Wendy's Company (The)

Good morning. Welcome to the Wendy's Company earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number two. Thank you. 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, irwendys.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, our President and Chief Executive Officer, Kirk Tanner, will give a business update, and our Chief Financial Officer, Gunter Plush, will review our second quarter results and share our financial outlook. From there, we will open up the line for questions. With that, I will hand things over to Kirk.

Thanks, Nick. Good morning, everyone. During the second quarter, our restaurants across the globe continued to deliver system-wide and same restaurant sales growth, reaching 2.6% and 0.8% respectively. Our performance was competitive in the U.S., with our dollar and traffic share holding steady with the QSR burger category during the quarter. This performance was driven by sales growth at the breakfast and late-night day parts and our focus on surrounding our customers with their Wendy's favorites, exciting innovation and compelling value done the Wendy's way with fresh, high-quality ingredients. The international segment delivered another quarter of strong system-wide sales growth, reaching over 8% driven by continued same-restaurant sales growth and net unit growth across each region. Turning to our digital business, everything we are doing in this space is with the goal of creating and building loyalty and personalized experiences for our customers. Our digital business continues to perform well, and we've made really good progress. We grew global digital sales by over 40% year over year in the second quarter, delivering 17% global digital sales mix. Global digital sales growth was driven by the U.S. segment, which grew sales dollars over 40% year over year, and international, which grew over 30% year over year. Our focus on driving sales through our Wendy's app and loyalty platform continues to be successful and our loyalty business is now almost as big as our third party delivery business. You will see us continue to focus on improving the experience for customers. We are confident that this will drive loyalty even further and create more growth for the brand in the years to come. Finally, our Q2 development progress achieved our expectations. We have now opened 99 brand new Wendy's restaurants through Q2, a more than 20% increase versus the first half of 2023. Looking ahead, the team has made meaningful progress towards solidifying our sales growth plan for the second half of 2024 and setting us up for unit growth acceleration in 2025 and beyond, driving our confidence in delivering strong results over the near and long term. Before diving into our year to go plans, I'd like to briefly touch on the leadership and structural changes that we recently announced. With the elevation of Abigail Pringle and EJ Wunsch, to the roles of President US and President International, we now have a structure that drives focus and clear accountability for accelerated unit growth and operational performance in both segments. This evolution also provides one voice for the franchisees in each segment, streamlining our communication and enhancing our engagement. I am confident this change will accelerate progress across our strategic focus areas, including franchise profitability, unit growth, customer satisfaction, and executional excellence. Now let's turn to our plans to drive growth during the rest of the year and beyond. We are leaning in even further across the growth pillars to drive sales while expanding restaurant margin. Our balanced approach focuses on elevating our craveable core menu, delivering impactful innovation, and offering relevant value. We believe we are in a position of strength. offering menu items that deliver across this spectrum. When it comes to our craveable menu, our fresh, never frozen beef, fresh produce, and full customization of every sandwich on the menu are key differentiators for us. We will continue to capitalize on opportunities to drive impactful innovation. In the second quarter, we launched Triple Berry Frosty and Saucy Nugs, both resonating with consumers, and you can expect to see a continuous stream of innovation from us in the second half of the year. As it relates to value, consumers continue to seek relevant value. Wendy's is the original when it comes to bundle value meal deals in QSR, and you'll see us continue to lean into this competitive advantage. Breakfast remains an incredibly important day part. It is highly profitable, and we have not yet reached our potential. We continue to outperform competitors by driving breakfast dollar growth ahead of the category in the second quarter. We have now optimized the level of our investment in 2024 to allow us to extend our existing breakfast advertising investment horizon beyond 2025. We continue to expect that breakfast sales growth will outpace rest of day at Wendy's, and those sales continue to be accretive to overall restaurant margin for the company and franchisees. Turning to our overall sales outlook, as we assess the current consumer and category, We now expect to deliver global same restaurant sales growth of one to 3% for the full year. Now let's turn to the great momentum we've built towards achieving our development goals. The team has made great progress solidifying our new restaurant pipeline as we continue our mission to bring more Wendy's to more fans across the globe. We remain on track to deliver global new restaurant openings of 250 to 300 units. providing a strong foundation to accelerate from in 2025 and beyond. Additionally, I am pleased to share that we have added more than 250 global new restaurant commitments year to date. Our European expansion is accelerating. We recently announced that the brand will enter the Republic of Ireland and Romania with strong franchisees who will begin opening restaurants in 2025. Ireland is a natural expansion of our current footprint, and we intend for Romania to act as an anchor for further expansion across other areas of Europe. These new development agreements layer on top of an additional increase in our UK franchise commitments, all supporting our plans to build hundreds of restaurants on the European continent in the coming years. Now turning to New Zealand. We recently shared that the Flynn Group has acquired the current New Zealand restaurants with plans to further expand the market in addition to their existing development agreement for 200 restaurants in Australia through 2034. The Flynn Group continues to be an outstanding operator and we are confident in their ability to grow these high potential markets beginning with new restaurants in Australia in 2025. In Asia, our franchisee in India has increased their development commitment with a mix of both traditional locations and delivery kitchens. This will build upon our current footprint of 150 open restaurants. Finally, in Canada, we have finalized a new agreement in Quebec with plans to double our footprint in the province this year. We have also recently announced an enhanced incentive program to appeal to franchisees of all sizes and increase the reach of our new restaurant development program. We expect that these incentives, along with our continued focus on expanding restaurant margin and improving profitability, will boost new build returns and further build out our long-term restaurant pipeline. As a result of the team's work, 100% of our new build goals through 2025 are tied to development commitments, which is up from 90% we previously disclosed. We are well on our way towards rapid expansion over the long term. I'll now turn it over to GP to share our second quarter financial results.