.
Speaker 4: by global same Western sales growth across both our U.S. and international segments and continued global net unit growth our U.S. company
And continued global net unit growth.
Our U S company restaurant margin reached 15, 6%, increasing 80 basis points year over year. This expansion was primarily due to the benefit of a higher average check driven by cumulative pricing of 6%, partially offset the customer count declines and labor and commodity inflation of approximately 4%.
Speaker 4: This expansion was primarily due to the benefit of a higher average check during the cumulative pricing of 6% partially offset the customer account declines and labor and commodity inflation of approximately 4% and
And 2% respectively.
Speaker 4: DNA decreased approximately 5% primarily driven by lower professional fees, resulting primarily from the completion of the company.
G&A decreased approximately 5%, primarily driven by lower professional fees, resulting primarily from the completion of the company's ERP implementation.
Adjusted EBITDA increased three 5% to approximately $139 million, resulting primarily from higher franchise royalty revenue lower G&A expense a decrease in the company's incremental investment in breakfast advertising and an increase in U S company operated restaurant margin.
Speaker 4: A trusted EBITDA increased 3.5% to approximately $139 million, resulting primarily from higher financial royalty revenue, lower Q&A expense.
Speaker 4: in the company's incremental investment in Brexit advertising, and an increase in U.S. company operating.
Speaker 4: were partially offset by lower other operating income due to lapping as it
These were partially offset by lower other operating income due to lapping a significant gain from insurance recoveries in the prior year, which represents a year over year EBITDA headwind of approximately 6% during the third quarter.
Speaker 4: in the prior year, which represents a year over year EBITDA headwind of approximately.
Speaker 4: over 12% increase in the trusted earnings per share was driven by an increase in the trusted EBITDA and high interest income. These increases were partially offset...
The over 12% increase in the tough to do earnings per share was driven by an increase in adjusted EBITDA and higher interest income. These increases were partially offset by higher amortization of cloud computing arrangement cost.
Year to date free cash flow increased over 35% to approximately $226 million, resulting primarily from higher net income adjusted for noncash expenses and the decrease in payments for incentive compensation.
Speaker 4: to date, free cash flow increased over 35% to approximately $226 million, resulting primarily from higher net income, adjusted for non-cash expenses, and a decrease in payments for incentive programs.
These were partially offset by higher capital expenditures.
Our strong results through the third quarter and the plans we have in place to end the year support our confidence in our 2023 and long term financial outlook, which we are largely reaffirming today.
Speaker 4: Our strong results through the third quarter and the plans we have in place to end the year support our confidence in our 2023 and long-term financial outlook, which we are largely reaffirming today.
Speaker 4: We are tightening our full-year global system by sales growth range.
We are tightening our full year global system wide sales growth range 262, 7% driven by our expectation for low single digit global same restaurant sales growth in the fourth quarter.
Speaker 4: birl Lisa Oh for low single-ditude global sea marathon sales brought in the fourth quarter.
We continue to expect mid single digit global same restaurant sales growth for full year 2023, and global net unit growth of approximately 2%.
Speaker 4: continue to expect mid-single-tichet, global Samaritan sales growth for full year 2023.
Speaker 4: Our 2023 Attracted EBITDA Outlook of $530 to $540 million.
Our 2023, adjusted EBITDA outlook of 532 $540 million remains unchanged, our tightened global system wide sales outlook is offset by lower G&A expectation of approximately $250 million, primarily driven by a lower expected incentive compensation accrual.
Speaker 4: Our Titan Global System might say that Outlook is offset by a lower chin-afe
Speaker 4: of approximately $250 million, primarily driven by a lower expected incentive compensation accrual.
We continue to expect U S company operated restaurant margin of 15% to 16%.
Speaker 4: We are also reaffirming our 2023 outlook for a trusted EPS of $9,5.2. Our capital expenditure outlook for the year is tightening to 80 to...
We are also reaffirming our 2023 outlook for adjusted EPS of <unk> 95 to a dollar.
Our capital expenditure outlook for the year is tightening to $80 million to $85 million as we have better visibility as to be closing on year end.
Speaker 4: Finally, we continue to expect 2023 cash flow.
Finally, we continue to expect 2023 free cash flow of $265 million to $275 million as our tightened capital expenditure outlook is offset by higher interest income.
