Q4 2023 The Wendy's Co Earnings Call

February 15, 2024

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 two thank you kelcey.

Kelsey freed director of Investor Relations you May begin your conference.

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 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 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, Kirk Tanner, and our Chief Financial Officer, Gunther Plush will give a business update review, our fourth quarter and full year 2023 results and share our 2024 financial outlook from there we will open up the line for questions and with that I'll hand things over to Kirk.

Thanks, Kelcey and good morning, everyone before we get started today I wanted to share how fired up I am about the opportunity to join the windows team and lead this iconic brand I've been a wendy's fan my whole life and what drove me to make this move was not just the amazing brand heritage, but the incredible potential.

In this business I am confident that you will be just as energized about our future as I am after hearing our plans to drive profitable growth.

Throughout my career I've taken a customer centric mindset, coupled with strong operational execution to guide growth and deliver on strategic objectives I feel strongly that my experience in leadership philosophy will support our success and I am excited to bring this perspective to windows at such a pivotal time for the brand.

And industry.

In my first 90 days I've had the opportunity to meet with many members of the team and some of our passionate franchisees I look forward to spending more time with others across the Wendy's system and our investment community in the coming weeks.

When I look at Wendy's I see the highest quality food in the <unk> industry, which has built a very strong foundation of sales and profit alongside a very healthy balance sheet. This foundation will serve as a springboard to drive what matters, most accelerated sales and unit growth. So the brand.

Can reach its full potential our commitment to growth has never been stronger and I believe that our strategic focus on driving global same restaurant sales momentum accelerating our digital business and expanding our footprint are the keys to unlocking our next chapter and becoming an even more formidable global <unk>.

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Today Youll hear our plans to invest behind these pillars to build a growth engine that drives an acceleration in sales growth footprint expansion and margin enhancement to level up the wendy's brand for years to come.

Before we dive into our profitable growth strategies I'd like to take a moment to recognize the team's accomplishments last year.

We delivered strong 2023 results driving sales and profit growth as we made continued progress on our strategic growth pillars. This marks our 13th consecutive year of global same restaurant sales growth, which highlights our consistent execution and dedication to growing the Wendy's brand.

And our international business achieved eight 1% same restaurant sales growth in 2023 lateral up to 25% on a two year basis and extending to 11 consecutive quarters of double digit two year same restaurant sales growth.

This success supported a record number of international new restaurants opening in 2023 and is a key enabler of our international expansion in the coming years.

Our U S business reached three 7% same restaurant sales growth in 2023, resulting in seven 6% on a two year basis.

This growth allowed us to maintain our dollar and traffic share within the <unk> Burger category each quarter of 2023.

We delivered meaningful year over year digital sales growth every quarter growing nearly 30% across the full year to almost $2 billion.

Which was well ahead of our original expectations.

We reached a record high of 14, 5% global digital sales mix in the fourth quarter supported by strength across all channels as we built more personalized relationships with our loyalty members and continue to provide great in restaurant experiences.

Our sales expansion and lower commodity inflation supported a 100 basis point year over year increase in U S Company operated restaurant margin to 15, 3%. This return to pre Covid margins sets the stage for even further improvement in profitability moving forward, we closed the year.

Strong from a restaurant development perspective, bringing our full year openings to 248 on a net basis, we achieved our goal of 2% net unit growth with 75% of that growth in international markets.

Finally, we remain disciplined in our capital allocation policy, including 100% increase in our dividend rate and returned nearly $400 million to shareholders. In 2023, all of this momentum sets a strong foundation for our growth in the coming years I will now turn it over to GP to share our fourth quarter and full year.

Our financial results. Thanks, Kirk we are pleased to deliver another quarter of sales and adjusted EBITDA growth to close 2023 in the fourth quarter. Our global system wide sales grew over 3% supported by continued global same restaurant sales growth and the benefit of our global net unit growth.

Our U S company operated restaurant margin of 13, 5% contracted versus the prior year, primarily due to a quarter over quarter acceleration in commodity inflation to mid single digit customer count declines and labor inflation of almost 4%.

Partially offset by the benefit of a higher average check driven by cumulative pricing of approximately four 5%.

G&A decreased approximately 4%, primarily driven by a decrease in employee compensation and benefits.

Adjusted EBITDA increased two 5% to approximately $127 million, resulting primarily from higher franchise royalty revenue.

Creasing, the company's incremental investment in breakfast advertising and lower G&A expense.

These were partially offset by a decrease in U S company operated restaurant margin and higher franchise support and other costs.

EPS came in at 21% with the decrease versus prior year, driven by higher amortization of cloud computing arrangement cost and a higher tax rate. These were partially offset by an increase in adjusted EBITDA.

Across the full year of 2023, our strategic plans and strong execution drove compelling financial performance. Our global system wide sales grew six 1% supported by the mid single digit global same restaurant sales growth alongside our 2% global net unit growth.

Our U S company operated restaurant margin of 15, 3% returned to pre COVID-19 levels, despite ongoing inflationary pressures.

Adjusted EBITDA increased over seven and then 5% to approximately $536 million, while adjusted EPS increased almost 13% to 97%.

Finally free cash flow increased 29% to approximately $274 million further demonstrating the high cash flow generating ability of our business with that I'll now turn it back over to Kirk to talk about our plans to drive growth in 2024, Thanks, GP as I said earlier I am.

Cited to begin this chapter for the Wendy's brand with a focus on accelerating our global growth delivering significant restaurant margin expansion and driving long term shareholder value now, let's turn to our growth plans across each strategic pillar.

The breakfast day part is one of the most compelling levers when considering sales growth and margin acceleration opportunities. We can grow our breakfast business significantly without adding incremental labor, which drives meaningful improvement of our restaurant economic model to fuel the acceleration of this day part to new Heights, we are planning to invest approximately.

$55 million of incremental company advertising in the U S and Canada split evenly over the next two years. This investment will further amplify our plans to support an always on approach across media partnerships and Activations as we tell our breakfast story.

We are on a mission to ensure everyone has tried breakfast at Wendy's because we know from experience that once customers try our fresh cracked eggs and crispy Bacon they will be back again and again the level of quality, we provide on our breakfast menu supports our highest customer satisfaction scores and we are now driving.

Further growth at the day part by providing our amazing food at a great everyday price alongside craveable innovation throughout the year I've.

I've had the privilege of meeting with some of our growth minded franchisees and I can tell you. They are all in on breakfast and are committed to further supporting our investments by doing everything they can to execute at the highest level in the morning, We expect our investment in plans will drive a 50% increase in weekly U S breakfast sales per.

Restaurant over the next two years as we charge forward on our journey towards earning our breakfast day part fair share of approximately $6000 weekly per restaurant.

We also have plans in place to double down on what makes Wendy's brand iconic first one of our biggest competitive advantages is our fresh never frozen beef that we use on every hamburger everyday <unk>.

Nobody delivers this level of quality at the scale that we do and we will once again utilize March madness has a high impact platform to remind fans of this key wendy's difference.

Second we will continue to lead the category in <unk>, an innovative programs that drive both traffic and check in 2024 that means new premium flavors and builds on our popular made to crave platform. It means big news on frosty, including new flavors that will drive special visits and add ons to existing orders and it means game.

<unk> innovation on our chicken lineup. Finally, we will continue to leverage our very own <unk> biggie bag platform to offer compelling everyday value importantly, we will always do this the wendy's way, which means never compromising on quality. This platform drove success in 2023 with our customer ratings on valley.

And quality trending better than competitors positioning us to win visits in 2020 for Chris.

Critically important we will execute with excellence in our more than 7000 global restaurants.

In 2023, we made great progress on customer satisfaction taste accuracy and speed and we will continue to elevate our in restaurant experience to delight every customer every day.

In total we now expect our plans and investments will drive global same restaurant sales growth of 3% to 4% in 2024, an increase versus our previous long term expectation of low single digits and we expect to build on this momentum moving forward.

Now, let's turn to our plans to accelerate our digital business.

We've made a ton of progress on our digital journey as we've grown digital sales from under $250 million in 2019 to almost $2 billion. In 2023, we are clearly seeing the benefits of the higher frequency and checks that digital drives. We also know there's a massive opportunity to firm.

Other unlock digital sales growth and benefit even more from the margin expansion. These channels can generate.

To drive Digital's, new phase of growth, we are planning to invest approximately $15 million, primarily in 2024 to further enhance our mobile app experience and step change our loyalty capabilities. The enhancement to our mobile app will allow us to consistently deliver a seamless experience for our customers enabling them.

To access Wendy's anytime anywhere.

We also implemented a new customer data platform in Q4 and are evolving our loyalty platform alongside best in class Third Party partners. These initiatives will unlock our ability to act on customer data through segmentation and machine learning driving a meaningful increase in personalization for our loyalty members.

I am excited about our new capabilities in our digital toolbox, but what really drives our confidence in accelerating digital is the way we are bringing the entire experience together in a uniquely wendy's way, we started our journey by forging a data centric infrastructure and building out a top talent team.

Yeah.

Okay.

Yes.

That foundation allows us to gain the maximum benefit from these new platforms, including increased digital engagement frequency and lifetime spend.

We have the right people systems and plans in place to fuel. The next phase of digital growth and now expect global digital sales will reach over $2 billion in 2020 for a full year earlier than planned.

We are always focused on improving the customer and crew experience and in that spirit, we're leveraging technology in our restaurants, even more we are planning to invest approximately $20 million rollout digital menu boards to all U S company operated restaurants by the end of 2025 and approximately 10 million.

Over the next two years to support digital menu board enhancements for the global system.

We expect our digital menu boards will drive immediate benefits to order accuracy improved crew experience and sales growth from Upselling and consistent merchandising execution big.

Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and day part offerings, along with AI enabled menu changes and suggestive selling as we continue to show the benefit of this technology in our company operated restaurants franchisee interest in digital menu boards should increase.

Further supporting sales and profit growth across the system.

We will continue setting the pace in generative AI and now have rolled out wendy's fresh AI and several restaurants, where we see ongoing improvement in speed and accuracy. This technology also plays a key role on our restaurant team, enabling the crew to focus on what matters preparing fresh high quality Wendy's favorites.

And building customer relationships to bring them back time and again.

We will do everything we can to ensure this new technology is delighting, our customers and crew, while enhancing our restaurant economic model along the way the incremental sales growth, we expect to deliver behind our investment in breakfast digital and technology will drive meaningful sales leverage in our restaurants.

These initiatives are highly incremental and margin accretive to the overall business driving further benefit to restaurant margin. These.

These growth drivers alongside our continued focus on supporting the restaurant economic model through cost management and strategic pricing are driving acceleration in our U S company operated restaurant margin outlook to 16% to 17% in 2024, and our plans perfectly positioned us to continue driving meaningful margin expansion.

Into the future.

