10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 4, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission file number: 1-2207

THE WENDY’S COMPANY

(Exact name of registrant as specified in its charter)

Delaware		38-0471180
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Dave Thomas Blvd.
Dublin,	Ohio	43017
(Address of principal executive offices)		(Zip Code)

(614) 764-3100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value	WEN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 222,787,694 shares of The Wendy’s Company common stock outstanding as of August 4, 2021.

THE WENDY’S COMPANY AND SUBSIDIARIES

INDEX TO FORM 10-Q

	Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements	4
Unaudited Condensed Consolidated Balance Sheets as of July 4, 2021 and January 3, 2021	4
Unaudited Condensed Consolidated Statements of Operations for the three and six months ended July 4, 2021 and June 28, 2020	5
Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 4, 2021 and June 28, 2020	6
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended July 4, 2021 and June 28, 2020	7
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended July 4, 2021 and June 28, 2020	9
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures about Market Risk	47
Item 4. Controls and Procedures	48
PART II: OTHER INFORMATION	49
Item 1. Legal Proceedings	50
Item 1A. Risk Factors	51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 6. Exhibits	52
Signatures	53

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands Except Par Value)

	July 4, 2021		January 3, 2021
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	568,139	$	306,989
Restricted cash	37,792		33,973
Accounts and notes receivable, net	103,257		109,891
Inventories	4,261		4,732
Prepaid expenses and other current assets	24,219		89,732
Advertising funds restricted assets	101,858		142,306
Total current assets	839,526		687,623
Properties	881,798		915,889
Finance lease assets	206,586		206,153
Operating lease assets	791,924		821,480
Goodwill	752,552		751,049
Other intangible assets	1,217,275		1,224,960
Investments	43,676		44,574
Net investment in sales-type and direct financing leases	302,694		268,221
Other assets	130,843		120,057
Total assets	$	5,166,874	$	5,040,006
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	32,750	$	28,962
Current portion of finance lease liabilities	14,547		12,105
Current portion of operating lease liabilities	45,269		45,346
Accounts payable	32,430		31,063
Accrued expenses and other current liabilities	137,991		155,321
Advertising funds restricted liabilities	109,799		140,511
Total current liabilities	372,786		413,308
Long-term debt	2,373,610		2,218,163
Long-term finance lease liabilities	521,608		506,076
Long-term operating lease liabilities	838,585		865,325
Deferred income taxes	279,837		280,755
Deferred franchise fees	89,286		89,094
Other liabilities	120,806		117,689
Total liabilities	4,596,518		4,490,410
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized;      470,424 shares issued; 222,960 and 224,268 shares outstanding, respectively	47,042		47,042
Additional paid-in capital	2,907,274		2,899,276
Retained earnings	303,475		238,674
Common stock held in treasury, at cost; 247,464 and 246,156 shares, respectively	(2,643,361)		(2,585,755)
Accumulated other comprehensive loss	(44,074)		(49,641)
Total stockholders’ equity	570,356		549,596
Total liabilities and stockholders’ equity	$	5,166,874	$	5,040,006

See accompanying notes to condensed consolidated financial statements.

4

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Amounts)

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
	(Unaudited)
Revenues:
Sales	$	193,525	$	164,217	$	382,582	$	331,015
Franchise royalty revenue and fees	136,661		103,120		259,491		204,825
Franchise rental income	60,868		56,857		119,744		114,713
Advertising funds revenue	102,283		78,112		191,723		156,713
	493,337		402,306		953,540		807,266
Costs and expenses:
Cost of sales	154,154		140,626		311,004		290,625
Franchise support and other costs	8,885		5,454		16,571		13,467
Franchise rental expense	34,068		31,297		66,634		60,598
Advertising funds expense	107,875		81,317		202,113		161,305
General and administrative	63,114		48,592		115,736		100,231
Depreciation and amortization	30,761		34,714		62,303		65,760
System optimization gains, net	(30,766)		(1,987)		(31,282)		(2,310)
Reorganization and realignment costs	2,102		2,911		7,036		6,821
Impairment of long-lived assets	630		117		1,265		4,704
Other operating income, net	(4,232)		(1,396)		(7,708)		(3,328)
	366,591		341,645		743,672		697,873
Operating profit	126,746		60,661		209,868		109,393
Interest expense, net	(28,204)		(29,085)		(56,990)		(57,610)
Loss on early extinguishment of debt	(17,917)		—		(17,917)		—
Other income (expense), net	161		(144)		290		932
Income before income taxes	80,786		31,432		135,251		52,715
Provision for income taxes	(15,062)		(6,528)		(28,161)		(13,370)
Net income	$	65,724	$	24,904	$	107,090	$	39,345
Net income per share:
Basic	$	.30	$	.11	$	.48	$	.18
Diluted	.29		.11		.47		.17