Speaker 4: 65 to 200 to $75 million, as our tightened capital expenditure outlook is offset by higher interest income. Turning to a long term.
Turning to our long term outlook, we continue to expect mid single digit annual system wide sales growth and high single digit to low double digit annual free cash flow growth in 2024 and 2025.
Speaker 4: annual system might sales growth and high single digit to low double digit annual three
To close I'd like to highlight our capital allocation policy, which remains unchanged.
Speaker 4: I'd like to highlight our capital location policy.
Speaker 4: Our cash balance remained elevated at more than $600 million at the end of the third quarter, giving us flexibility to invest in the business, to deliver meaningful global growth and return.
Our cash balance remained elevated at more than $600 million at the end of the third quarter, giving us flexibility to invest in the business to deliver meaningful global growth and return cash to shareholders.
Our first priority continues to be investing in our business for growth, which we will continue to do while holding true to our asset light model.
Speaker 4: new to do while holding true to our S-Z Lite model.
Secondly, we announced today the declaration of our fourth quarter dividend of <unk> 25 per share delivering a full year dividend of $1 per share in 2023.
Speaker 4: announced today the declaration of our fourth quarter dividend of 25 cents per share, delivering a full year dividend of $1 per share.
Speaker 4: represents an over 100% dividend-payer ratio and aligns with our commitment
This represents an over 100% dividend payout ratio and aligns with our commitment to sustain an attractive dividend.
Speaker 4: Lastly, our capital allocation policy gives us the flexibility to utilize access cash, to repurchase shares and reduce debt. Buy 640 Y highlighted.
Lastly, our capital allocation policy gives us the flexibility to utilize excess cash to repurchase shares and reduce debt year to date through October 26, we have repurchased approximately 8 million shares and have approximately $332 million remaining on our five.
Speaker 4: million years and have approximately 330.
Speaker 4: $500 million remaining on our 500 million dollar sharey purchase authorization, expiring in February of 2022.
$100 million share repurchase authorization expiring in February of 2027.
Do you expect to continue to lean in on share repurchases. This year in light of our current share price and cash balance.
Speaker 4: year in light of our current share price and cash balance. Additionally, we repurchased approximately $70 million of debt for approximately $65 million including both the benches and securitized debt, year-to-date through.
Additionally, we repurchased approximately $17 million of debt for approximately $65 million, including both debentures and securitize debt year to date through October 26, our board of.
Directors recently increased our debt repurchase authorization by $10 million, leaving approximately $20 million remaining on the authorization expiring in February of 2024.
Speaker 4: We are fully committed to continuing to delivering our simple yet powerful formula. We are a predictable, efficient growth company that is investing our growth pillars and striving strong system might sales growth on the backdrop of positive sales and expanding our global footprint. This is translating into significant...
We are fully committed to continue delivering a simple yet powerful formula we are predictable efficient growth company that is investing in our growth pillar in driving strong system wide sales growth on the backdrop of positive same restaurant sales and expanding our global footprint. This is translating into significant.
And free cash flows, which support meaningful return of cash to shareholders through an attractive dividend and share repurchases with that I will hand things over to kelcey to share our upcoming IR calendar.
Speaker 4: With that, I will hand things over to Kelsey to share our upcoming IR.
D P to start things off we have an MTR in New York with Barclays on November 15th after which we'll attend the Stephens conference in Nashville on November 16th.
Speaker 2: Starting off, we have an NDR in New York with Barclays on November 15th. After which, we'll attend the Stevens Conference in Nashville on November 15th.
Speaker 2: On November 27th, we have an investor call with Keybank. And finally, we have a virtual NDR with TD Cowan on December .
November 27th we have an investor call with Keybanc and finally, we have a virtual Andy are with TD, calling on December 11th.
Speaker 2: If you are interested in joining us at any of these events, please contact the respective self-ide analysts or equity sales contact at the host firm. Lastly, we plan to report our fourth quarter and full year earnings and host sales.
If you are interested in joining us at any of these events. Please contact the respective sell side analyst or equity sales contact at the host firm Lastly, we plan to report our fourth quarter and full year earnings and host a conference call that same day on February 15th.
Speaker 2: In transition to our Q&A section, I want to remind everyone that due to the high number of covering analysts, we will be limiting everyone to one question only. But that, we're ready to take your questions.