The top 25% of our company operated footprint already achieved over 20% restaurant margin. So we know significant growth is achievable. We are now creating the foundation for all restaurants to reach towards the top performance tier we are committed to working with our franchisees to support margin expansion.

Our system. This drives both incremental profit for our current footprint and improvement and new unit economics, which further supports our global footprint expansion arcs.

Our expected restaurant margin expansion will improve newbuild paybacks and drive increased financial health across our system, increasing development appetite from new and existing franchisees over time, but we arent waiting to accelerate our unit growth. We are fueling growth now with continued to support of our global expansion plans.

Our popular build to suit funds continued to drive unit growth and we expect to add incremental funding to the program over time to drive even more new restaurants. Additionally, as our restaurant economic model becomes even more compelling we will lead by example, and continue to expand our company operated footprint in the U S and U K.

These initiatives build on our groundbreaker in pace Center development incentive programs and our increased franchise recruiting efforts, which have resulted in hundreds of new restaurant commitments and 70 approved new franchisees across the last two years. These plans support our goal of driving global net unit growth of north of 2% in 2020.

Four and further acceleration to 3% to 4% in 2025 as of today, we have over 90% of our new restaurant pipeline through 2025 committed under a development agreement. This represents a 20% increase versus our position in the previous quarter further solidifying our confidence.

In achieving our development goals.

Now I will turn it back to J P to walk through our financial outlook.

Thanks, Kirk our 2024 financial outlook, which replaces our previous long term outlook reflects the strong foundation. We are building as we enter our next chapter.

Expect to deliver significant sales growth of 5% to 6%. This year driven by global same restaurant sales growth of 3% to 4% and global net unit growth north of 2%.

This sales growth flows through the P&L benefiting royalties and our company operated restaurant EBITDA and driving our 2024 adjusted EBIT the outlook of approximately $535 million to $545 million flat to slightly up versus the prior year as we are making significant incremental investing.

Across the business.

Expecting U S company operated restaurant margin expansion of approximately 100 basis points to 16% to 17%.

Supported by our sales growth, including cumulative pricing in the low single digits and flat commodity inflation.

We expect labor inflation will hold relatively steady versus the prior year at 3% to 5%. Please.

Please note that we expect our startup investments in ongoing inflationary pressures in the U K market will represent a headwind of approximately 50 basis points to global company operated restaurant margin.

We anticipate that the increases in royalty in restaurant EBITDA will be partially offset by our investment in U S and Canadian breakfast advertising and increase in G&A to $265 million to $275 million and a decrease in net franchise fees to $15 million to $20 million.

Do you expect it to G&A increase is driven by investments to high end support top talent to drive our growth plans. These increases are partially offset by lower expected professional fees.

We expect free cash flow to grow to approximately $280 million to $219 million this year.

We expect this will be driven by lower cloud computing arrangement cash outlays of approximately $25 million.

As both phases of our ERP implementation have now being completed and increasing our core earnings and cash received for development activities and services provided to franchisees.

We anticipate these benefits will be partially offset by an increase in capex to $90 million to $100 million.

Driven by the rollout of digital menu boards to our U S company operated restaurants investments in our mobile App and an increase in company Newbuild.

To close out 2024 outlook discussion, we expect an increase in our EPS in 2024 to <unk> 98 cents to a dollar in two.

Primarily driven by an increase in adjusted EBITDA and lapping a decrease in investment income in the prior year.

<unk> are partially offset by lower interest income driven by an expected decrease in our cash balance as we invest in the business for growth and an increase in amortization of cloud computing arrangement.

We're building a profitable growth engine behind our investments to drive continued sales and margin expansion supporting earnings and cash flow growth for years to come.

Finally, I'd like to highlight our capital allocation policy, which remains unchanged investing in growth remains our number one priority and it is clear to the investments we are making to fuel our strategic growth pillars.

Secondly, we are committed to sustaining an attractive dividend, we announced today the declaration of our first quarter dividend of 25 per share and we expect a full year dividend of $1 per share in 2024.

As we turn our focus to growth investments and maintaining an industry, leading dividend yield we plan to allocate less cash over the next year to share and debt repurchases.

We have approximately $310 million remaining on our $500 million share repurchase authorization expiring in February of 2027, and the approximately $20 million remaining.

We purchased authorization expiring this month, we will.

We remain fully committed to delivering a simple yet powerful formula predictable efficient growth company that is driving strong system wide sales growth on the backdrop of positive same restaurant sales and expanding our global footprint. This is translating into significant free cash flows which supports meaningful return of cash.

To shareholders through an attractive dividend and share repurchases with that I will hand things over to Cook.

Thanks, GP I couldnt be more excited for what's ahead of us at Wendy's as the investments and plans, we announced today position us to drive growth across our strategic pillars. These plans are specifically designed to complement each other in ways that build wendy's fandom and bring more customers into our restaurants more often.

Our plans and investment enable us to delight, our customers with high quality menu items exciting innovation and compelling value across our day parts fueling an increase in our 2024 global same restaurant sales expectations to 3% to 4% they allow us to build personalized relationships with our fans and make it easier for.

For them to access the brand anytime anywhere, enabling us to reach our global digital sales goal of over $2 billion, a year earlier than planned and.

And they drive our global footprint expansion, bringing more wendy's restaurants to the world and empowering our net unit growth acceleration to 3% to 4% in 2025 Wendy's already has a strong track record of growth and now we are solidifying that foundation with the right investments at the right time to drive us to the end.

Next level in the coming months I am committed to working alongside the Wendy's system to build a robust profitable growth plan that will unlock the full potential of this iconic brand with that I will hand things over to kelcey to share our upcoming IR calendar.

Thanks, Kirk we're excited to get on the road and introduced many of you to Kirk who will be attending our investor events. This quarter to start things off we have an MBR in Boston with Piper Sandler on March 7th well that attend the UBS Conference in New York on March 13th followed by the City Conference in Orlando on March 21st Lastly, we plan to report our first quarter or.

<unk> and host a conference call that same day on May 2nd as we transition into our Q&A section I wanted to remind everyone that due to the high number of covering analysts will be limiting everyone to one question only with that we're ready to take your questions.

Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.

Thats Star one on your telephone keypad.

We do have our first question comes from Danilo <unk> from Bernstein your.

Your line is now open.

Yeah.

Thank you and thank you will.

Welcome aboard.

Quick question on the unit growth expectations for 2024.

Just maybe needs of the business can you just help us understand in your view what has prevented at wendy's from potentially accelerating the unit growth environment in 2024.

And why are you.

Cited about the growth development potential.

25 and beyond.

Okay.

Danilo nice to meet you.

Thanks for the welcome yes in 2024, we're excited about our expansion I think the first thing to think about is between 24 and 25, we have 90%.

Commitments through our development plan. So that gives me a lot of confidence in 2024, we see north of 2%, which is an acceleration on 2023 I feel really good about that and I feel really good about 25 and beyond because we've got that momentum and we can see that momentum moving into the future that gives me.

<unk>.

A great deal of confidence.

Our next question comes from Joshua Long from Stephens, Inc.

Sure you May proceed with your question.

Great. Thanks for taking my question I'm curious, if you could talk a little bit about the Brexit.

Breakfast sales trends to date and interested to hear about the incremental marketing that you're going to be focused on to drive that awareness in 2024 and beyond curious maybe with the second round of investment what we've learned or what you have learned from the first round and maybe how it might differ as you seek to drive the overall awareness of the <unk>.

Category.

Good morning, Josh on breakfast, we were really happy with our breakfast business. As you know we are in it for since since four years. We have now created the number three market position in the United States and has a lot of opportunity on the <unk>.

Remarks.

Sure on this business is a $6000 per restaurant week.

Yes, definitely with that investment.

Growing sales by about 50% in the next two years and how do we do that right we definitely.

We are doing more innovation that you have seen us launch of breakfast burrito that will resonate well with consumers.

Also leveraging the cinnabon brand.

Launched soon upon us to again.

Fulfillment unmet need that will drive trial and repeat and will drive the breakfast business soda Secondly, I would say is we've definitely learned that kind of everyday value.

This is really important so you've seen us in the second half of last year to two for $3 meal bundle on breakfast.

Consumers know the debts, they're here to stay so whenever they choose us in the morning day part they will find great value and obviously they find the best breakfast food in the category I would also say is free.

Franchise community Super excited about the breakfast investments that we're making so they are all in.

Hood Cook waiting to talk to a lot of franchisees and.

Excited to support the investment and continue to support and drive the breakfast business for US Yes, just let me add a few things.

This is the most compelling growth opportunity for Wendy's and with the investment the innovation and the excitement from the franchise community. This is a real opportunity for 2024 and 2025. So you think about our Srs growth. This represents about a third of the growth just in breakfast. So.

It's certainly a big bet for US a lot of upside for us and we really have system excitement. So I'm really excited about this opportunity.

Our next question comes from Jon Tower from City, John Your line is now open.

Great. Thanks, maybe just following up on the breakfast.

Why.

Just curious why breakfast and what's going to what are you thinking about for the rest of the day parts are there any shifts that incremental spending regarding lunch dinner and can you give us maybe some context on how breakfast performed in third and fourth quarter of 'twenty four and maybe just reiterating Joshua question, how it looks.

To date.

Yes, John.

On the breakfast side, but I don't think I'd give you spend enough time answering the question and again, we are liking it because obviously super incremental from a profitability point of view for the franchisees and for US we can add 50% of sales.

Without really.

Adding any additional labor. So it is a great driver for restaurant economic model.

I would say on rest of day, obviously super important for us.

Definitely going to double down and everything that makes this brand iconic fresh never frozen beef every day the whole lineup.

<unk> can do that on the same scale as we are.

And we are going to drive innovation, you're going to say see news on made to crave, you'll see news on trustee flavors and you will see innovation on the chicken lineup.

Also would say value important to consumers under pressure.

On the boat Biggie bag is driving restaurant economic model for US and is meeting the needs of those consumers that are looking for a deal and last but not least execution execution execution in the restaurants, we've made great progress in quarter four we go faster.

Customer satisfaction, <unk>, better and it's obviously a huge focus for us Cook any anything else yes.

I think we've talked about the upside potential in the profitability upside for breakfast for sure I would just add we use some of our platforms like March madness to talk about our fresh never frozen.

Hamburgers, which are truly I think the best in the industry at the scale that we can provide so we will certainly celebrate what we're famous for.

For us and is meeting the needs of those consumers that are looking for a deal and last but not least execution execution execution in the restaurants, we've made great progress in quarter four we got faster.

But again very excited about breakfast again thats not the only thing we'll be talking about but that's certainly one of the most important growth drivers for 2024 and 2025.

<unk> resection accuracy order went better that's obviously a huge focus for us took any anything else.

Just realized I didn't answer your question in terms of sales trends beginning of the first quarter. As you know we don't give these out but I didn't give you a little bit of color.