See accompanying notes to condensed consolidated financial statements.

5

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
	(Unaudited)
Net income	$	65,724	$	24,904	$	107,090	$	39,345
Other comprehensive income (loss):
Foreign currency translation adjustment	3,347		4,149		5,567		(8,358)
Other comprehensive income (loss)	3,347		4,149		5,567		(8,358)
Comprehensive income	$	69,071	$	29,053	$	112,657	$	30,987

See accompanying notes to condensed consolidated financial statements.

6

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands)

	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Stock Held in Treasury		Accumulated Other Comprehensive Loss		Total
	(Unaudited)
Balance at January 3, 2021	$	47,042	$	2,899,276	$	238,674	$	(2,585,755)	$	(49,641)	$	549,596
Net income	—		—		41,366		—		—		41,366
Other comprehensive income	—		—		—		—		2,220		2,220
Cash dividends	—		—		(20,156)		—		—		(20,156)
Repurchases of common stock	—		—		—		(56,084)		—		(56,084)
Share-based compensation	—		5,151		—		—		—		5,151
Common stock issued upon exercises of stock options	—		(20)		—		683		—		663
Common stock issued upon vesting of restricted shares	—		(2,996)		—		817		—		(2,179)
Other	—		49		(5)		44		—		88
Balance at April 4, 2021	$	47,042	$	2,901,460	$	259,879	$	(2,640,295)	$	(47,421)	$	520,665
Net income	—		—		65,724		—		—		65,724
Other comprehensive income	—		—		—		—		3,347		3,347
Cash dividends	—		—		(22,123)		—		—		(22,123)
Repurchases of common stock	—		—		—		(27,291)		—		(27,291)
Share-based compensation	—		5,882		—		—		—		5,882
Common stock issued upon exercises of stock options	—		850		—		23,466		—		24,316
Common stock issued upon vesting of restricted shares	—		(959)		—		714		—		(245)
Other	—		41		(5)		45		—		81
Balance at July 4, 2021	$	47,042	$	2,907,274	$	303,475	$	(2,643,361)	$	(44,074)	$	570,356

See accompanying notes to condensed consolidated financial statements.

7

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED

(In Thousands)

	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Stock Held in Treasury		Accumulated Other Comprehensive Loss		Total
	(Unaudited)
Balance at December 29, 2019	$	47,042	$	2,874,001	$	185,725	$	(2,536,581)	$	(53,828)	$	516,359
Net income	—		—		14,441		—		—		14,441
Other comprehensive loss	—		—		—		—		(12,507)		(12,507)
Cash dividends	—		—		(26,793)		—		—		(26,793)
Repurchases of common stock, including accelerated share repurchase	—		15,000		—		(58,336)		—		(43,336)
Share-based compensation	—		4,539		—		—		—		4,539
Common stock issued upon exercises of stock options	—		280		—		1,330		—		1,610
Common stock issued upon vesting of restricted shares	—		(4,017)		—		726		—		(3,291)
Other	—		33		(7)		27		—		53
Balance at March 29, 2020	$	47,042	$	2,889,836	$	173,366	$	(2,592,834)	$	(66,335)	$	451,075
Net income	—		—		24,904		—		—		24,904
Other comprehensive income	—		—		—		—		4,149		4,149
Cash dividends	—		—		(11,181)		—		—		(11,181)
Share-based compensation	—		4,787		—		—		—		4,787
Common stock issued upon exercises of stock options	—		(902)		—		11,361		—		10,459
Common stock issued upon vesting of restricted shares	—		(1,041)		—		773		—		(268)
Other	—		19		(3)		42		—		58
Balance at June 28, 2020	$	47,042	$	2,892,699	$	187,086	$	(2,580,658)	$	(62,186)	$	483,983

See accompanying notes to condensed consolidated financial statements.