As we transition to our Q&A section I wanted to remind everyone that due to the high number of covering analysts will eliminate everyone to one question only with that we're ready to take your questions.
Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad now.
Speaker 3: Thank you. If you would like to ask a question, please press Star Followed by one on your telephone keypad now. And if you change your mind, please press Star Followed by two. When preparing to ask your question.
You change your mind, Please press star followed by chicken.
When prepayment to ask a question. Please ensure your line is on mute luxury.
Our first question today comes from David Palmer of Evercore ISI. David Your line is now open. Please go ahead.
Speaker 5: The first question today comes from David Palmer of Everglow ISI. David, your line is now open. Please go.
Speaker 6: Thanks. I wanted to ask you about Unicroath and...
Thanks, I wanted to ask you about.
Unit growth in and particularly the return on investment for franchisees I know you've been working on new formats.
Speaker 6: working on new formats and you touched on this last conference call but
Touched on this last conference call, but.
Speaker 6: I think it's worth going over because I think people are concerned about the higher building costs, the higher land costs, and the margin compression that's naturally happened because of labor. Could you just kind of go through what you see as return on investment for new units these days and where do you see that?
And I think it's worth going over because I think people are concerned about the higher building caused the higher land costs and the margin compression that's naturally happened because of labor. So could you just kind of go through what what you see is the return on investment for new units. These days in.
Where do you see that pipeline developing thank you.
Speaker 4: Good morning David. Yeah, it's a great question. We made great progress on new build designs. As you know, with next-gen building cost, we took about 10% cost out, and we're also operating it more efficiently. As you go through this, if you were to have no incentives, the levered payback of a new next-gen design is about six years. IN CREASING!! Communist
Good morning, David.
Yes, Great question, we made great progress on the new builds designs as you know with Nextgen building costs, we took about 10% cost out and we are also operating it.
More efficiently.
As you as you go through this.
If you were to have no incentives.
Unlevered payback.
Nextgen design is about six years since the one bookend.
Speaker 4: If you sign up for our Build to SUTH program, which is the most attractive program for franchisees, you get a levered return of about three and a half years. Then obviously we have other incentive programs like the paste setter that gets you to a return of about four years. And if you choose to do a ground breaker, it's about five and a half years of levered return.
If you sign up for our <unk>.
Build to suit program, which is the most attractive program for franchisees you get a levered return of about three and a half years and then obviously we have other incentive programs like the pace that that gets you to a return of about four four years and if you choose to do a ground breaker, it's about 500 to five years.
But what we're doing so that's kind of what we have it assumes the elevated from a from a leverage point of view. It assumes the elevated interest rates that we are seeing in the marketplace.
Speaker 4: So that's kind of what we have. It assumes the elevated from a malevolved point of view. It assumes the elevated interest rates that we are seeing in the map.
Speaker 3: And I think David, the confidence in the future is really in the proof that we talked about on the call, right? We've got 2% net unit growth approximately, then we'll hit this year with all of those open or under construction.
And I think David <unk>.
Confidence in the future is really in the and the proof that we talked about on the call right. We've got.
2% net unit growth of approximately that will hit this year with all of those open or under construction.
Speaker 3: We've now got 70% of our restaurants under development agreement through 2025. So we are building confidence and we know we need to continue to work to take a little bit of cost out of the building and continue to drive our margins up. And we've been seeing nice healthy margins on company new restaurant openings which
We've now got 70% of our restaurants under development agreement through 2025. So we are building confidence and we know we need to continue to work to take a little bit of cost out of the building and continue to drive our margins up and we've been seeing nice healthy margins on company, new restaurant openings, which <unk> been opening north of 2 million.
Speaker 3: You know, I've been opening North of $2 million in with margins above the average margins that you see for the company. So those are encouraging signs too.
And with with margins above the average margins that you see for the company. So those are encouraging signs too.
Speaker 5: Our next question comes from Tyler Preels from Stephen's I&T. Tyler, your line is now open. Please go ahead.
Our next question comes from Todd <unk> from Stephens Int Toni Your line is now open. Please go ahead.
Tyler Your line is now open please on mute locally and proceed with your question.
Speaker 7: Sorry I was muted. Thanks for taking the question here. Can you talk a little more about the consumer and what you're seeing as far as trade down or check management? Additionally, what are you seeing in the competitive environment as far as discounting among peers?