Speaker Change: I think we've talked about the upside potential in the profitability upside for breakfast for sure I would just add we will use some of our platforms like March madness to talk about our fresh never frozen.

As you have heard we are into.

Creasing, the Sos guidance with this outlook to 3% to 4% the previous guidance was low single digit sort of.

Stephanie next generation behind the investments can definitely safer machine point of view I can say quarter, one will be slightly lower and then quarter two and quarter three will be.

Speaker Change: Hamburgers, which are truly I think the best in the industry at the scale that we can provide so we will certainly celebrate what we're famous for.

Speaker Change: But again very excited about breakfast again, that's not the only thing we will be talking about but thats certainly one of the most important growth drivers for 2024 and 2025.

Kind of steady and a little bit higher than the fiscal year guidance.

You might ask the question. So why are we seeing quarter, one is a little bit lower a couple of things first of all definitely difficult comparisons you know in the first quarter of last year Global Sos growth was 8%.

Speaker Change: Tom.

Speaker Change: Realized I didn't answer your question in terms of sales trends beginning of the first quarter. As you know we don't give this out but I didn't give you a little bit of color.

Tom: You have heard we are increasing the Sos guidance with this outlook to 3% to 4%. The previous guidance was low single digit. So there's definitely an acceleration behind investments can definitely say from machine point of view I can say quarter, one will be slightly lower than the reported two and quarter three.

Clearly weather conditions in United States didn't help.

Can also offer that.

<unk> seen the sales momentum accelerated in recent weeks and with all of that we are confident with the sales guidance, we have given up.

Our next question comes from Brian Bittner from Oppenheimer, Brian Your line is now open.

Tom: <unk> will be.

Tom: Kind of steady and a little bit higher than the fiscal year guidance.

Yeah.

Thanks, Good morning.

<unk> I just wanted to follow up on that.

Tom: You might ask the question. So why are we saying quarter. One is a little bit lower couple of things first of all definitely difficult comparisons you know in the first quarter of last year, our global Sos growth was 8% and clearly better conditions in United States didn't help.

The system sales guidance for 2004, it does assume the 3% to 4% comps.

I do just want to understand the confidence in setting what does seem to be a high bar I understand there is investments coming to drive growth, but you guys did 1% comps and <unk>, 2% comps on average the last couple of quarters.

Tom: Can also offer that.

Tom: We <unk> the sales momentum accelerated in recent weeks and with all of that.

<unk> is rolling off so.

Help us understand why the same store sales assumption for 'twenty four is not a range that maybe reflects a bit more conservatism.

Tom: We are confident with the sales guidance, we have given up.

Tom: Our next question comes from Brian Bittner from Oppenheimer, Brian Your line is now open.

Maybe gives you a chance to maybe under promise over deliver on the same store sales and why you come out of the gate with what seems to be a pretty bold.

Brian John Bittner: Thanks, Good morning.

Brian Bittner: <unk>.

Brian John Bittner: GP I just wanted to follow up on that.

We went to 4% target for comps.

Brian John Bittner: The system sales guidance for 2004, it does assume the 3% to 4% comps.

Yes, Brian Good morning, the reason why we increased the guidance, we've put more money behind to drive that growth that was not contemplated.

Brian John Bittner: I do just wanted to understand the confidence in setting what does seem to be a high bar I understand there is investments coming to drive growth, but you guys did 1% comps and <unk>, 2% comps on average the last couple of quarters.

<unk>, obviously in the previous guidance. So it is kind of the main reason as we obviously thought about this guidance and looked at our plans we feel really good about them.

What are the underlying assumptions to break it down a little bit we definitely expect it.

Brian John Bittner: Pricing is rolling off so maybe help us understand why the same store sales assumption for 2004 is not a range that maybe reflects a bit more conservatism and maybe gives you a chance to maybe under promise over deliver on the same store sales and why it come out of the gate with what seems to be a pretty bold.

The Hamburger category will be slightly positive in traffic next year that's all.

Assessment. That's also the assessment of market Research company that we are looking at device for and then if you look at.

Srs.

Definitely expecting in those single digit traffic growth again, we are building frequency right, we're building frequency and breakfast <unk>.

Brian John Bittner: We went to 4% target for comps.

Speaker Change: Yes, Brian Good morning, the reason why we increased the guidance, we've put more money behind to drive that growth that was not contemplated obviously in the previous guidance. So it is kind of the main reason.

Frequency digital.

Drive traffic for US we expect low single digit price is your observation is correct, we have a carryover price of about 2%.

Have a small price increase set up for the middle of the year. So that makes it about low single digit and we expect the mix to be about flat. So that's the story, obviously hasn't given you all the details on all our commercial plans, we are highlighting breakfast, but again rest of day, because obviously a huge portion.

Traffic next year.

Our assessment that also the assessment of market Research company that we're looking at device for and then if you look at on U S. Srs.

We have a lot of exciting news and approaches for consumer that makes us confident that the guidance is very realistic.

And they are expecting low single digit traffic growth again, we are building frequency right. We're building frequency in breakfast, we're building frequency and digital.

Our next question comes from Dennis Geiger from UBS.

Drive traffic for US we expect low single digit prices. Your observation is correct, we have a carryover price of about 2%.

Your line is now open.

Great Thanks and.

Congratulations wondering if you guys could talk a little bit more about your customer whether youre seeing anything as far as customer behaviors or spending patterns changing I think GP.

Speaker Change: And we have a small price increase set up for the middle of the year. So that makes it about low single digit and we expect the.

Speaker Change: The mix to be about flat. So that's the story, we obviously havent given you all the details on all our commercial plans, we highlight in breakfast, but again rest of David obviously, a huge portion we have a lot of exciting news and approaches for our consumer that makes us confident that the guidance is very real.

Just mentioned a little bit around the consumer pressure and I think you've talked about value within that context. So curious if anything more to expand also on the brand's value offering.

Let me be value perception scores and maybe at a high level just value plans for the year, if theres a way to kind of frame that up for us. Thank you.

Speaker Change: Okay.

Good morning, Dennis Let me, let me start with the answer and then cooked chicken.

Speaker Change: Our next question comes from Dennis Geiger from UBS.

I forget anything so.

Dennis Geiger: Your line is now open.

Right, but the consumer is definitely under pressure continues to be on the type of under pressure the trends that the lower income consumer, which we define as somebody with a household income of less than $75000 traffic is down with them. Our share is unchanged. So we are we are not lose.

Speaker Change: Great Thanks and.

Speaker Change: Congratulations I'm wondering if you guys could talk a little bit more about your customer whether youre seeing anything as far as customer behaviors or spending patterns changing I think GP.

Speaker Change: Just mentioned a little bit around the consumer pressure and I think you've talked about value within that context. So curious if anything more to expand also on the brand's value offering.

Their same thing on the higher household income consumer traffic there.

Tom: I'll, maybe value perception scores than maybe at a high level just value plans for Europe. There is a way to kind of frame that up for us. Thank you.

Again, she is unchanged and that's my overall in the quarter, our daily dollar and traffic share.

Was unchanged so.

Speaker Change: Good morning, Dennis Let me, let me start with the answer and then cooked chicken.

So value is going to be important.

I think our barbell strategy of offering a piggy back up to what I would call. The Super premium we've made to crave I think is definitely.

Speaker Change: Forget anything so so you're right, but the consumer is definitely under pressure continues to be underpinned are under pressure. The trend that's been lower income consumer, which we define as somebody with a household income of less than $75000.

Helping all our consumer basis.

The high income consumer is probably ending more to the higher priced items in the menu and vice versa. So.

Tom: It is down with them our share is unchanged. So we are we are not losing their same thing on the higher household income consumer traffic is up and again I wish you had changed and that's my overall in the quarter, our download dollar and traffic share.

That's kind of the consumer dynamics.

You look at the history of the category you definitely finds that net disposable income and miles driven are pretty big correlate us and expect expectation.

Speaker Change: Was unchanged so.

Expectation is clearly to net disposable income should go slightly up sequentially right about why do we believe this economy is doing pretty well and we are basically full employment grocery inflation is coming down so a quarter versus quarter that the consumers should start to see net disposable income.

Speaker Change: So value is going to be important.

Brian John Bittner: I think our barbell strategy of offering a piggy back up to what I would call Super premium we've made to crave I think is definitely.

Brian John Bittner: Helping all of our consumer basis.

Brian John Bittner: The high income consumer is probably tending more to the higher priced items in the menu and vice versa. So.

Coming up slightly feel a little bit rich and feed a little bit like.

What I can treat myself and Tom a little bit more often.

Brian John Bittner: That's kind of the consumer dynamics.

Total debt divest towards fuel costs came down a little bit so driving around mobility has become a little bit better. So all of that explains a little bit our position on the category issue to do a little bit better than we would absolutely expect that to be able to perform at least in line with the category yes.

Brian John Bittner: If you look at the history of the category, you're definitely finds that net disposable income and miles driven are pretty big correlate us.

Brian John Bittner: The expectation is clearly the net disposable income should go slightly up sequentially right about why do we believe it is.

Yes look I would just add in my early days here and seeing the biggie bag looking at consumer trends and consumer.

Speaker Change: The economy is doing pretty well and we are basically full employment grocery inflation is coming down so a quarter versus quarter. The consumers should start to see net disposable income coming up slightly feel a little bit richer and treat a little bit like.

Feedback consumers love Biggie and that is a real platform. We will continue to build on value is going to be incredibly important. It also gives me the confidence of why we're building. This digital capability. So that we can get personalized value. We can also create that loyalty and have momentum and loyalty. So digital is another avenue for us.

Speaker Change: What I can treat myself and Tom a little bit more often.

Speaker Change: To date the restaurants.

Speaker Change: Fuel costs came down a little bit so driving around mobility, it's come a little bit better. So all of that explains a little bit our position on the category should do a little bit better than we would absolutely expect that we would perform at least in line with the category.

To drive value and the quality that we have at Wendy's.

Sure.

Our next question comes from Chris <unk> from Stifel. Your line is now open.

Speaker Change: Look I would just add in my early days here and seeing the biggie bag looking at consumer trends and consumer.

Thanks, Hi, Kirk welcome to the call.

Thanks for the information about the plans for 'twenty, four but I would like to hear your thoughts about the company's longer term strategic priorities or at least if the company is going through a process to kind of evaluate whether the right long term growth priorities are in place and what I mean by this for example, or are things like whether the company should be focused on international developed.

Speaker Change: Feedback consumers love Biggie and that is a real platform. We will continue to build on value is going to be incredibly important. It also gives me the confidence of why we're building. This digital capabilities. So that we can get personalized value. We can also create that loyalty and have momentum and loyalty. So digital is another avenue for us.

Outside of North America is the right strategy or whether it should maybe consider franchising multiple domestic brands I'd love your thoughts on that.