8

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	Six Months Ended
	July 4, 2021		June 28, 2020
	(Unaudited)
Cash flows from operating activities:
Net income	$	107,090	$	39,345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	62,303		65,760
Share-based compensation	11,033		9,326
Impairment of long-lived assets	1,265		4,704
Deferred income tax	(2,137)		1,920
Non-cash rental expense, net	20,075		12,251
Change in operating lease liabilities	(23,074)		(19,233)
Net receipt of deferred vendor incentives	3,332		7,728
System optimization gains, net	(31,282)		(2,310)
Distributions received from joint ventures, net of equity in earnings	2,354		1,262
Long-term debt-related activities, net	21,328		3,141
Changes in operating assets and liabilities and other, net	(13,536)		(93,332)
Net cash provided by operating activities	158,751		30,562
Cash flows from investing activities:
Capital expenditures	(24,069)		(29,402)
Acquisitions	4,879		—
Dispositions	50,531		4,320
Notes receivable, net	611		138
Net cash provided by (used in) investing activities	31,952		(24,944)
Cash flows from financing activities:
Proceeds from long-term debt	1,100,000		153,315
Repayments of long-term debt	(941,220)		(24,271)
Repayments of finance lease liabilities	(5,777)		(3,707)
Deferred financing costs	(20,873)		(2,122)
Repurchases of common stock	(83,658)		(45,137)
Dividends	(42,279)		(37,974)
Proceeds from stock option exercises	25,933		11,865
Payments related to tax withholding for share-based compensation	(3,197)		(3,704)
Net cash provided by financing activities	28,929		48,265
Net cash provided by operations before effect of exchange rate changes on cash	219,632		53,883
Effect of exchange rate changes on cash	2,283		(3,132)
Net increase in cash, cash equivalents and restricted cash	221,915		50,751
Cash, cash equivalents and restricted cash at beginning of period	418,241		358,707
Cash, cash equivalents and restricted cash at end of period	$	640,156	$	409,458
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	$	7,242	$	6,082
Finance leases	30,863		12,962
	July 4, 2021		January 3, 2021
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	568,139	$	306,989
Restricted cash	37,792		33,973
Restricted cash, included in Advertising funds restricted assets	34,225		77,279
Total cash, cash equivalents and restricted cash	$	640,156	$	418,241

See accompanying notes to condensed consolidated financial statements.

9

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of July 4, 2021, the results of our operations for the three and six months ended July 4, 2021 and June 28, 2020 and cash flows for the six months ended July 4, 2021 and June 28, 2020. The results of operations for the six months ended July 4, 2021 are not necessarily indicative of the results to be expected for the full 2021 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2021 (the “Form 10-K”).

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic. We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition; however, we cannot predict the ultimate duration, scope or severity of the COVID-19 pandemic or its ultimate impact on our results of operations, financial condition and prospects.

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 17 for further information.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

(2) Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Three Months Ended July 4, 2021
Sales at Company-operated restaurants	$	193,279	$	246	$	—	$	193,525
Franchise royalty revenue	106,006		13,560		—		119,566
Franchise fees (a)	14,331		1,454		1,310		17,095
Franchise rental income	—		—		60,868		60,868
Advertising funds revenue	96,227		6,056		—		102,283
Total revenues	$	409,843	$	21,316	$	62,178	$	493,337

10

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Six Months Ended July 4, 2021
Sales at Company-operated restaurants	$	382,336	$	246	$	—	$	382,582
Franchise royalty revenue	202,770		25,130		—		227,900
Franchise fees (a)	26,261		2,897		2,433		31,591
Franchise rental income	—		—		119,744		119,744
Advertising funds revenue	180,430		11,293		—		191,723
Total revenues	$	791,797	$	39,566	$	122,177	$	953,540
Three Months Ended June 28, 2020
Sales at Company-operated restaurants	$	164,217	$	—	$	—	$	164,217
Franchise royalty revenue	88,121		9,070		—		97,191
Franchise fees (a)	5,308		433		188		5,929
Franchise rental income	—		—		56,857		56,857
Advertising funds revenue	73,612		4,500		—		78,112
Total revenues	$	331,258	$	14,003	$	57,045	$	402,306
Six Months Ended June 28, 2020
Sales at Company-operated restaurants	$	331,015	$	—	$	—	$	331,015
Franchise royalty revenue	172,954		19,593		—		192,547
Franchise fees (a)	10,593		906		779		12,278
Franchise rental income	—		—		114,713		114,713
Advertising funds revenue	147,737		8,976		—		156,713
Total revenues	$	662,299	$	29,475	$	115,492	$	807,266

_______________

(a)Includes fees for providing information technology services to franchisees, which are recognized as revenue as earned.