Sorry, I was muted thanks for taking the question here can you talk a little more about the consumer and what youre seeing as far as trade down or check management. Additionally, what are you seeing in the competitive environment as far as discounting among peers.
Speaker 3: Yep, you'll look at the consumer. It's really the tail of two sides, right? The over 75,000 consumer continues to be healthy. We continue to see traffic growth in that segment, or hold on their share in that segment. Under 75,000 consumers a little more stressed, especially as you go down the income core or as it gets even more stressed.
Yes, if you look at the consumer it's really the tale of two sides right.
Over 75000 consumer continues to be healthy we continue to see traffic growth in that segment, we're holding our share in that segment under 75000 consumers a little more stressed, especially as you go down the income core I would say it gets even more stressed but again with last a little bit of traffic, there, but still holding our share with that consumer.
Speaker 3: But again, we've lost a little bit of traffic there, but still holding our share with that consumer.
Speaker 3: From a trade down perspective, we are seeing some trade down from Midscale Casual and sit down in the QSR. But we're also seeing some trade out of the category from the lower income consumer out of QSR and into food at home. So it's kind of washed each other out along the way.
<unk> from a trade down perspective, we are seeing some trade down from mid scale casual.
And sit down into <unk>, but we're also seeing some trade out of the category from the lower income consumer out of <unk> into food at home. So it was kind of wash each each other out along the way.
Speaker 3: We do feel like we've had a calendar that's very balanced with high end load to support both income cohorts.
We do feel like we've got a calendar, that's very balanced with with high and low to support both income cohorts and our job is to continue to make sure that we create great experiences as we have those folks trade into our brand and have compelling offers to make sure was folks get a little healthier from a economic standpoint, they continue to come back into the Wendy's brand with <unk>.
Speaker 3: and our job is to continue to make sure that we create great experiences as we have those folks trade into our brand and have compelling offers to make sure was folks get a little healthier from an economic standpoint, you know, they continue to come back into the Wendy's brand with our great promotions moving forward.
Great promotions moving forward.
Speaker 5: Our next question comes from Jeffrey Bernstein or Bartre, Jeffrey O'Learn is out open. Peace, guys.
Our next question comes from Jeffrey Bernstein of Barclays. Jeffrey Your line is now open. Please go ahead.
Great. Thank you very much.
Speaker 8: Great, thank you very much. Just wondering if you could talk a little bit about, I think you mentioned the Camp Star to improve in mid-Ougust.
Just wondering if you could talk a little bit about that.
I think you mentioned the comps start to improve in mid August that traffic was positive I'm. Just wondering if you could talk a little bit about what you think was the driver of the uptick.
Speaker 8: traffic with positive. I'm just wondering if you could talk a little bit about what you think with the the driver of the uptick
Speaker 8: I know of the big burger players. It seems like optically you're perhaps lagging your two biggest burger players. And then you mentioned holding your dollar and percent market shares and just wanting to...
No of the Big Burger players it seems like optically your perhaps lagging.
Your two biggest Burger players I know you mentioned holding your dollar 1% market share. So I'm just wondering if you can connect the dots with a little bit more detail in terms of the competitive marketplace and your positioning relative to those largest peers and again the improvement that you saw in mid August what you think the drivers of that were.
Speaker 8: Connect the dots to a little bit more detail in terms of the competitive marketplace and your positioning relative to those largest peers. And again, the improvement that you saw in mid-August what you think the drivers of that were.
Yeah. Thanks for the question Jeffrey.
Speaker 3: Thanks for the question, Jeffrey. You know, as you think about the start to the quarter, we were up against some really strong comps from a year ago with the success of strawberry frost.
Think about the start to the quarter, we were up against some really strong comps from from a year ago with the success of Strawberry Frosty, we thought we had a strong promotion with the bogo for a dollar.
Speaker 3: You know, we thought we had a strong promotion with the Bogo for a dollar. It didn't bring into as many add-ons early in the quarter as we had anticipated.
It didn't bring in as many add ons early in the quarter as we had anticipated, but we also didn't have any media support or promotional support on breakfast business to start the quarter, we're rolling off of the $3 croissant deal.
