Wendy's Co Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dennis Geiger - UBS Equities - Analyst : Great, thanks guys. Good morning. Wondering if you could talk a little bit more about the unit development outlook, including maybe how much of the '25 targets are covered at this point by development agreements or any more detail on sort of what that pipeline looks like? And maybe just broadly, franchisee demand overall sentiment to grow in the current environment, considering some of the headwinds out there, but I guess, offset by some of the positive drivers that you guys called out. Thank you.

Question: David Palmer - Evercore ISI Institutional Equities - Analyst : Thanks. I'll just try to squeeze in two in quick succession here. Kirk, I know you've done a lot of consumer. You and the team have done consumer insight work and audited the brand and menu opportunity. I know you don't want to front run your entire Analyst Day, but if there's any sort of REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 1:30PM, WEN.OQ - Q4 2024 Wendy's Co Earnings Call big bucket opportunities to drive comps that you're most excited about, where your energies are being applied love to hear maybe a teaser on that, if you could. And then also, in what ways -- I know this is also another area for the Analyst Day, but in what ways have you restructured and rewired the organization since you've joined, which I think is about a year ago now. And in what ways are maybe changing incentive compensation to metrics that really will change the priorities of the company. Thank you.

Question: Jon Tower - Citi - Analyst : Hey, great, thanks for taking the question. Hopefully, you can hear me okay. I was just curious, the dividend cut that you announced today, curious why you decided to go down the path of repurchase activity rather than perhaps reinvesting back in the business considering the success that the brand has had, say, in reallocating some of the advertising dollars to breakfast in the past when you're building that out? And then separately, why refinance the debt in this year rather than perhaps just paying some of that down.

Question: Brian Mullen - Piper Sandler - Analyst : Just a question on the breakfast day part. Kirk, I think one of the first decisions you made was to recommit to this business. I think you said in the prepared remarks, breakfast sales grew 6% last year. So if you could just give us an assessment thus far, what have you learned? And how does that inform your strategy with breakfast over, say, the next three to five years? And is that going to require ongoing investments from corporate over a longer period of time? I know you're pulling a little this year, but just over the next several years. Thank you.

Question: Danilo Gargiulo - Bernstein - Analyst : Great. Ken, I was wondering if you can offer your early observations on the business being relatively new to the organization. And maybe if you can expand on which best practices do you think you can bring over to the organization from topping from your past experience from, let's say, UPS. Thank you.

Question: Brian Bittner - Oppenheimer & Co., Inc - Analyst : Thanks. Good morning. Your 2025 unit growth guidance is 2% to 3%. But last quarter, I think you talked about growing 3% to 4% in 2025. So can you talk about what shifted over the last few months, if it's related to less openings or more closures? And maybe perhaps this is part of your underpromised approach, Ken, as unit growth guidance historically has been on the optimistic side. So can you just help us understand the change?

Question: Chris O'Cull - Stifel Nicolaus and Company - Analyst : Yeah, thanks. Good morning guys. My question relates to just the timing of investments. And I apologize if I missed this, but Kirk, I was hoping you could elaborate more on which investments you can make quickly that would impact the customer experience.

Question: Jim Salera - Stephens Inc - Analyst : Hi, good morning, guys. Thanks for taking my question. You mentioned earlier, 1Q should be the low point for same-restaurant sales and then build there with improvements in industry traffic and some of the programming you have winter in the year if I could maybe parse that out, do you expect the traffic improvement to be driven by Wendy's specific efforts or just kind of taking your fair share of overall improvement in QSR. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 1:30PM, WEN.OQ - Q4 2024 Wendy's Co Earnings Call And maybe if I could add a second part on that question. Obviously, in '24, we saw a very kind of value-focused environment, especially in a lot of the marketing from QSR and even some full-service restaurants. You give me assumptions around how the industry progresses in '25 and how that messaging looks maybe if we shift a little bit back more to kind of experiential focus versus just kind of dollar price points? Thanks.

Question: Andrew Charles - TD Cowen - Analyst : Great. Thank you. Kirk, what are the early learnings from the voice of the drive-thru pilot. In particular, I'm curious what you guys are seeing with speed of service as well as check lift as you expand the pilot to more stores.

Question: Eric Gonazales - KeyBanc Capital Markets Inc - Analyst : Hi, thanks for the question. You clearly had a strong October with the SpongeBob activation. Were you able to retain a decent portion of the customers that you acquired during that promotion. And I think I heard you said you should expect some additional collapse this year. do you think you need to do anything different with regards to how you execute around the shoulders of something like the SpongeBob promotion such that you could see a longer tail?

Question: Rahul Krotthapalli - JPMorgan - Analyst : Good morning guys. Can you discuss the average US franchise profitability and how the cash-on-cash returns for some of the new stores have tracked over time probably compared to pre-COVID. I mean the context here is acceleration in the US development. And given the fact that around 40% of US system is owned and operated by around 15 franchises who are also multi-brand operators. I'm curious to see how this cohort is going to contribute to unit growth versus the rest of the system as they prioritize capital allocation? And a quick follow-up, is the 200-plus franchisees the right mix for the brand? Or do you see some room for consolidation as you move forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 1:30PM, WEN.OQ - Q4 2024 Wendy's Co Earnings Call

Question: Jim Sanderson - Northcoast Research - Analyst : Hey, thanks for the question. I wanted to go back to the discussion on breakfast. I think you mentioned achieving 4% growth year-over-year, which I think gets you to about 8% sales mix in the US Just wondering how you expect the daypart mix to trend in 2025 what's embedded in your guidance? And if you're expecting a little bit of a step back as you divert investment into other areas? Thank you.

Question: Christine Cho - Goldman Sachs - Analyst : Great, thank you so much. Great. So it was really encouraging to see close to 5% comps in the international markets. So would you be able to add some texture to what drove the acceleration here? And within the 2% to 3% net unit growth that you're expecting for 2025, could you talk to the expansion you're in the international side, especially given kind of the new European markets that you're planning to enter and the key priorities here. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 1:30PM, WEN.OQ - Q4 2024 Wendy's Co Earnings Call

Question: Logan Reich - RBC Capital Markets - Analyst : Hey, good morning. Thanks for the question. I have a quick follow-up on the composition of the same-store sales outlook for 2025. Can you provide any sort of breakdown from international versus US that's baked into your expectations?

Question: Jared Hludzinski - BMO Capital Markets - Analyst : Hi, thank you for taking the question. Hoping to get your thoughts on the level of commodity inflation you're expecting in the US for 2025. And some of the puts and takes there, specifically as it relates to beef costs, which one of your peers recently called out as a risk for 2025. Thank you very much.