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

	July 4, 2021 (a)		January 3, 2021 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	51,005	$	57,677
Receivables, which are included in “Advertising funds restricted assets”	62,468		63,252
Deferred franchise fees (c)	98,409		97,785

_______________

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,123 and $89,286 as of July 4, 2021, respectively, and $8,691 and $89,094 as of January 3, 2021, respectively.

11

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	July 4, 2021		June 28, 2020
Deferred franchise fees at beginning of period	$	97,785	$	100,689
Revenue recognized during the period	(6,845)		(3,898)
New deferrals due to cash received and other	7,469		1,772
Deferred franchise fees at end of period	$	98,409	$	98,563

Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

Estimate for fiscal year:
2021 (a)	$	6,073
2022	6,298
2023	6,126
2024	5,930
2025	5,746
Thereafter	68,236
	$	98,409

_______________

(a)Represents franchise fees expected to be recognized for the remainder of 2021, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

(3) Acquisitions

No restaurants were acquired from franchisees during the six months ended July 4, 2021 and June 28, 2020.

NPC Quality Burgers, Inc. (“NPC”)

As previously announced, NPC, formerly the Company’s largest franchisee, filed for chapter 11 bankruptcy in July 2020 and commenced a process to sell all or substantially all of its assets, including its interest in approximately 393 Wendy’s restaurants across eight different markets, pursuant to a court-approved auction process. On November 18, 2020, the Company submitted a consortium bid together with a group of pre-qualified franchisees to acquire NPC’s Wendy’s restaurants. Under the terms of the consortium bid, several existing and new franchisees would have been the ultimate purchasers of seven of the NPC markets, while the Company would have acquired one market. As part of the consortium bid, the Company submitted a deposit of $43,240, which was included in “Prepaid expenses and other current assets” as of January 3, 2021. The deposit included $38,361 received from the group of prequalified franchisees, which was payable to the franchisees and included in “Accrued expenses and other current liabilities” as of January 3, 2021 pending resolution of the bankruptcy sale process.

During the three months ended April 4, 2021, following a court-approved mediation process, NPC and certain affiliates of Flynn Restaurant Group (“FRG”) and the Company entered into separate asset purchase agreements under which all of NPC’s Wendy’s restaurants were sold to Wendy’s approved franchisees. Under the transaction, FRG acquired approximately half of NPC’s Wendy’s restaurants in four markets, while several existing Wendy’s franchisees that were part of the Company’s consortium bid acquired the other half of NPC’s Wendy’s restaurants in the other four markets. The Company did not acquire any restaurants as part of this transaction. In addition, the deposits outstanding as of January 3, 2021 were settled during the three months ended April 4, 2021 upon resolution of the bankruptcy sale process. The net settlement of deposits of $4,879 is included in “Acquisitions” in the condensed consolidated statements of cash flows.

12

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(4) System Optimization Gains, 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, the Company expects to continue to optimize the Wendy’s 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. During the six months ended July 4, 2021 and June 28, 2020, the Company facilitated 19 and three Franchise Flips, respectively. In addition, during the three months ended July 4, 2021, the Company completed the sale of 47 Company-operated restaurants in New York (including Manhattan) to franchisees. No Company-operated restaurants were sold to franchisees during the six months ended June 28, 2020.