Speaker Change: To drive value and the quality that we have a wendy's.

Chris Good to meet you.

Speaker Change: Our next question comes from Chris <unk> from Stifel. Your line is now open.

One of the things that attracted me to Wendy's was certainly the potential for profitable growth and the expansion opportunities that we have.

Chris: Thanks, Hi, Kirk welcome to the call.

I mentioned earlier that 90% of our development, we can see full line of sight through 'twenty five.

One of the big growth opportunities certainly is both domestic and international expansion, we have a brand that certainly travels outside the U S and has the capability to provide great value.

Chris: What I mean by this for example, or are things like whether the company should be focused on international development outside of North America is the right strategy or whether it should maybe consider franchising multiple domestic brands.

And profitability and returns to our franchisees. So we've recently brought on another 70 franchisees and approved in other.

Chris: Love your thoughts on that.

Speaker Change: Chris Good to meet you, yes, one of the things that attracted me to Wendy's was certainly the potential for profitable growth and the expansion opportunities that we have I mentioned earlier that 90% of our development. We can see full line of sight through 'twenty.

A group of franchisees to drive that development, we're looking at international development is a real opportunity.

We will build.

We've put a flag in.

Several different countries that we can build brand awareness drive profitable growth.

That is I would tell you that is one of the things that excited me the most about joining wendy's.

Speaker Change: Five.

Speaker Change: One of the big growth opportunities certainly is both domestic and international expansion, we have a brand that certainly travels outside the U S and has the capability to provide great value.

That is in addition to driving.

<unk> growth in our digital platform unit growth, both domestically and internationally is the key.

Speaker Change: And profitability and returns to our franchisees.

Clear priority for us.

Speaker Change: We've recently brought on another 70 franchisees and improved another.

Our next question comes from Eric Gonzalez from Keybanc, Eric Your line is now open.

Speaker Change: A group of franchisees to drive that development.

Speaker Change: We're looking at international development is a real opportunity.

Hey, Thanks for the question and welcome Kirk.

Speaker Change: We will build.

My question is with the late night day part I don't think we really talked about it that much on the paired remarks. So maybe you could discuss how that performed during the fourth quarter and whether you continue to view that as a growth driver in 'twenty four.

Speaker Change: We'll put a flag in.

Speaker Change: Several different countries that we can build brand awareness drive profitable growth. Yes that is I would tell you that is one of the things that excited me the most about joining wendy's.

Good morning, Eric.

Really happy with the late night day part.

That is in addition to driving.

We grew in the fourth quarter about mid teens year over year. So that was really a nice sales kind of a for us in 2023.

Speaker Change: S growth and our digital platform unit growth, both domestically and internationally is.

Speaker Change: Clear priority for us.

These managed no to get really good support from.

From franchisees on that initiative about 90% of our company rest of our restaurants are open to midnight or even a little bit later.

Speaker Change: Our next question comes from Eric Gonzalez from Keybanc, Eric Your line is now open.

Eric Gonzalez: Alright, Thanks for the question and welcome Kirk.

The business it is higher average checks it's really.

My question is with the late night day part I don't think we really talked about it that much on the remarks. So maybe you could discuss how that performed during the fourth quarter and whether you continue to view that as a growth driver in 'twenty four.

Good for the delivery business should.

So we like all of that.

I would say is that's in the base I think it's going to be.

A valuable sales layout going forward, but I would not expect the outsized high teen growth rate that.

Kirk: Good morning, Eric.

Eric Gonzalez: Really happy with the late night day part.

Eric Gonzalez: We grew in the fourth quarter about mid teens year over year. So that was really a nice sales timing for us in 2023.

We have seen in 2003 to repeat itself in 2024.

Eric Gonzalez: You know that we've managed now to get really good support from.

Our next question comes from John <unk> from JP Morgan.

Eric Gonzalez: From franchisees on that initiative about 90% of our company rest of our restaurants are open to midnight or even a little bit later.

John Your line is open.

Yes, hi, Thank you hi, how are you.

So the question I have two if you don't mind.

That business at a higher average check really.

On international and especially the idea of putting a flag in certain international markets to drive opportunity.

Eric Gonzalez: Good for the delivery business should.

Speaker Change: We like all of that.

Speaker Change: I would say is.

Some cases UK, specifically, it's a mature market. There is a number of competitors that have a lot of scale in that market.

Speaker Change: That's in the base I think it's going to be.

Speaker Change: And valuable sales layout going forward, but I would not expect the outsized.

Our.

Speaker Change: And growth rates that.

Very new relatively new and very subscale in that market. So it may be applying some of your pepsico.

Speaker Change: We have seen in 2003 to repeat itself in 2024.

Type of experience how can win he has come in and break in a mature market where scale has already been established by some very long term competitors, just kind of give us that path. This itself if you don't mind.

Speaker Change: Our next question comes from Sean <unk> from JP Morgan.

Sean: John Your line is open.

Sean: Yes, hi, Thank you hi, Chris how are you.

Sean: So the question I have two if you don't mind.

Yes.

That's exactly.

Sean: On international and especially the idea of putting a flag in certain international markets and you have to drive opportunity.

You're onto something here, especially with the U K.

One thing that I love about what we have is we have this quality differentiation that really plays in that market, we've seen real momentum in the U K and that's enough we have enough evidence.

Sean: Some cases UK, specifically, it's a mature market. There is a number of competitors that have a lot of scale in that market.

Sean: Our.

Sean: Very new relatively new and very subscale in that market. So it may be applying some of your pepsico.

With winning over customers with our quality.

That which is very differentiated which is meaningful for the UK consumer.

Sean: Type of experience you know how can when he has come in and break in a mature market where scale has already been established by some very long term competitors, just kind of give us that path. This itself if you don't mind.

Seeing the growth and we will continue to build in that market along with other markets, but in that example, we have enough momentum enough evidence.

We have brand love brand awareness and those are the things you think about when Youre building a market as well the awareness, what's you're famous for differentiation and we have momentum so I feel really good about where we're going.

Sean: Yes.

Speaker Change: That's exactly.

Speaker Change: You're onto something here, especially with the U K.

Speaker Change: One thing that I love about what we have is we have this quality differentiation that really plays in that market, we've seen real momentum in the U K and that's enough we have enough evidence.

Internationally to your example, the UK has a very strong market and has tons of potential for the future.

And Tony you know who wanted to add that also infringements. He's a super excited but we have 10 franchise restaurants in the United Kingdom.

Speaker Change: With winning over customers with our quality.

Speaker Change: Is very differentiated which is meaningful for the UK consumer.

14, <unk> units in 12 company units and the initial results.

Speaker Change: You've seen the growth and we will continue to build in that market along with other markets, but in that example, we have enough momentum enough evidence.

Franchise. He saw excited them. So much did actually early in the increased the development commitments and select looked at something there is resonates with the UK consumers. We are so confident that we won't sign additional commitments to help your go to market. So I think it's another good data point to think about.

Speaker Change: Where we have brand love our brand awareness and those are the things you think about when Youre building a market as well the awareness, what's you're famous for differentiation and we have momentum so I feel really good about where we're going.

That would be probably got the entry into the U K right. It's a springboard for us into Europe, and we think the investment is going to pay off nicely for us and for our shareholders.

Speaker Change: Internationally to your example, the UK has a very strong market and has tons of potential for the future.

And Sean you know who wanted to add that also our franchisees are super excited to have 10 franchise restaurants.

Our next question comes from Andrew <unk> from BMO, Andrew Your line is now open.

Speaker Change: Them.

Speaker Change: 14, reefer units until the company units and the initial results that our U K franchise. He saw excited them. So much did actually early in the increased development commitments and select looked at something there is resonates with the UK consumers. We are so confident that we won't sign additional.

Great. Thank you and good morning.

My question is on the restaurant margin outlook, you provided for the U S business, obviously expecting.

Some nice margin expansion there. So I guess I was just hoping you could break that down a little bit how much are you expecting the breakfast is going to contribute in 2000 and for how much visibility do you have on the commodity inflation side the swap that you mentioned.

Speaker Change: Commitments to help your go to market. So I think it's another good data point to think about that would be probably got the entry into the U K right.

As you think about balancing value and premium I don't know if youre expecting mix to be a positive contributor negative I'm just curious for a little more texture on the margin.

Speaker Change: As a springboard for us into Europe.

Speaker Change: We think the investment is going to pay off nicely for us and for our shareholders.

Thanks.

Good morning, Andrew.

Speaker Change: Our next question comes from Andrew <unk> from BMO, Andrew Your line is now open.

We feel really confident about the guidance of 100 basis points up to 16% to 17%, especially sales language right. So the <unk>.

Andrew: Great. Thank you and good morning. My question is on the restaurant margin outlook you provided for the U S business, obviously, you're expecting.

The percent growth of breakfast.

The next two years drive some of the profitability same with digital as you know check remains elevated versus the non digital check that drives things for us.

Andrew: Some nice margin expansion there. So I guess I was just hoping you could break that down a little bit how much are you expecting the breakfast is going to contribute in 2000 and for how much visibility do you have on the commodity inflation side. The fact that you mentioned and as you think about balancing value and premium I don't know if youre expecting mix to be up.

Have a couple of projects out there.

Pure cost management.

To help get margin expansion going for us.

<unk> talked about about low single digit pricing in the context of an expectation that commodities is going to be flat for us in 2024, and labor inflation in line with history about 3% to 5%.

Andrew: Positive contributor negative I'm, just curious for a little more texture on the margin outlook. Thanks.

Speaker Change: Good morning, Andrew Yeah, we feel really confident about the guidance of 100 basis points up to 16% to 17%, it's definitely sales leverage right.

Little bit of color on the commodity front, we definitely expect.

Speaker Change: 50% growth of breakfast.

Speaker Change: What are the next two years drive some of the profitability same with digital right. As you know check remains elevated versus the non digital check that's drives things for us we have a couple of projects out there on kind of pure cost management.

Chicken to be deflationary for us beef and fries inflationary all of that balances out to flat from a visibility point of view about 75% of our commodity pricing is locked down.

Speaker Change: To help get.

Speaker Change: Margin expansion going for us.

The remaining 25% as you know a decent amount of that is beef as you know we cannot locked it down throughout the year. So it's kind of.

Speaker Change: Pricing right I talked about about low single digit pricing in the context of an expectation that commodities is going to be flat for us in 2024, and labor inflation in line with history about 3% to 5%.

Colored restaurant margin for you.

Our next question comes from Chris <unk> from RBC capital markets. Chris Your line is now open.

Speaker Change: A little bit of color on the commodity front, we definitely expect.

Hi, Thanks, Good morning, So GP I believe you mentioned an increase in company new builds so can you expand maybe a bit more on that what the plan is there both near term and long term just maybe touching on the impact of franchise mix, whether you plan to refranchising those new builds over time, just any further detail on the company.

