2019 Investor Day Shows Wendy’s Plans for Accelerated Growth

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2019 Investor Day
2019 Investor Day
READ ON FOR HIGHLIGHTS DISCUSSED DURING WENDY’S 2019 INVESTOR DAY.

Today we hosted our Investor Day, one of my favorite events, as it’s an opportunity to showcase the incredible work underway at Wendy’s®. The last time we hosted an Investor Day was in 2017 and we shared some background on what happens during this meeting here on The Square Deal. As in 2017, this morning, we hosted a number of financial analysts at our headquarters in Dublin, Ohio. Together, we highlighted the Company’s financial performance and updated long-term goals, and what I call our “pillars of growth” to achieve those goals. I wanted to share a brief overview of this morning’s meeting and what we discussed, as it’s truly an impressive effort by our Wendy’s team.

First, What’s Investor Day?

Every quarter we report our financial performance – a requirement of all publicly traded companies. Investor Day is different than those quarterly earnings reports as it allows us to provide a much more in-depth view into our strategy, long term goals, and what’s happening at Wendy’s. Financial analysts gather in Dublin (or tune in via live webcast) and we spend half a day reviewing the impressive work that is underway at Wendy’s. Ultimately, the day serves to instill confidence in our road map to achieve our goals and an opportunity to share important information related to our financial outlook.

What Was Discussed?

We shared some important financial information at Investor Day, including strong preliminary third quarter global system-wide sales of 5.7%, North America same-restaurant sales of 4.4% and global new restaurant openings of 40. From a sales perspective, this was our strongest quarter since the launch of 4 for $4 in 2015. We also shared that our Board of Directors authorized a 20% dividend rate increase as part of our capital allocation strategy. Prior to this 20% increase, we had increased our dividend rate approximately 325% since 2013. Gunther Plosch, our Chief Financial Officer, announced our new 2020 goals and long-term financial outlook through 2024, which helps demonstrate our confidence in the momentum we’re building as an efficient growth company.

We also discussed how we plan to accelerate our growth as we find another gear behind our growth initiatives, and how we’re working to bring all elements of the Wendy’s business from good to great. Over the past several years we have set up a strong foundation by consistently growing same restaurant sales, investing in growth, improving our brand health and setting up a capital structure that has allowed us to return a significant amount of cash to shareholders. The team talked about how we’re going to play a different game to drive growth efficiently in partnership with our franchisees, and how we plan to do that by accelerating same restaurant sales and our global restaurant footprint.

From recent improvements in brand health metrics related to quality and freshness of food, and recent wins like the return of our Spicy Nuggets to future initiatives like a national breakfast launch, the roll out of a loyalty program and International expansion into new areas of the world, there is a lot excitement at Wendy’s, and we’re just getting started. We are building a stronger Wendy’s for not only the next five years, but for the next 50! Here are some highlights discussed earlier today…

New Business Unit Structure

Earlier this year, we announced some changes to our highly talented senior leadership team that allow us to continue to drive further accountability and efficiencies across the organization. Kurt Kane was promoted to President, U.S. and Chief Commercial Officer, and Abigail Pringle was promoted to President, International and Chief Development Officer. In making these moves, we reinforced that Wendy’s is not a marketing or an operations company – Wendy’s is a restaurant company. This structure is already delivering more efficient, nimble decision‐making, and cross-functional teams are coming together in support of shared goals. Our collective focus is speed with discipline to continue to unlock accelerated growth. We’ve truly set ourselves up for success and I couldn’t be prouder of our team.

National Breakfast Launch

As you may have read, we recently announced that Wendy’s plans to introduce breakfast across our U.S. restaurant system in 2020. We already have breakfast in over 300 restaurants across the U.S. and we’re looking forward to expanding that across the U.S. system next year. We’re committed to the success of this program for the long term, and we’re making an upfront investment of about $20 million this year to help our franchisees get off to a strong start next year.