Gains and losses recognized on dispositions are recorded to “System optimization gains, 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 5. 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				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Number of restaurants sold to franchisees	47		—		47		—
Proceeds from sales of restaurants	$	50,518	$	—	$	50,518	$	—
Net assets sold (a)	(16,939)		—		(16,939)		—
Goodwill related to sales of restaurants	(4,847)		—		(4,847)		—
Net unfavorable leases (b)	(2,939)		—		(2,939)		—
Gain on sales-type leases	7,156		—		7,156		—
Other (c)	(2,148)		—		(2,148)		—
	30,801		—		30,801		—
Post-closing adjustments on sales of restaurants (d)	—		—		515		345
Gain on sales of restaurants, net	30,801		—		31,316		345
(Loss) gain on sales of other assets, net (e)	(35)		1,987		(34)		1,965
System optimization gains, net	$	30,766	$	1,987	$	31,282	$	2,310

_______________

(a)Net assets sold consist primarily of equipment.

(b)During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings, and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(c)The three and six months ended July 4, 2021 include a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(d)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

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THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(e)During the three and six months ended July 4, 2021, the Company received net cash proceeds of $10 and $13, respectively, primarily from the sale of surplus and other properties. During the three and six months ended June 28, 2020, the Company received net cash proceeds of $4,125 and $4,320, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

	July 4, 2021		January 3, 2021
Number of restaurants classified as held for sale	—		43
Net restaurant assets held for sale (a)	$	—	$	20,587
Other assets held for sale (b)	$	2,318	$	1,732

_______________

(a)Net restaurant assets held for sale as of January 3, 2021 included New York Company-operated restaurants (excluding Manhattan) and consisted primarily of cash, inventory, property and an estimate of allocable goodwill. During the three months ended April 4, 2021, the Company also classified its four Manhattan restaurants as held for sale.

(b)Other assets held for sale primarily consist of surplus properties.

Assets held for sale are included in “Prepaid expenses and other current assets.”

(5) Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Operations and field realignment	$	1,215	$	—	$	1,489	$	—
IT realignment	6		2,847		6		6,406
G&A realignment	(16)		64		(34)		331
System optimization initiative	897		—		5,575		84
Reorganization and realignment costs	$	2,102	$	2,911	$	7,036	$	6,821

Operations and Field Realignment

In September 2020, the Company initiated a plan to reallocate resources to better support the long-term growth strategies for Company and franchise operations (the “Operations and Field Realignment Plan”). The Operations and Field Realignment Plan realigned the Company’s restaurant operations team, including transitioning from separate leaders of Company and franchise operations to a single leader of all U.S. restaurant operations. The Operations and Field Realignment Plan also includes contract terminations, including the closure of certain field offices. The Company expects to incur total costs aggregating approximately $6,000 to $8,000 related to the Operations and Field Realignment Plan. During the three and six months ended July 4, 2021, the Company recognized costs totaling $1,215 and $1,489, respectively, which primarily included third-party and other costs. The Company expects to incur additional costs aggregating approximately $1,000 to $3,000, comprised primarily of third-party and other costs. The Company expects to recognize the majority of the remaining costs associated with the Operations and Field Realignment Plan during the remainder of 2021.

14

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following is a summary of the activity recorded as a result of the Operations and Field Realignment Plan:

	Three Months Ended		Six Months Ended		Total Incurred Since Inception
	July 4, 2021		July 4, 2021
Severance and related employee costs	$	79	$	333	$	3,446
Third-party and other costs	1,136		1,156		1,223
	1,215		1,489		4,669
Share-based compensation (a)	—		—		621
Total operations and field realignment	$	1,215	$	1,489	$	5,290

_______________

(a)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the Operations and Field Realignment Plan.

The table below presents a rollforward of our accruals for the Operations and Field Realignment Plan, which are included in “Accrued expenses and other current liabilities” as of July 4, 2021.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	2,600	$	333	$	(1,924)	$	1,009
Third-party and other costs	—		1,156		(1,156)		—
	$	2,600	$	1,489	$	(3,080)	$	1,009

Information Technology (“IT”) Realignment

In December 2019, our Board of Directors approved a plan to realign and reinvest resources in the Company’s IT organization to strengthen its ability to accelerate growth (the “IT Realignment Plan”). The Company has partnered with a third-party global IT consultant on this new structure to leverage their global capabilities, enabling a more seamless integration between its digital and corporate IT assets. The IT Realignment Plan has reduced certain employee compensation and other related costs that the Company has reinvested back into IT to drive additional capabilities and capacity across all of its technology platforms. Additionally, in June 2020, the Company made changes to its leadership structure that included the elimination of the Chief Digital Experience Officer position and the creation of a Chief Information Officer position, for which the Company completed the hiring process in October 2020. During the three and six months ended June 28, 2020, the Company recognized costs totaling $2,847 and $6,406, which primarily included third-party and other costs and severance and related employee costs. The Company does not expect to incur any material additional costs under the IT Realignment Plan.