Speaker Change: Chicken to be deflationary for us beef and fries inflationary all of that balances out to flat from a visibility point of view about 75% of our commodity pricing is locked down the remaining 25% as you know a decent amount of debt.

On strategy. Thank you.

Yes. Good morning. So overall is not a departure from our strategy, it's a little bit of leaning in putting their money, where our mouth base, we're going to stay asset light as you know our company restaurant ownership is about five 7% at the end of this last year it will hover around.

Speaker Change: Beef as you know we cannot lock that down throughout the year. So it's kind of the.

Speaker Change: Color on restaurant margin for you.

Speaker Change: Our next question comes from Chris <unk> from RBC capital markets. Chris Your line is now open.

The growth of the rest of the system to about the same level.

Chris: Hi, Thanks, Good morning, So GP I believe you mentioned an increase in company new builds so can you expand maybe a bit more on that what the plan is there both near term and long term.

You can definitely expect that we're going to continue to build out the U K footprint.

That's about the seating it's tough for us to and is currently in the next couple of years. It can expect growth to about 20 restaurants, we also going to build out.

Chris: Maybe touching on the impact of franchise mix, whether you plan to Refranchising those new builds over time, just any further detail on the company owned strategy. Thank you.

Some of our existing markets in the U S a little bit photo.

GP: Yes. Good morning. So overall is not a departure from our strategy, it's a little bit of leaning in putting our money, where our mouth base, we're going to stay asset light as you know our company restaurant ownership is about five 7% at the end of this last year it will hover around.

Kind of.

Color on us leading in it is not a departure from an asset light structure.

Demonstrating to franchisees that.

There's money to be made there is a great financial return to be had when you build best amongst these days with the marketing margin structure that we have <unk> behalf at the margin outlook could advance.

GP: The growth of the rest of the system to about the same level.

GP: You can definitely expect that youre going to continue to build out the U K footprint.

Our next question comes from Sara Senatore from Bank of America. Sara Your line is now open.

GP: So thats about the seating it's 12 restaurants currently in the next couple of user can expect.

GP: <unk> to about 20 restaurants, we also going to build out.

Great. Thank you very much.

<unk>.

A follow up question on the competitive environment I know.

GP: Some of our existing markets in the U S. A little bit further so that's kind of.

Third quarter, you exited I think with positive traffic.

GP: The color on us leading in it is not a departure from an asset light structure, we're just demonstrating to franchisees that.

You talked about fourth quarter, you kind of maintain your share and the.

Traffic I think negative.

Could you just maybe talk about that how much of that was the market versus maybe your menu news youre marketing and as you think about getting to positive traffic in your head and.

GP: There is money to be made there is a great financial return to be had when you build restaurants. These days with the market marching structure states behalf <unk> behalf at the margin outlook.

Not to belabor this but Ken maybe if you could press on some of the levers is it just the marketing dollars are you expecting perhaps some improvement in the operating a competitive environment.

GP: Yes.

GP: Our next question comes from Sara Senatore from Bank of America. Sara Your line is now open.

Sara Harkavy Senatore: Great. Thank you very much just.

Sara Harkavy Senatore: One is a follow up question on that.

Good morning, Sarah.

Sara Harkavy Senatore: Competitive environment I know.

Comment on the quarter for I would say is really the category. The category was relatively soft we performed in line with the category I think we had a pretty decent program thing for before we push breakfast a little bit with <unk>.

Sara Harkavy Senatore: Third quarter, you exited I think with positive traffic.

Sara Harkavy Senatore: That fourth quarter, you kind of maintain your share and.

Speaker Change: I think so.

Speaker Change: Could you just maybe talk about that how much of that was the market versus maybe your menu news your marketing and as you think about getting to positive traffic in your head.

English muffin, and obviously starting between still the expectation with consumers on a two for $3.

Youll deal that this represents.

Speaker Change: Yes.

Presenting great value.

Speaker Change: Not to belabor this but Ken maybe if you could press on some of the levers is it just the marketing dollars are you expecting perhaps some improvement in the operating a competitive environment.

So.

I would say the category in the fourth quarter was probably a little bit softer than we thought to be state obviously within the sales guidance that we've given of 6% to 7%, but at the end it's in the slightly lower side, but didn't miss it.

Ken: Good morning, Sir yes.

Ken: <unk>.

Ken: Comment on the quarter for I would say is really the category the category was relatively soft.

And again encouraged about the programming for next year breakfast is important and it's not the only thing.

Speaker Change: In line with the category.

Ken: We had a pretty decent program out there in quarter, four we pushed breakfast a little bit with that.

Duane.

There is a decent amount of innovation across all our main product lines on the rest of day is it going to few of the business on the digital side and together with the breakfast business.

Ken: English muffin, and obviously starting between still the expectation with consumers on a two for $3 Youll deal that is.

Ken: Resenting great value.

That's kind of.

Enough color I can give you on that one.

Ken: So I would say the category in the fourth quarter was probably a little bit softer than we thought to be state obviously within the sales guidance that we had given of 6% to 7%, but the ended and the slightly lower side, but didn't miss it.

Alright. Thank you Sir that was our last question of the call. Thank you Kirk in GB and thank you Evan participating. This morning, we look forward to speaking with you again on our first quarter call.

Great Day, you may now disconnect.

Ken: And again encouraged about the programming for next year breakfast is important and it's not the only thing we are.

Okay.

Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.

Ken: <unk>.

Thank you.

Ken: There is a decent amount of innovation across all of our main product lines on the rest of day is it going to fuel the business on the digital side and together with the breakfast business.

Yeah.

Okay.

Ken: That's kind of.

Enough color I can give you on that one.

Speaker Change: Alright. Thank you Sir that was our last question of the call. Thank you Kirk and GP and thank you ever just within this morning, we look forward to speaking with you again on our first quarter call have a great day you may now disconnect.

Speaker Change: Okay.

Speaker Change: Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.

Thank you.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Conference call all lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session.

Kelsey freed director of Investor Relations you May begin your conference.

Kelsey Freed: 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 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.

Speaker Change: 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 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.

Speaker Change: On our conference call today are president and Chief Executive Officer, Kirk Tanner, and our Chief Financial Officer, Gunther Plush will give a business update review, our fourth quarter and full year 2023 results and share a 'twenty 'twenty four financial outlook from there we will open up the line for questions and with that I'll hand things over to Kirk.

Speaker Change: Thanks, Kelcey and good morning, everyone before we get started today I wanted to share how fired up I am about the opportunity to join the windows team and lead this iconic brand I've been a wendy's fan my whole life and what drove me to make this move was not just the amazing brand heritage, but the incredible potential IC.

Dennis Geiger: In this business I am confident that you will be just as energized about our future as I am after hearing our plans to drive profitable growth.

Tom: Throughout my career I've taken a customer centric mindset, coupled with strong operational execution to guide growth and deliver on strategic objectives I feel strongly that my experience in leadership philosophy will support our success and I am excited to bring this perspective to wendy's at such a pivotal time for the brand.

And industry.

Brian John Bittner: In my first 90 days I've had the opportunity to meet with many members of the team and some of our passionate franchisees I look forward to spending more time with others across the Wendy's system and our investment community in the coming weeks.

Brian John Bittner: When I look at Wendy's I see the highest quality food in the queues are industry, which has built a very strong foundation of sales and profit alongside a very healthy balance sheet. This foundation will serve as a springboard to drive what matters, most accelerated sales and unit growth. So the brand.

Can reach its full potential.

Brian John Bittner: Our commitment to growth has never been stronger and I believe that our strategic focus on driving global same restaurant sales momentum accelerating our digital business and expanding our footprint are the keys to unlocking our next chapter and becoming an even more formidable global competitor.

Speaker Change: Today, you'll hear our plans to invest behind these pillars to build a growth engine that drives an acceleration in sales growth footprint expansion and margin enhancement to level up the wendy's brand for years to come.

Before we dive into our profitable growth strategies I'd like to take a moment to recognize the team's accomplishments last year.

Speaker Change: We delivered strong 2023 results driving sales and profit growth as we made continued progress on our strategic growth pillars. This marks our 13th consecutive year of global same restaurant sales growth, which highlights our consistent execution and dedication to growing the Wendy's brand.

Speaker Change: And our international business achieved eight 1% same restaurant sales growth in 2023 lateral up to 25% on a two year basis and extending to 11 consecutive quarters of double digit two year same restaurant sales growth.

Speaker Change: This success supported a record number of international new restaurants opening in 2023 and is a key enabler of our international expansion in the coming years.

Speaker Change: Our U S business reached three 7% same restaurant sales growth in 2023, resulting in seven 6% on a two year basis.

Chris: This growth allowed us to maintain our dollar and traffic share within the <unk> Burger category each quarter of 2023.

Chris: We delivered meaningful year over year digital sales growth every quarter growing nearly 30% across the full year to almost $2 billion, which was well ahead of our original expectations.

Chris: We reached a record high of 14.5% global digital sales mix in the fourth quarter supported by strength across all channels as we built more personalized relationships with our loyalty members and continue to provide great in restaurant experiences.

Speaker Change: Our sales expansion and lower commodity inflation supported a 100 basis point year over year increase in U S Company operated restaurant margin to 15, 3%. This return to pre Covid margins sets the stage for even further improvement in profitability moving forward, we closed the year.

Speaker Change: Strong from a restaurant development perspective, bringing our full year openings to 248 on a net basis, we achieved our goal of 2% net unit growth with 75% of that growth in international markets.

Speaker Change: Our financial results. Thanks, Cook, we are pleased to deliver another quarter of sales and adjusted EBITDA growth to close 20 to 23 in the fourth quarter. Our global system wide sales grew over 3% supported by continued global same restaurant sales growth and the benefit of our global net unit growth.

Speaker Change: Our U S company operated restaurant margin of 13, 5% contracted with the prior year, primarily due to a quarter over quarter acceleration in commodity inflation to mid single digit customer count declines and labor inflation of almost 4%.

Eric Gonzalez: Partially offset by the benefit of a higher average check driven by cumulative pricing of approximately four and a half defense.

Eric Gonzalez: <unk> decreased approximately 4%, primarily driven by a decrease in employee compensation and benefits.

Eric Gonzalez: Adjusted EBITDA increased two 5% to approximately half the $27 million, resulting primarily from higher franchise royalty revenue.

Eric Gonzalez: Creasing, the company's incremental investment in breakfast advertising and lower G&A expense.

Eric Gonzalez: But partially offset by a decrease in U S company operated restaurant margin and higher franchise support and other costs.

Eric Gonzalez: Adjusted EPS came in at 21% with the decrease was probably a year driven by higher amortization of cloud computing arrangement cost and a higher tax rate. These were partially offset by an increase in adjusted EBITDA.