Speaker 3: but we also didn't have any media support or promotional support on breakfast uh... business to start the quarter we're rolling off of the three dollar uh... croissant deal uh... and uh... and really did set ourselves up uh... with a lot of uh... support were news to compete in the first half of the quarter
And really we did set ourselves up with a lot of support or news to compete in the first half of the quarter, but as the quarter evolved we made some several challenges we launched on the premium side in the middle of the quarter with the loaded Nacho Cheeseburger and queso Fries, we brought news to breakfast with the English muffin.
Speaker 3: But as the quarter evolved, we made some several challenges. We launched on the premium side in the middle of the quarter with the loaded Nacho Cheeseburger and Kaiso fries.
Speaker 3: We brought news to breakfast with the English muffin. You know, we started our NCAA cup promotion, and we launched a very compelling two for three breakfast biggie bag bundles. We started to see our business immediately shift and bring more customers in as we put those news and promotions out. And then soon after that, the pumpkin spice frosty launched, which created some additional support.
We started our NCWA Cup promotion and we launched a very compelling two for three breakfast biggie bag Biggie bag bundles.
We started to see our business immediately shift.
And bring more customers in.
We put those news and promotions out and then soon after that the pumpkin Spice Frosty launched which created some additional support.
Speaker 3: With all of that, we saw our one and two-year same restaurant sales accelerate each month within the quarter. And importantly, we started to deviate from category trends with us starting to grow customer counts as we exit the quarter versus the category. QSR burger category being a little more challenge.
With all of that we saw our one and two year same restaurant sales accelerate each month within the quarter and importantly, we started to deviate from category trends with are starting to grow customer accounts as we exited the quarter versus the category <unk> Burger category in a little more challenged.
And our next question comes from Danielle I got Ya Li from Bernstein. Your line is now open. Please go ahead.
Speaker 5: And our next question comes from Denelo. Guard you, Lou from, first time, Denelo, you're loaded now open. Please go ahead.
Thank you.
Speaker 9: Thank you. In your opinion, remarks, you mentioned offering more consistent value promotion. Can you elaborate on that point? And what are you planning to maintain strong, resonable margins for the next few quarters, as a result of your strategy?
Remarks, you mentioned offering more consistent value promotion. So can you can you elaborate on that point and what are you planning to maintain strong restaurant level margins for the next few quarters as a result of your.
Strategy.
Speaker 4: Good morning Danilo. Yes, I mean, value is important for our consumers. As told, answered the previous question, right? The income cohort that is earning less than $75,000 a year, they are having less frequency and opting out of the category. So as a result of it, value bundles are important. I would say we've done a great job to move away from 4444 and really upgrade the consumer to 4, 5, and 6 big e-bags.
Good morning, Danilo, Yes, I mean value is important for our consumers as Todd answer the previous question right.
The income cohort that is earning less than $75000 a year, they are having less frequency and opening out of the category.
The result of a value bundles important I would say we've done a great job to move away from four for four and really upgrades to consumer 245, and six piggy bags, we have done a similar thing now.
Speaker 4: We have done a similar thing now, instead of doing like a dollar cross-all promotion, we are moving to 243, which again, is creating overall better economics. When you see it on our company restaurant, P&L, our margin in the quota was up 80 basis points, despite still 2% commodity inflation and 4% labor inflation.
<unk> of doing that.
Croissant promotion via move into 243.
Again.
Creating overall better economics, when you see it in our company restaurant P&L.
In the quarter. It was up 80 basis points, despite still 2% commodity inflation in the 4% labor inflation.
Speaker 4: If you take the whole year, run the whole year, a company restaurant margin sits at 15.9%, it's actually above COVID levels, and we expanded profitability by about 190 basis points. So it's a good balancing act.
It takes the whole year the whole year.
Here a company restaurant margin sits at 15, 9%, that's actually above COVID-19 levels, and we expanded profitability.
190 basis points. So it's a good balancing act there.
Speaker 4: that is the driving good consumer engagement without actually giving up on the rest of the economic model in other parts of the way around, we're actually expanding profitability.
<unk> is driving.
Good consumer engagement without actually giving up aggressively economic model and the other way around we actually expanding profitability.
Speaker 3: He said it well, it's a nice balance calendar. We've talked about that historically, and we continue to make sure that we're there for the consumer, but also make sure that we're working a strong restaurant economic model. And you see that in the construct of our early day Biggie Bag bundles at breakfast, good margin construct on that. You see that on the evolution of our Biggie Bag rest of day as we've evolved from four for four to five and six dollars. And you'll see a nice balance between digital offers.