The following is a summary of the activity recorded as a result of the IT Realignment Plan:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs (a)	$	(8)	$	830	$	(119)	$	975	$	8,272
Recruitment and relocation costs	13		143		121		314		1,417
Third-party and other costs	1		1,874		4		5,117		6,539
	6		2,847		6		6,406		16,228
Share-based compensation (b)	—		—		—		—		193
Total IT realignment	$	6	$	2,847	$	6	$	6,406	$	16,421

_______________

(a)The three and six months ended July 4, 2021 include a reversal of an accrual as a result of a change in estimate.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the IT Realignment Plan.

The accruals for the IT Realignment Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $462 and $10 as of July 4, 2021 and $4,039 and $371 as of June 28, 2020, respectively. The tables below present a rollforward of our accruals for the IT Realignment Plan.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	1,508	$	(119)	$	(917)	$	472
Recruitment and relocation costs	—		121		(121)		—
Third-party and other costs	—		4		(4)		—
	$	1,508	$	6	$	(1,042)	$	472

	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	7,548	$	975	$	(4,113)	$	4,410
Recruitment and relocation costs	—		314		(314)		—
Third-party and other costs	1,076		5,117		(6,193)		—
	$	8,624	$	6,406	$	(10,620)	$	4,410

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses (the “G&A Realignment Plan”). Additionally, in May 2019, the Company announced changes to its management and operating structure that included the creation of two new positions, a President, U.S. and Chief Commercial Officer and a President, International and Chief Development Officer, and the elimination of the Chief Operations Officer position. During the six months ended June 28, 2020, the Company recognized costs totaling $331, which primarily included share-based compensation and severance and related employee costs. The Company does not expect to incur any material additional costs under the G&A Realignment Plan.

The following is a summary of the activity recorded as a result of the G&A Realignment Plan:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs (a)	$	(22)	$	(6)	$	(53)	$	146	$	24,213
Recruitment and relocation costs	(1)		—		—		15		2,876
Third-party and other costs	(1)		—		—		1		2,223
	(24)		(6)		(53)		162		29,312
Share-based compensation (b)	8		70		19		169		8,130
Termination of defined benefit plans	—		—		—		—		1,335
Total G&A realignment	$	(16)	$	64	$	(34)	$	331	$	38,777

_______________

(a)The three and six months ended July 4, 2021 and June 28, 2020 include a reversal of an accrual as a result of a change in estimate.

(b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A Realignment Plan.

16

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

As of July 4, 2021, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities.” As of June 28, 2020, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled and $2,705 and $108, respectively. The tables below present a rollforward of our accruals for the G&A Realignment Plan.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	932	$	(53)	$	(738)	$	141
Recruitment and relocation costs	—		—		—		—
Third-party and other costs	—		—		—		—
	$	932	$	(53)	$	(738)	$	141

	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	5,276	$	146	$	(2,671)	$	2,751
Recruitment and relocation costs	83		15		(36)		62
Third-party and other costs	—		1		(1)		—
	$	5,359	$	162	$	(2,708)	$	2,813

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. During the six months ended July 4, 2021, the Company recognized costs totaling $5,575, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the NPC bankruptcy sale process. See Note 3 for further information. The Company expects to recognize a gain of approximately $1,000 related to the write-off of certain NPC-related lease liabilities upon final termination of the leases.

