XML 23 R12.htm IDEA: XBRL DOCUMENT v3.19.1
System Optimization (Gains) Losses, Net
 3 Months Ended
Mar. 31, 2019
Property, Plant and Equipment [Abstract]  
System Optimization (Gains) Losses, Net
System Optimization (Gains) Losses, Net

The Company’s system optimization initiative includes a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”). As of January 1, 2017, the Company completed its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system. While the Company has no plans to reduce its ownership below the approximately 5% level, Wendy’s expects to continue to optimize its system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages.

Gains and losses recognized on dispositions are recorded to “System optimization (gains) losses, net” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs,” which are further described in Note 6. All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:
 
Three Months Ended
 
March 31,
2019
 
April 1,
2018
Post-closing adjustments on sales of restaurants (a)
$
(8
)
 
$
(212
)
Gain (loss) on sales of other assets, net (b)
20

 
(358
)
System optimization gains (losses), net
$
12

 
$
(570
)
_______________

(a)
The three months ended April 1, 2018 includes cash proceeds, net of payments of $6.

(b)
During the three months ended April 1, 2018, the Company received cash proceeds of $345 primarily from the sale of surplus properties.

Assets Held for Sale

As of March 31, 2019 and December 30, 2018, the Company had assets held for sale of $4,470 and $2,435, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”