Well, it's a nice balanced calendar and we've talked about that historically and we continue to make sure that we're there for the consumer but also make sure that we're working on a strong restaurant economic model and you see that in the construct of our everyday biggie bag bundles at breakfast on good margin construct on that you'll see that on the evolution of our biggie bag rest of day.
As we've evolved from four for four to five and $6 and Youll see a nice balance between digital offers new news.
Speaker 3: new news like pepperon pepperon frosty coming back into the fourth quarter and we'll continue to make sure we bring some exciting innovations as we close out the year on the premium.
<unk> frosty coming back into the fourth quarter, and we will continue to make sure we bring some exciting innovations as we close out the year on the premium side.
Speaker 5: Our next question comes from Andrew Charles from TD Gowan.
Our next question comes from Andrew Charles from TD Cowen.
Andrew Your line is now open. Please go ahead.
Speaker 6: Great, thanks. Todd, two part question on breakfast. First, just curious if you look back over the last year or so, post COVID, how would you describe the progress of driving breakfast trial and to have it? And separately, if you talk about the success of the two for $3 breakfast promo in the quarter, how do you plan to improve breakfast profitability as value activity for the categories, likely to persist and likely put pressure on continued promotions during the day part?
Great. Thanks, Todd two part question on breakfast first just curious if you look back over the last year or so post COVID-19. How would you describe the progress of driving breakfast trial and to have it and separately you talked about the success the two for $3 breakfast promo in the quarter.
Do you plan to improve breakfast profitability as value activity for the category is likely to persist and likely put pressure on continued promotions during the day part.
Speaker 3: Yeah, we're still on a journey. You know, trying to ingrain the breakfast day part and the habit takes some time. We've been doing a nice job. We've got good awareness. We have been driving trial.
Yes, we're still on a journey.
I knew ingrain, the breakfast day part.
Habit. It takes some time, we've been doing a nice try nice job. We've got good awareness, we have been driving trial.
Speaker 3: We continue to have an opportunity to bring our rest of the day customer in and get them into our breakfast day part.
We continue to have an opportunity to bring our rest of the day customer in and get them into our breakfast day part.
Speaker 3: But we're still what I would characterize in the early innings of breakfast. And you see that where we need to continue to make sure that we've got news.
But we are still what I would characterize it in the early innings of breakfast and you see that where we need to continue to make sure that we've got news. We did that in this quarter was the trustee cream cold brew with English Muffin, we knew do know we need to have compelling value to for three is as compelling value, but it is constructed very nicely to make sure that it.
Works for the restaurant economic model as well for the consumer.
Just need to be consistent be consistent on with with compelling value and piggy bundles gives us that platform to do that.
Speaker 4: to be consistent out there with messaging, letting the consumer know that Wendy's is open for breakfast. So, it is a journey. It's been progressing well. You know, we've continued to establish the date part for us. We know we've got a lot of opportunity for Grossville ahead of us. In Android, as you know, right, the breakfast business is a buff average profitability. Even when we promote, we still basically maintain a buff average profitability. That's the reason why we keep leaning in, keep innovating, keep price promoting, continue to drive the break in habit, and building our business because long term, it's sustained tailwinds our margin progression.
We continue to be consistent out there with messaging letting the consumer know that Wendy's is open for breakfast. So.
It is a journey, it's been progressing well.
Continued two to establish the day part for US and we know we've got a lot of opportunity for growth still ahead of us.
Speaker 4: And Android, as you know, right, the breakfast business is a buff average profitability. Even when we promote, we still basically maintain a buff average profitability. That's the reason why we keep leaning in, keep innovating, keep price promoting, continue to drive the break in habit and building our business because long term, it's sustained tailwinds or much in progression.
Andrew as you know right.
Breakfast business is above average profitability, even when we promote we still basically maintain above average profitability. That's the reason why we keep leaning in keep innovating keep apprised promoting continue.
Continued to drive the breaking habit.
Building, our business because long term sustained.
Sustained tailwind so margin progression.
Speaker 5: and our next question comes from Gregory Frankfort from Good Goodheim. Gregory, your line is now open.
And our next question comes from Gregory Frankfurt from Guggenheim.
Your line is now open. Please go ahead.