The following is a summary of the costs recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs	$	661	$	—	$	661	$	—	$	18,898
Professional fees	504		—		739		80		22,846
Other (a)	—		—		1,354		4		7,207
	1,165		—		2,754		84		48,951
Accelerated depreciation and amortization (b)	—		—		—		—		25,398
NPC lease termination costs (c)	(268)		—		2,821		—		2,821
Share-based compensation (d)	—		—		—		—		5,013
Total system optimization initiative	$	897	$	—	$	5,575	$	84	$	82,183

_______________

(a)The six months ended July 4, 2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c)The six months ended July 4, 2021 includes the write-off of lease assets of $1,341 and lease termination fees paid of $1,480.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

The table below presents a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	—	$	661	$	(661)	$	—
Professional fees	1,230		739		(1,969)		—
Other	—		1,354		(1,354)		—
	$	1,230	$	2,754	$	(3,984)	$	—

(6) Investments

Equity Investments

Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand. (Tim Hortons is a registered trademark of Tim Hortons USA Inc.) In addition, a wholly-owned subsidiary of Wendy’s has a 20% share in a joint venture for the operation of Wendy’s restaurants in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method of accounting, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.”

Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements:

	Six Months Ended
	July 4, 2021		June 28, 2020
Balance at beginning of period	$	44,574	$	45,310
Equity in earnings for the period	4,921		3,455
Amortization of purchase price adjustments (a)	(1,658)		(1,105)
	3,263		2,350
Distributions received	(5,617)		(3,612)
Foreign currency translation adjustment included in “Other comprehensive income (loss)” and other	1,456		(1,631)
Balance at end of period	$	43,676	$	42,417

_______________

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

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THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(7) Long-Term Debt

Long-term debt consisted of the following:

	July 4, 2021		January 3, 2021
Series 2021-1 Class A-2 Notes:
2.370% Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029	$	450,000	$	—
2.775% Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031	650,000		—
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	378,000		386,000
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	425,250		434,250
Series 2018-1 Class A-2 Notes:
3.573% Series 2018-1 Class A-2-I Notes, repaid in connection with the June 2021 refinancing	—		436,500
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	458,375		460,750
Series 2015-1 Class A-2 Notes:
4.497% Series 2015-1 Class A-2-III Notes, repaid in connection with the June 2021 refinancing	—		473,750
Canadian revolving credit facility	—		1,962
7% debentures, due in 2025	84,585		83,998
Unamortized debt issuance costs	(39,850)		(30,085)
	2,406,360		2,247,125
Less amounts payable within one year	(32,750)		(28,962)
Total long-term debt	$	2,373,610	$	2,218,163

Senior Notes

Wendy’s Funding, LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015. In June 2021, the Master Issuer completed a refinancing transaction with respect to this facility under which the Master Issuer issued fixed rate senior secured notes in the following 2021-1 series: Class A-2-I with an initial principal amount of $450,000 and Class A-2-II with an initial principal amount of $650,000 (collectively, the “Series 2021-1 Class A-2 Notes”). Interest and principal payments on the Series 2021-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2021-1 Class A-2 Notes is in June 2051. If the Master Issuer has not repaid or refinanced the Series 2021-1 Class A-2 Notes prior to their respective anticipated repayment dates, additional interest will accrue pursuant to the indenture governing the Series 2021-1 Class A-2 Notes. The net proceeds from the sale of the Series 2021-1 Class A-2 Notes were used to repay in full the Master Issuer’s outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes, including the payment of prepayment and transaction costs. The remaining funds will be used for general corporate purposes, which may include funding for growth initiatives, return of capital to shareholders, or additional debt retirement. As a result of the refinancing, the Company recorded a loss on early extinguishment of debt of $17,917 during the three months ended July 4, 2021, which was comprised of a specified make-whole payment of $9,632 and the write-off of certain unamortized deferred financing costs of $8,285. The Series 2021-1 Class A-2 Notes have scheduled principal payments of $5,500 in 2021, $11,000 annually from 2022 through 2028, $422,750 in 2029, $6,500 in 2030 and $588,250 in 2031.

In connection with the issuance of the Series 2021-1 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2021-1 Class A-1 Notes” and, together with the Series 2021-1 Class A-2 Notes, the “Series 2021-1 Senior Notes”), which allows for the drawing of up to $300,000 on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2021-1 Class A-1 Notes during the three months ended July 4, 2021. The Series 2021-1 Class A-1 Notes replaced the Company’s $150,000 Series 2019-1 Class A-1 Notes and $100,000 Series 2020-1 Class A-1 Notes, which were canceled on the closing date, and the letters of credit outstanding against the Series 2019-1 Class A-1 Notes were transferred to the Series 2021-1 Class A-1 Notes.