To bring our breakfast program to life, the Wendy’s system plans to hire approximately 20,000 new team members to support this initiative. We’re excited to grow our Wendy’s family and know breakfast will be successful with great, differentiated food served by Wendy’s kind of people.

Kurt shared additional details about our breakfast program, and I’m especially proud of the way that he and the team developed this initiative. We’ve built our plan with franchisee engagement and support upfront; examined all aspects of the restaurant economic model, from capital requirements to staffing models, in order to ensure a financial benefit for our franchisees; created a menu that is operationally simple and features craveable items, aligned with our food vision and sure-to-be fan favorites; and, as opposed to the past, we are going all in on a national roll out for this launch. So, you could actually say that this is the first time we are launching breakfast nationally.

Our menu will feature signature items like a Breakfast Baconator®, Honey Butter Chicken Biscuit and Frosty®-ccino (yes, you can now get Frosty flavor in your iced coffee). We couldn’t be more excited to bring Wendy’s quality to mornings all over America.

Accelerating Growth Through Technology

Not only are we bringing Wendy’s quality to more people through breakfast expansion, we’re providing more access through technology and our digital experience. Scale matters in the restaurant industry and leveraging our scale can be a true differentiator for Wendy’s. To help us grow, we shared that we are introducing a new targeted digital and technology strategy focused on driving frequency through redefining convenience.

Laura Titas, our Chief Digital Experience Officer, shared some important announcements regarding our digital journey. First, that Wendy’s digital customers visit us approximately four times as often as our traditional customers, and delivery has been a major contributor to our digital sales growth. But we asked ourselves, how can we continue to grow delivery? We talked about our plans to make advancements such as delivery point of sale integration, in-app delivery capabilities, and expanding delivery to multiple third-party providers that will provide more options and access to our customers.

We also announced our plans to launch a robust rewards program next year to foster brand loyalty. Laura explained to the analysts that our loyalty program has been designed to be easy to use, with all ordering channels eligible to help customers earn rewards and our customers will have flexibility on how they redeem offers. Creating a personalized experience for loyalty members will help us better engage with Wendy’s fans and bring Wendy’s to more people, more often.

Global Expansion

Abigail shared exciting news about how we’re seeing success with our International business, with 17 consecutive quarters of total sales growth and 22 consecutive quarters of same-restaurant sales growth, and how we have big plans to build on this momentum and accelerate the expansion of Wendy’s across the globe. 95% of the world lives outside the United States and simply put, we believe the world deserves more Wendy’s! Abigail shared how we’re implementing a targeted global expansion strategy, recruiting new franchisees, providing attractive incentives to our current franchisees, developing new restaurants in non-traditional ways and in new locations, and giving consumers more opportunities to visit Wendy’s.

Our goal is to reach more than 1,500 restaurants outside of the U.S. and double our International sales by 2024. We expect to drive the majority of that projected growth in our existing International regions including Canada, Latin America and the Caribbean, Asia Pacific and the Middle East. But we were also thrilled to announce that we expect the remaining growth will be the result of entering a new part of the world, as we shared our plans for Wendy’s to expand into Europe.

Abigail shared that we are planning to open our first restaurants “across the pond” in the United Kingdom in the next 12-18 months. While there is no Wendy’s presence in this region today, there are many International franchise partners who are familiar with U.S. brands, and American burger concepts have already proven successful. We discussed that our plan is to open the UK market with company restaurants, clear the path for future franchise-led growth, and eventually build out the market to its full potential. We also expect that the UK will serve as a beachhead for driving accelerated growth across all of Europe. We can’t wait to bring great Wendy’s experiences to this part of the world.

Building a Stronger Wendy’s

To have a good restaurant, you need good food and good people. To have a great restaurant, you need great food and great people. I firmly believe that Wendy’s can deliver greatness. The work rests in capable hands, supported by the best franchisees in the business, with whom we have incredibly strong, collaborative relationships. Our future is bright, and Wendy’s is well on its way to becoming the world’s most thriving and beloved restaurant brand.

Cheers,

Todd