Speaker Change: Across the full year of 2023, our strategic plans and strong execution drove compelling financial performance. Our global system wide sales grew six 1% supported by the mid single digit global team with home sales growth alongside our 2% Global net unit growth.

Speaker Change: U S company operated restaurant margin of 15, 3% returned to pre COVID-19 levels, despite ongoing inflationary pressure.

Sean: EBITDA increased over 75% to approximately $536 million, while adjusted EPS increased almost 13% to 97%.

Sean: Finally free cash flow increased 29% to approximately $274 million further demonstrating the high cash flow generating ability of our business with that I'll now turn it back over to Kirk to talk about our plans to drive growth in 2024. Thanks G. P. As I said earlier I am.

Kirk Tanner: Cited to begin this chapter for the Wendy's brand with a focus on accelerating our global growth delivering significant restaurant margin expansion and driving long term shareholder value now, let's turn to our growth plans across each strategic pillar.

Sean: The breakfast day part is one of the most compelling levers when considering sales growth and margin acceleration opportunities. We can grow our breakfast business significantly without adding incremental labor, which drives meaningful improvement of our restaurant economic model to fuel the acceleration of this day part to new Heights, we are planning to invest approximately.

Speaker Change: We are on a mission to ensure everyone has tried breakfast at Wendy's because we know from experience that once customers try our fresh cracked eggs and crispy Bacon they will be back again and again the level of quality, we provide on our breakfast menu supports our highest customer satisfaction scores and we are now driving.

Speaker Change: Further growth at the day part by providing our amazing food at a great everyday price alongside craveable innovation throughout the year I've.

Speaker Change: I've had the privilege of meeting with some of our growth minded franchisees and I can tell you. They are all in on breakfast and are committed to further supporting our investments by doing everything they can to execute at the highest level in the morning, We expect our investment in plans will drive a 50% increase in weekly U S breakfast sales per.

Speaker Change: Restaurant over the next two years as we charge forward on our journey towards earning our breakfast day part fair share of approximately $6000 weekly per restaurant.

Speaker Change: We also have plans in place to double down on what makes Wendy's brand iconic first one of our biggest competitive advantages is our fresh never frozen beef that we use on every hamburger every day.

Andrew: Nobody delivers this level of quality at the scale that we do and we will once again utilize March madness has a high impact platform to remind fans of this key wendy's difference.

Andrew: Second we will continue to lead the category in <unk>, an innovative programs that drive both traffic and check in 2024 that means new premium flavors and builds on our popular made to crave platform. It means big news on frosty, including new flavors that will drive special visits and add ons to existing orders and it means game.

Andrew: <unk> innovation on our chicken lineup. Finally, we will continue to leverage our very own Abel biggie bag platform to offer compelling everyday value importantly, we will always do this the wendy's way, which means never compromising on quality. This platform drove success in 2023 with our customer ratings on valley.

Speaker Change: And quality trending better than competitors positioning us to win visits in 2020 for Chris.

Critically important we will execute with excellence in our more than 7000 global restaurants.

Speaker Change: In 2023, we made great progress on customer satisfaction taste accuracy and speed and we will continue to elevate our in restaurant experience to delight every customer every day.

Speaker Change: In total we now expect our plans and investments will drive global same restaurant sales growth of 3% to 4% in 2024, an increase versus our previous long term expectation of low single digits and we expect to build on this momentum moving forward.

Speaker Change: Now, let's turn to our plans to accelerate our digital business.

Speaker Change: We've made a ton of progress on our digital journey as we've grown digital sales from under $250 million in 2019 to almost $2 billion. In 2023, we are clearly seeing the benefits of the higher frequency and checks to digital drives. We also know there's a massive opportunity to firm.

Speaker Change: Other unlock digital sales growth and benefit even more from the margin expansion. These channels can generate judy.

Speaker Change: To drive Digital's, new phase of growth, we are planning to invest approximately $15 million, primarily in 2024 to further enhance our mobile app experience and step change our loyalty capabilities.

Chris: The enhancement to our mobile App will allow us to consistently deliver a seamless experience for our customers, enabling them to access when these anytime anywhere.

Chris: We also implemented a new customer data platform in Q4 and are evolving our loyalty platform alongside best in class Third Party partners. These initiatives will unlock our ability to act on customer data to segmentation and machine learning driving a meaningful increase in personalization for our loyalty members.

GP: I'm excited about our new capabilities in our digital toolbox, but what really drives our confidence in accelerating digital is the way we are bringing the entire experience together in a uniquely wendy's way, we started our journey by forging a data centric infrastructure and building out a top talent team.

GP: That foundation allows us to gain the maximum benefit from these new platforms, including increased digital engagement frequency and lifetime spend.

GP: We have the right people systems and plans in place to fuel. The next phase of digital growth and now expect global digital sales will reach over $2 billion in 2020 for a full year earlier than planned.

GP: We are always focused on improving the customer and crew experience and in that spirit. We are leveraging technology in our restaurants, even more we are planning to invest approximately $20 million rollout digital menu boards to all U S company operated restaurants by the end of 2025 and approximately 10 million.

Sara Harkavy Senatore: Over the next two years to support digital menu board enhancements for the global system, We expect our digital menu boards will drive immediate benefits order accuracy improved crew experience and sales growth from upselling and consistent merchandising execution.

Sara Harkavy Senatore: Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and day part offerings, along with AI enabled menu changes and suggestive selling.

Speaker Change: As we continue to show the benefit of this technology in our company operated restaurants franchisee interest in digital menu boards should increase further supporting sales and profit growth across the system.

Speaker Change: We will continue setting the pace in generative AI and now have rolled out wendy's fresh AI and several restaurants, where we see ongoing improvement in speed and accuracy. This technology also plays a key role on our restaurant team, enabling the crew to focus on what matters preparing fresh high quality Wendy's favorites.

Ken: And building customer relationships to bring them back time and again.

Ken: We will do everything we can to ensure this new technology is delighting, our customers and crew, while enhancing our restaurant economic model along the way.

Incremental sales growth, we expect to deliver behind our investment in breakfast digital and technology will drive meaningful sales leverage in our restaurants. These initiatives are highly incremental and margin accretive to the overall business driving further benefit to restaurant margin.

Ken: Into the future.

Ken: The top 25% of our company operated footprint already achieved over 20% restaurant margin. So we know significant growth is achievable. We are now creating the foundation for all restaurants to reach towards the top performance tier we are committed to working with our franchisees to support margin expansion.

Speaker Change: Our system. This drives both incremental profit for our current footprint and improvement and new unit economics, which further supports our global footprint expansion arcs.

Speaker Change: Our expected restaurant margin expansion will improve newbuild paybacks and drive increased financial health across our system, increasing development appetite from new and existing franchisees over time, but we arent waiting to accelerate our unit growth. We are fueling growth now with continued to support of our global expansion plans.

Speaker Change: Our popular build to suit funds continued to drive unit growth and we expect to add incremental funding to the program over time to drive even more new restaurants. Additionally, as our restaurant economic model becomes even more compelling we will lead by example, and continue to expand our company operated footprint in the U S and U K.

Speaker Change: These initiatives build on our groundbreaker in pace Center development incentive programs and our increased franchise recruiting efforts, which have resulted in hundreds of new restaurant commitments and 70 approved new franchisees across the last two years. These plans support our goal of driving global net unit growth of north of 2% in 2020.

Speaker Change: Four and further acceleration to 3% to 4% in 2025 as of today, we have over 90% of our new restaurant pipeline through 2025 committed under a development agreement. This represents a 20% increase versus our position in the previous quarter further solidifying our confidence.

Speaker Change: In achieving our development goals.

Speaker Change: Now I'll turn it back to G P to walk through our financial outlook.

Gunther Plosch: Thanks, Kirk our 'twenty 'twenty, four financial outlook, which replaces our previous long term outlook reflects the strong foundation. We are building as we enter our next chapter we expect to deliver significant sales growth of 5% to 6%. This year driven by global same restaurant sales growth of 324% and global net unit growth.

Gunther Plosch: North of 2%.

Gunther Plosch: This sales growth flows through the P&L benefiting royalties and our company operated restaurant EBITDA and it's driving a 2024 trucks that he'd be the outlook of approximately $535 million to $545 million flat to slightly up versus the prior year as we are making significant incremental investments.

Gunther Plosch: Across the business.

Gunther Plosch: Expecting U S company operated restaurant margin expansion of approximately 100 basis points to 16% to 17%. This is supported by our sales growth, including cumulative pricing in the low single digits and flat commodity inflation do.

We expect labor inflation will hold relatively steady versus the prior year at 325%. Please.

Gunther Plosch: Please note that we expect our startup investments in ongoing inflationary pressures in the U K market going to represent a headwind of approximately 50 basis points to global company operated restaurant margin.

Gunther Plosch: We anticipate that the increases in royalty in restaurant EBITDA will be partially offset by our investment in U S and Canadian breakfast advertising and increase in G&A to $265 million to $275 million and a decrease in net franchise fees to $15 million to $20 million.

Gunther Plosch: Do you expect it to G&A increase is driven by investments to high end support top talent to drive our growth plans. These increases are partially offset by lower expected professional fees.

Do you expect free cash flow to grow to approximately $280 million to $219 million this year.

Gunther Plosch: We expect this will be driven by lower cloud computing arrangement cash outlays of approximately $25 million is both phases of our ERP implementation have now being completed and increasing our core earnings and cash received for development activities and services provided to franchisees.

Gunther Plosch: We anticipate these benefits will be partially offset by an increase in capex to $90 million to $100 million.

Gunther Plosch: Driven by the rollout of digital menu boards to our U S company operated restaurants investments in our mobile App and an increase in company Newbuild.

Gunther Plosch: To close out 2024 outlook discussion do you expect an increase you know trough to EPS in 2024 to <unk> 98 cents to a dollar and two cent.

Gunther Plosch: Primarily driven by an increase in the trusted EBITDA and lapping a decrease in investment income in the prior year.

These are partially offset by lower interest income driven by an expected decrease in our cash balance as we invest in the business for growth and an increase in amortization of cloud computing arrangement.

Gunther Plosch: We're building a profitable growth engine behind our investments to drive continued sales and margin expansion supporting earnings and cash flow growth for years to come.

Gunther Plosch: Finally, I'd like to highlight our capital allocation policy, which remains unchanged investing in growth remains our number one priority and it is clear to the investments we are making to fuel our strategic growth pillar.

Gunther Plosch: Secondly, we are committed to sustaining an attractive dividend, we announced today the declaration of our first quarter dividend of <unk> 25 per share and expect a full year dividend of $1 per share in 2024.

Gunther Plosch: As we turn our focus to growth investments and maintaining an industry, leading dividend yield we plan to allocate less cash over the next year to share and debt repurchases.