Speaker 10: Hey, thanks for the question. GP, I just had a question on Dallas sheet and cashew cashews and it's out of the prepared remarks you were talking about maybe no change to the capital structure, but I think you've been buying back a little bit of debt here.
Hey, Thanks, Thanks for the question <unk> I just had a question on.
Dallas you can cast your cash usages.
Look on the prepared remarks, you were talking about maybe no change to the capital structure, but I think you've been buying back a little bit of that here.
Speaker 10: I'm wondering as you look forward the next two or three years, what your thoughts are on leverage and what your thoughts are on potentially the pushes and pulls between shared repurchase and debt repurchase.
I'm wondering as you look forward the next two or three years, what your thoughts are on leverage and what your thoughts are on potentially the pushes and pulls between share repurchase and debt repurchase. Thanks.
Good morning, Greg, Yes, maybe are sitting in a great position right cash balances a little bit more than $600 million as you know we have.
Speaker 4: Good morning Greg. Yeah, we're sitting in a great position, right? Our cash balance is a little bit more than $600 million. Says, you know, we have.
Speaker 4: Secure as debt structure that's very well-lettered. So when is our our next debt action is clearly end of 2025 when we have to buy back Our payback our debentures is about 50 million dollars outstanding And then the first WBS that's that's going to be refinanced is in 2026 so we have time To wait what the financial markets are going to do. We are sitting currently at about a five point
Securitized debt structure that is very well later, so when he's our.
Our next that X gene is clearly end of 2025, when we have to buyback.
Our payback or debenture is about $50 million outstanding.
Then the first WPS.
It's going to be refinanced in 2026, so we have time.
Wait what the financial markets are going to do we're sitting currently at about a 5.2 times sorry on the $4 seven times leverage ratio. So.
Speaker 4: two times, sorry, in a 4.7 times leverage ratio. So it's well below the five to six times I started on seven years ago. I would expect with that trajectory that leverage people naturally do lever. And you will also see us definitely continue to look at our debt and maybe buy back more. You've seen the sign, the board had.
Well below that five to six times is started on seven years ago, I would expect that trajectory.
That leverage people naturally de lever and you will also see definitely.
Continue to look at our debt and maybe buyback more you've seen designed board.
Speaker 4: increased our debt authorization, so if you get all of that done, we will have put back 85 million dollars of debt.
Increased that authorization. So if we get all of that is done we will have bought back $85 million of debt.
Speaker 4: on top of the mandatory authorization. So the balancing act, we're obviously trying to protect a very, very attractive dividend so that you can continue to see from.
On top of the mandatory authorization so.
Balancing acts to be obviously trying to protect at very very attractive dividend.
That you can continue to see from US and you can also expect obviously share repurchases is continuing to be part of.
Speaker 4: and you can also expect obviously shared purchases is continuing to be part of our choices.
Our choices.
Speaker 4: As you know, we have leaned in on a UDAT basis. We have put back 168 million dollars.
As you know we have leaned in on a year to date basis, we have bought back $168 million.
Speaker 4: on a prohibited basis really that would be $125 million on the year. So we are leaning in. So clearly, if you leave the authorization unchanged for the next three years, share your purchases with us.
On a pro rated basis really that would be around the $25 million on the year. So we are leaning in so clearly if you change if you lift the authorization unchanged for the next three years share repurchases will step down a little bit. The great News is we've got a lot of flexibility to GPS point on the balance sheet with a lot of cash today.
Speaker 3: The great thing is we've got a lot of flexibility to GPs point on the balance sheet with a lot of cash today and a lot of free cash flow generation that we've got built into the outlook and we know we can continue to drive that which gives us the opportunity to invest in growth first and foremost and return a lot of cash to the shareholders in various forms over time.
Lot of free cash flow generation that we've got built into the outlook and we know we can continue to drive that which gives us the opportunity to invest in growth first and foremost and return a lot of cash to the shareholders in various forms over time.
Speaker 5: and our next question comes from Dennis Geiger from EBS. Dennis, your line is now open. Please.
And our next question comes from Dennis Geiger from UBS. Dennis Your line is now open. Please go ahead.
Speaker 11: Great. Thanks very much. One of they asked a little bit more about late night and maybe even the snacking date part off.