Gunther Plosch: We have approximately $310 million remaining on our $500 million share repurchase authorization expiring in February of 2027, and approximately $20 million remaining.

Gunther Plosch: We purchased authorization expiring this month.

Gunther Plosch: We remain fully committed to delivering a simple yet powerful formula, but predictable efficient growth company that is driving strong system wide sales growth on the backdrop of positive same restaurant sales and expanding our global footprint. This is translating into significant free cash flows which support meaningful return of cash.

Gunther Plosch: Cash to shareholders through an attractive dividend and share repurchases with that I will hand things over to Cook.

Cook: G P I couldn't be more excited for what's ahead of us at Wendy's as the investments and plans, we announced today position us to drive growth across our strategic pillars. These plans are specifically designed to complement each other in ways that build wendy's fandom and bring more customers into our restaurants more often.

Cook: Our plans and investment enable us to delight, our customers with high quality menu items exciting innovation and compelling value across our day parts fueling an increase in our 2024 global same restaurant sales expectations to 3% to 4% they allow us to build a personalized relationships with our fans and make it easier for them to.

Cook: Access the brand anytime anywhere, enabling us to reach our global digital sales goal of over $2 billion a year earlier than planned.

Cook: And they drive our global footprint expansion, bringing more wendy's restaurants to the world and empowering our net unit growth acceleration to 3% to 4% in 2025.

Cook: Wendy's already has a strong track record of growth and now we are solidifying that foundation with the right investments at the right time to drive us to the next level in the coming months I am committed to working alongside the Wendy's system to build a robust profitable growth plan that will unlock the full potential of this ike.

Cook: Connick brand with that I will hand things over to kelcey to share our upcoming IR calendar.

Kelcey: Thanks, Kirk we're excited to get on the road and introduced many of you to Kirk who will be attending our investor events this quarter.

Kelcey: Start things off we have an MBR in Boston with Piper Sandler on March 7th well that attend the UBS Conference in New York on March 13th followed by the City Conference in Orlando on March 21st Lastly, we plan to report our first quarter earnings and host a conference call that same day on may 2nd.

Speaker Change: He transitioned into our Q&A section I wanted to remind everyone that due to the high number of covering analysts will be limiting everyone to one question only but that we are ready to take your questions.

Speaker Change: Ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: [laughter] that's star one on your telephone keypad.

Speaker Change: We do have our first question comes from Danilo <unk> from Bernstein.

Danilo: Your line is now open.

Danilo: Thank you and.

Danilo: Welcome aboard.

Danilo: Quick question on the unit growth expectations for 2024.

Danilo: Just maybe needs of the business can you help us understand in your view what has prevented at wendy's from potentially accelerating the unit growth environment in 2024, and why are you excited about the growth potential in 2025 and beyond.

Danilo.

Danilo: Nice to meet you.

Thanks for the welcome Yeah in 2024, we're excited about our expansion I think the first thing to think about is between 24 and 25, we have 90%.

Danilo: Commitments through our development plan. So that gives me a lot of confidence in 2024, we see north of 2%, which is an acceleration on 2023 I feel really good about that and I feel really good about 25 and beyond because we've got that momentum and we can see that momentum moving into the future.

Danilo: Gives me.

Danilo: Great deal of confidence.

Danilo: Yeah.

Danilo: Our next question comes from Joshua Long from Stephens, Inc.

Joshua C. Long: Joshua you May proceed with your question.

Joshua C. Long: Great. Thanks for taking my question I'm curious if you could talk a little bit about the Brexit sales trends to date and you're interested to hear about the incremental marketing that you're going to be focused on to drive that awareness in 2024 and beyond curious kind of maybe with the second round of investment what we've learned or what you have learned from the first row.

Joshua C. Long: And maybe how it might differ as you seek to drive the overall awareness of the category.

Speaker Change: Good morning, Charles shown breakfast to be really happy with our breakfast business. As you know we are in it for four years.

Speaker Change: <unk> created the number three market position in the United States.

And there's a lot of opportunity.

I heard on the prepared remarks.

Speaker Change: C. A share on these business he's a $6000 per restaurant week.

Speaker Change: Yes, definitely with that investment.

Speaker Change: Growing sales by about 50% in the next two years and how do we do that but we definitely are.

Speaker Change: Are doing more innovation that you have seen us launch of breakfast burrito that reservation made relevant to consumer we are also leveraging the cinnabon brand.

Speaker Change: Two launched suitable improve us to again fulfilling unmet needs that will drive trial and repeat and we will drive the breakfast business soda Secondly, I would say is we definitely learned that kind of everyday value is really important.

Speaker Change: In the second half of last year to two for $3 meal bundle on breakfast.

Speaker Change: Consumer is Luna no bad debts, they're here to stay.

Speaker Change: So whenever they choose us in the morning day part they will find great value in <unk> defined.

Speaker Change: Breakfast food in the category I would also say he's been a infringements community Super excited about the breakfast investments that we're making so they are all in.

Speaker Change: Good Cook waiting to talk to a lot of franchisees and they are excited to support the investment and continue to support and drive our breakfast business for US Yeah just.

Speaker Change: Just let me add a few things.

Speaker Change: This is the most compelling growth opportunity for Wendy's and with the investment the innovation and the excitement from the franchise community. This is a real opportunity for 2024 and 2025. So you think about our Srs growth. This represents about a third of the growth just in breakfast. So.

Speaker Change: Certainly a big bet for US a lot of upside for us and we really have system excitement. So I'm really excited about this opportunity.

Speaker Change: Our next question comes from Jon Tower from C. T. John Your line is now open.

Jon Tower: Great. Thanks, maybe just following up on the breakfast is why I'm, just curious why breakfast and what's going to what are you thinking about for the rest of the day parts are there any shifts in incremental spending regarding lunch and dinner and can you give us maybe some context on how breakfast performed in third and fourth quarter.

Jon Tower: Of 24, and maybe just reiterating Joshua question, how it looks quarter to date.

Speaker Change: Yes, Sean.

Speaker Change: On the breakfast side I don't think I'd give you spend enough time answering the question and again, we're liking it because obviously super incremental from a profitability point of view for the franchisees and for US we can add 50% of sales.

Speaker Change: Without really.

Speaker Change: Anything any additional labor. So it is a great driver for restaurant economic model.

Speaker Change: I will tune rest of day, obviously super important for us.

Speaker Change: Definitely going to double down on everything that makes this brand iconic fresh never frozen beef every day the whole lineup.

Speaker Change: What he can do that on the same scale as we are.

And we are going to drive innovation, you're going to see news on made to crave, you'll see news on frosty flavors.

And you will see innovation on the chicken lineup.

Speaker Change: I also would say.

Speaker Change: Value important to consumers under pressure.

Speaker Change: Our very own Abboud Biggie bag is driving restaurant economic model for us and these meeting the needs of those consumers that are looking for a deal and last but not least execution execution execution in the restaurants.

Speaker Change: Made great progress in quarter four we go faster.

Speaker Change: Third infection accuracy order went better that's obviously a huge focus for US took any anything else. Yeah. I think we've talked about the upside potential in the profitability upside for breakfast for sure I would just add you know we'll use some of our platforms like March madness to talk about our <unk>.

Speaker Change: <unk> never frozen.

Speaker Change: Hamburgers, which are truly I think the best in the industry at the scale that we can provide so we will certainly celebrate what we're famous for.

Speaker Change: But again very excited about breakfast again, that's not the only thing we'll be talking about but that's certainly one of the most important growth drivers for 2024 and 2025.

Speaker Change: I just realized I didn't answer your question in terms of sales trends beginning of the first quarter. As you know we don't give these out but I didn't give you a little bit of color.

Speaker Change: You have heard we are increasing the sys guidance with this outlook to 3% to 4% the previous guidance was low single digit.

Speaker Change: It's definitely an acceleration behind investments can definitely say from machine point of view I can say quarter, one will be slightly lower than the quarter, two and quarter three will be.

Speaker Change: Kind of a steady and a little bit higher than the fiscal year guidance.

Speaker Change: You might ask the question. So why are we seeing quarter, one is a little bit lower a couple of things first before definitely difficult comparisons you know in the first quarter of last year.

Speaker Change: <unk> growth was 8% and clearly with the conditions in United States didn't help.

Speaker Change: Can also offer that <unk> seen the sales momentum accelerating in the recent weeks and all of that.

Speaker Change: And with the sales guidance, we have given up.

Speaker Change: Our next question comes from Brian Bittner from Oppenheimer, Brian Your line is now open.

Speaker Change: Thanks.

Speaker Change: Turning.

Brian John Bittner: <unk> I just wanted to follow up on that you know the system sales guidance for 'twenty four it does assume the 3% to 4% comps in the eye.

Brian John Bittner: I do just want to understand the confidence in setting what does seem to be a high bar I understand there's investments coming to drive growth, but you guys did 1% comps and <unk>, 2% comps on average the last couple of quarters.

Brian John Bittner: Pricing is rolling off so maybe help us understand why the same store sales assumption for 'twenty four is not a range that maybe reflects a bit more conservatism and maybe gives you a chance to maybe under promise over deliver on the same store sales or might come out of the gate with what seems to be a pretty bold.

Brian John Bittner: We went to 4% target for comps.

Brian John Bittner: Yes, Brian Good morning, the reason why we increased the guidance, we've put more money behind to drive that growth that was not contemplated obviously in the previous guidance. So it is kind of the main reason is we obviously thought about this guidance and looked at our plans we feel really good about them.

Brian John Bittner: What are the underlying assumptions to break it down a little bit we definitely expect that the.

Brian John Bittner: The Hamburger category will be slightly positive traffic next year.

Brian John Bittner: Our assessment. That's also the assessment of market Research company that we are looking at twice for and then if you look at.

Brian John Bittner: U S Srs.

Brian John Bittner: Definitely expecting in those single digit traffic growth again, we are building frequency right, we're building frequency and Brexit building frequency and digital.

Brian John Bittner: To drive traffic for us we expect low single digit prices. Your observation is correct, we have a carryover price of about 2%.

Brian John Bittner: Have a small price increase set up for the middle of the year. So that makes it about low single digit and we expect the.

Brian John Bittner: The mix to be about flat. So that's the story, obviously hasn't given you all the details on all our commercial plans get breakfast, but again rest of David obviously, a huge portion we have a lot of exciting news and approaches for consumer that makes us confident that the guidance is very real.

Brian John Bittner: Okay.

Brian John Bittner: Our next question comes from Dennis Geiger from UBS.

Dennis Geiger: Your line is now open.

Dennis Geiger: Great Thanks and.

Congratulations I'm wondering if you guys could talk a little bit more about the your customer whether youre seeing anything as far as customer behaviors or spending patterns changing I think GP.

Dennis Geiger: Just mentioned a little bit around the consumer pressure and I think you've talked about value within that context. So curious if anything more to expand also on the brand value offering anything on maybe value perception scores and maybe at a high level just value plans for Europe. There is a way to kind of frame that up for us. Thank you.