Great. Thanks, very much I wanted to ask a little bit more about late night, and maybe even the snacking day part opportunities. It seems like Youre, making good gains in late night. This year is this still a notable opportunity into 'twenty four.
Speaker 11: It seems like you're making good gains in late night this year. Is this still a notable opportunity into 24? And then I assume staffing and operations are some of the key drivers to help unlock that opportunity. But how much maybe does digital and loyalty help as you guys look to maybe continue to push on those day parts? Thank you.
And then I assume staffing and operations or some of the key drivers to help unlock that opportunity, but how much maybe digital and loyalty because you guys look to maybe continue to push on those day parts. Thank you.
Speaker 3: Yeah, late night continues to be a fast growing segment of the QSR business and we're out performing the category at late night and we continue to have a lot of opportunity to continue momentum. You know, we've led the way on late night with company. We've extended, you know, always operation now across the system. We've made a lot of progress and there's still a lot of opportunity across various regions of the country where we know we can do even more at late night.
Yes late night continues to be a fast growing segment of the <unk> business and we're outperforming the category at late night, and we continue to have a lot of opportunity to continue momentum.
We've led the way on late night with company, we've extended hours operation now across the system.
We've made a lot of progress and there's still a lot of opportunity across various regions of the country, where we know we can do even more at at late night.
Speaker 3: You know, it's a great business. A lot of incremental volume without adding any labor. We do see a big delivery business at late night with that nice average check. We have seen staffing improve across all day parts and turnover improve, which has certainly helped us staff the restaurant all the way from breakfast through the late night day part.
Is a great business.
A lot of incremental volume without adding any labor, we do see a big delivery business at at late night with that nice average check.
Haven't seen staffing improve across all day parts and turnover improve which is certainly help us staff. The restaurant all the way from breakfast through the late night day part but.
Speaker 3: But we do think that there's still a lot of leg room and opportunity to grow that business. And we know we can create and deliver some of the best food in the business. So when we're fully customized, make the order at that late night day part.
We do think that there's still a lot of leg room and opportunity to grow that business and we know we can create and deliver some of the best food in the business. When we're fully customized make to order at that late night day part.
Speaker 5: And our next question comes from John Tower of City. John your line is now open. Please go ahead.
And our next question comes from Jon Tower of Citi. Your line is now open. Please go ahead.
Speaker 3: Great, thanks for taking a question. Just curious, maybe you guys can expand upon your expectations for balancing pricing next year with new product users. I know, obviously.
Great. Thanks for taking the question just curious maybe you guys can expand upon your expectations for balancing pricing next year.
With new product news.
Asleep.
Speaker 12: can't dictate where the franchisees are going with price and they will continue to be some inflationary pressures in the business. And obviously, there's some stresses happening at the lower income levels with the consumer, maybe even spreads beyond that. So this here is how you're thinking about pricing actions next year and we have to give all of that.
Can't dictate where franchisees are going with price and they will continue to be some inflationary pressures in the business and obviously there's.
Some stresses happening at the lower income levels of the consumer maybe even spreads beyond that so just curious how youre thinking about.
Pricing actions next year.
Maybe a follow up to that.
Speaker 4: Good morning, John . Yeah, it all ties to our long term guidance, right? We have said that we're expecting mid-single digits overall sales growth with low single digit, same-risk ones sales growth. And the same-risk ones sales growth is really driven by fledged traffic, slightly positive mix, and the rest is all price, right? So it's...
Hi, Good morning, John It's all tied to our long term guidance why did you have said that.
We're expecting mid single digits overall sales growth with low single digit same restaurant sales growth and the same restaurant sales growth.
It is really driven by flattish traffic slightly positive makes center race, because oil price right.
Speaker 4: very low pricing versus what we have done in the past. Just as a recap, this year, we're expecting effective pricing recently in the company restaurant of about 7%.
Very low pricing versus what we have done in the past just as a recap.
This year.
<unk> effective price increase in the company restaurants is about 7%.
Speaker 13: Five of that was carried over two percent was new Just to foreshadow a little bit we did our last price increase in May of this year We are going to do a small price increase at the end of this year To set us up for for next year. So we definitely expecting a moderately
Five of that was carry over 2% of it was new.
Just a foreshadow a little bit with it.
Our last price increase in May of this year, we're going to do a small price increase.
End of this year to set us up for for next year. So we are definitely expecting moderate.