Dennis Geiger: Yeah.

Speaker Change: Good morning, Dan Let me, let me start with the answer and then cooked chicken.

Speaker Change: Forget anything so so you're right, but the consumer is definitely under pressure continues to be under pressure the trends. That's the lower income consumer, which we define it somebody with a household income of less than $75000.

It is down with them our share is unchanged. So we are we are not losing their same thing on the higher household income consumer traffic, there and he's off and again or she is unchanged and that's my overall in the quarter, our daily dollar and traffic share.

Speaker Change: Was unchanged so.

Speaker Change: So value is going to be important.

Speaker Change: I think a barbell strategy of offering a piggy back up to what I would call. The Super premium we've made to crave I think it's definitely.

Speaker Change: Helping all of our consumer basis.

The high income consumer is probably ending more to the higher priced items in the menu and vice versa. So.

Speaker Change: That's kind of the consumer dynamics.

Speaker Change: You look at the history of the category, you're definitely finds that net disposable income and miles driven are pretty big correlate us.

Speaker Change: And I expect expectation is clearly doesn't that disposable income should go slightly up sequentially right about why do we believe.

Speaker Change: The economy is doing pretty well and we are basically full employment grocery inflation is coming down so a quarter versus quarter that the consumers should start to see net disposable income coming up slightly skewed a little bit richer and feed a little bit like yoga.

Speaker Change: Can treat myself and Tom a little bit more often.

Speaker Change: To date the restaurants.

Fuel costs came down a little bit so driving around mobility and I'm, a little bit better. So all of that explains a little bit our position on the category should do a little bit better and we absolutely expect that we would perform at least in line with the category.

Speaker Change: Look I would just add in my early days here and seeing the biggie bag looking at consumer trends and consumer.

Speaker Change: To drive value and the quality that we have at Wendy's.

Our next question comes from Chris <unk> from Stifel. Chris Your line is now open.

Chris: Thanks, Hi, Kirk welcome to the call.

Chris: Thanks for the information about the plans for 'twenty, four but I would like to hear your thoughts about the company's longer term strategic priorities or at least if the company is going through a process to kind of evaluate whether the right long term growth priorities are in place and what I mean by this for example, or are things like whether the company should be focused on international development outside of.

Chris: North America is the right strategy or whether it should maybe consider franchising multiple domestic brands I'd.

Chris: I'd Love your thoughts on that.

Speaker Change: Chris Good to meet you, yes, one of the things that attracted me to Wendy's was certainly the potential for profitable growth.

And the expansion opportunities that we have I mentioned earlier that 90% of our development. We can see full line of sight through 'twenty five.

Speaker Change: <unk> profitability and returns to our franchisees. So we've recently brought on another 70 franchisees and approved in other.

Speaker Change: The group of franchisees to drive that development. We're looking at international development is a real opportunity we will build.

Speaker Change: Put a flag in several.

Speaker Change: Several different countries that we can build brand awareness drive profitable growth.

Speaker Change: Yes that is I would tell you that is one of the things that excited me the most about joining wendy's.

Speaker Change: That is in addition to driving.

Speaker Change: S growth and our digital platform unit growth, both domestically and internationally as you know.

Speaker Change: Clear priority for us.

Speaker Change: Our next question comes from Eric Gonzalez from Keybanc, Eric Your line is now open.

Eric Gonzalez: Hey, Thanks for the question and welcome Kirk.

Eric Gonzalez: My question is with the late night day part I don't think we really talked about it that much on the paired remarks. So maybe you can discuss how that performed during the fourth quarter and whether you continue to view that as a growth driver in 'twenty four.

Kirk Tanner: Good morning, Eric.

Eric Gonzalez: Really happy with the late night day part.

Eric Gonzalez: We grew into it in the fourth quarter about mid teens year over year. So that was really a nice tailwind for us in 2023.

Eric Gonzalez: You know that we've managed snow to get really good support from.

Eric Gonzalez: From franchisees on that initiative about 90% of our company rest of our restaurants are open to midnight or even a little bit later, we lost business at a higher average check it's really.

Eric Gonzalez: Good for the delivery business should.

Eric Gonzalez: We like all of that.

Speaker Change: I would say is.

That's in the base I think it's going to be.

Speaker Change: A valuable sales layout going forward, but I would not expect the outsized.

Speaker Change: And growth rates that.

We have seen in 2003 to repeat itself in 2024.

Speaker Change: Our next question comes from John if uncle from JP Morgan.

Speaker Change: John Your line is open.

John: Yes, hi, Thank you hi, Craig how are you.

John: So the question I have two if you don't mind.

John: On international and especially the idea of putting a flag in certain international markets to drive opportunity.

John: Some cases U K, specifically, it's a mature market. There's a number of competitors that have a lot of scale in that market you are.

Every new relatively new and very subscale in that market. So it may be applying some of your pepsico.

Type of experience you know how can when he's come in and break in a mature market where scale has already been established by some very long term competitors, just kind of give us that path. This itself if you don't mind.

John: Yeah.

John: Yes.

Speaker Change: That's exactly it.

Speaker Change: You're onto something here, especially with the U K.

Speaker Change: With winning over customers with our quality.

Speaker Change: Is very differentiated which is meaningful for the UK consumer.

Speaker Change: You've seen the growth and we will continue to build in that market along with other markets, but in that example, we have enough momentum enough evidence.

Where we have brand love our brand awareness and those are the things you think about when you're building a market as well the awareness, what's you're famous for differentiation and we have momentum so I feel really good about where we're going.

Speaker Change: Internationally to your example, the UK has a very strong market and has tons of potential for the future.

Speaker Change: And in turn you know who wanted to add that also infringements. He's a super excited to be have 10 franchise restaurants.

Speaker Change: Hum.

Speaker Change: Commitments to help your go to market. So I think it's another good data point to think about that would be probably got the entry into the U K right.

Speaker Change: As a springboard for us into Europe.

Speaker Change: We think the investment is going to pay off nicely for us and for our shareholders.

Speaker Change: Our next question comes from Andrew <unk> from BMO, Andrew Your line is now open.

Andrew: Great. Thank you and good morning.

Andrew: My question's on the restaurant margin outlook, you provided for the U S business, obviously expecting.

Andrew: Some nice margin expansion there. So I guess I was just hoping you could break that down a little bit how much are you expecting the breakfast is going to contribute in 'twenty for how much visibility do you have on the commodity inflation side. The fact that you mentioned and as you think about balancing value and premium.

No if you're expecting mix to be a positive contributor negative I'm just curious for a little more texture on the margin outlook. Thanks.

Speaker Change: Good morning, Andrew.

Speaker Change: We feel really confident about the guidance of 100 basis points up to 16% to 17% is definitely save language right. So the 50% growth of breakfast.

Speaker Change: What are the next two years drive some of the profitability same with digital as you know check remains elevated versus the non digital check that's drives things for us we have a couple of projects out there on kind of pure cost management.

Speaker Change: To help get margin expansion going for us.

Speaker Change: Little bit of color on the commodity front, we definitely expect.

Speaker Change: Chicken to be deflationary for us beef and fries inflationary all of that balances out to flat from a visibility point of view about a 75% of our commodity pricing is locked down the remaining 25% as you know a decent amount of.

It is beef as you know we cannot lock that down throughout the year. So I was kind of.

Speaker Change: Colored restaurant margin for you.

Speaker Change: Our next question comes from Chris Carey from RBC capital markets. Chris Your line is now open.

Chris Carey: Hi, Thanks, Good morning, So G. T. I believe you mentioned an increase in company new builds so can you expand maybe a bit more on that what the plan is there both near term and long term just maybe touch on the impact of franchise mix, whether you plan to re franchise those new builds over time, just any further detail on the call.

Speaker Change: The one strategy. Thank you.

Gunther Plosch: Yes. Good morning. So overall is not a departure from our strategy, it's a little bit of leaning in putting their money where our mouth.

Speaker Change: We're going to stay asset light as you know our company restaurant ownership is about five 7% at the end of this last year. It will hover around the growth of the rest of the system. It's about the same level.

Speaker Change: Can definitely expect that we're going to continue to build out the U K footprint.

Speaker Change: So thats about just hitting its 12 restaurants currently in the next couple of years. It can expect growth to about 20 restaurants, we also going to build out.

Speaker Change: Some of our existing markets in the U S a little bit photo.

Speaker Change: Kind of.

Speaker Change: Color on us leading in it is not a departure from an asset light structure.

Speaker Change: But demonstrating to franchisees that.

Speaker Change: There's money to be made there is a great financial return to be had when you build restaurants. These days with the marketing margin structure states behalf <unk>.

Speaker Change: <unk> behalf at the margin outlook.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Sara Senatore from Bank of America. Sara Your line is now open.

Sara Harkavy Senatore: Great. Thank you very much.

Sara Harkavy Senatore: I wanted a follow up question on the competitive environment I know.

Sara Harkavy Senatore: Third quarter, and you exited I think with positive traffic.

Sara Harkavy Senatore: You talked about fourth quarter, you kind of maintain your share and.

Sara Harkavy Senatore: I think getting negative so could.

Speaker Change: Could you just maybe talk about that how much of that was the market versus maybe your menu news your marketing and as you think about getting to positive traffic in your head and.

Speaker Change: Not to belabor this but maybe if you could pass on some of the levers is it just the marketing dollars are you expecting perhaps some improvement in the operating a competitive environment.

Good morning, Sara.

Speaker Change: Comment on the quarter for I would say is really the category. The category was relatively soft we performed in line with the category.

Speaker Change: We had a pretty decent program one thing for the for we push breakfast a little bit with that.

Speaker Change: English muffin, and obviously starting between still the expectation with consumers on a two for $3 <unk>.

Speaker Change: Youll deal that it.

Speaker Change: Presenting great value.

Speaker Change: So.

Speaker Change: I'd say the category in the fourth quarter was probably a little bit softer than before to be state obviously within the sales guidance that we had given of 6% to 7%, but the ended and the slightly lower side didn't miss it.

Speaker Change: And again encouraged about the programming for next year breakfast is important and it's not the only thing we are.

Speaker Change: Duane.

Speaker Change: There is a decent amount.

Speaker Change: Ration across all our main product lines on the rest of day is it going to fuel the business on the digital side and together with the breakfast business.

Speaker Change: That's kind of.

Speaker Change: Enough color I can give you on that one.

Speaker Change: Alright. Thank you Sir that was our last question of the call. Thank you Kirk in GB and thank you everyone participating. This morning, we look forward to speaking with you again on our first quarter call.

Speaker Change: Great Day, you may now disconnect.

Speaker Change: Okay.

Speaker Change: Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Yeah.

Q4 2023 The Wendy's Co Earnings Call

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