19

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The Series 2021-1 Senior Notes are secured by substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors, except for certain real estate assets and subject to certain limitations. The Series 2021-1 Senior Notes are subject to substantially the same series of covenants and restrictions as the Company’s outstanding Series 2019-1 Class A-2 Notes and Series 2018-1 Class A-2 Notes.

During the three and six months ended July 4, 2021, the Company incurred debt issuance costs of $20,873 in connection with the issuance of the Series 2021-1 Senior Notes. The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2021-1 Senior Notes utilizing the effective interest rate method.

Other Long-Term Debt

A Canadian subsidiary of Wendy’s has a revolving credit facility of C$6,000, which bears interest at the Bank of Montreal Prime Rate. Borrowings under the facility are guaranteed by Wendy’s. In March 2020, the Company drew down C$5,500 under the revolving credit facility, which the Company fully repaid through repayments of C$3,000 in the fourth quarter of 2020 and C$2,500 in the first quarter of 2021. As a result, as of July 4, 2021, the Company had no outstanding borrowings under the Canadian revolving credit facility.

(8) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

20

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	July 4, 2021				January 3, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	125,037	$	125,037	$	75,067	$	75,067	Level 1
Financial liabilities
Series 2021-1 Class A-2-I Notes (a)	450,000		453,105		—		—		Level 2
Series 2021-1 Class A-2-II Notes (a)	650,000		658,190		—		—		Level 2
Series 2019-1 Class A-2-I Notes (a)	378,000		402,570		386,000		409,778		Level 2
Series 2019-1 Class A-2-II Notes (a)	425,250		466,669		434,250		469,555		Level 2
Series 2018-1 Class A-2-I Notes (a)	—		—		436,500		450,381		Level 2
Series 2018-1 Class A-2-II Notes (a)	458,375		489,407		460,750		491,021		Level 2
Series 2015-1 Class A-2-III Notes (a)	—		—		473,750		481,851		Level 2
Canadian revolving credit facility	—		—		1,962		1,962		Level 2
7% debentures, due in 2025 (a)	84,585		101,250		83,998		98,775		Level 2

_______________

(a)The fair values were based on quoted market prices in markets that are not considered active markets.

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

Non-Recurring Fair Value Measurements

Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.

Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) declines in operating performance at Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance.

21

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 9 for further information on impairment of our long-lived assets.

			Fair Value Measurements
	July 4, 2021		Level 1		Level 2		Level 3
Held and used	$	718	$	—	$	—	$	718
Held for sale	340		—		—		340
Total	$	1,058	$	—	$	—	$	1,058

			Fair Value Measurements
	January 3, 2021		Level 1		Level 2		Level 3
Held and used	$	2,653	$	—	$	—	$	2,653
Held for sale	855		—		—		855
Total	$	3,508	$	—	$	—	$	3,508

(9) Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications, and (3) closing Company-operated restaurants and classifying such surplus properties as held for sale. Impairment charges during the six months ended June 28, 2020 were primarily due to the expected deterioration in operating performance of certain Company-operated restaurants as a result of the COVID-19 pandemic.

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Company-operated restaurants	$	488	$	—	$	934	$	4,395
Restaurants leased or subleased to franchisees	—		—		189		—
Surplus properties	142		117		142		309
	$	630	$	117	$	1,265	$	4,704

(10) Income Taxes

The Company’s effective tax rate for the three months ended July 4, 2021 and June 28, 2020 was 18.6% and 20.8%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the three months ended July 4, 2021 primarily due to a reduction for the benefit of share-based compensation, partially offset by an increase due to state income taxes.

The Company’s effective tax rate for the six months ended July 4, 2021 and June 28, 2020 was 20.8% and 25.4%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the six months ended July 4, 2021 primarily due to a reduction for the benefit of share-based compensation, partially offset by an increase due to state income taxes, including discrete changes to state deferred taxes.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and six months ended July 4, 2021. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $2,016 due primarily to the lapse of statutes of limitations and expected settlements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The current portion of refundable income taxes was $4,528 and $5,399 as of July 4, 2021 and January 3, 2021, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of July 4, 2021 and January 3, 2021.

(11) Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Net income	$	65,724	$	24,904	$	107,090	$	39,345
Common stock:
Weighted average basic shares outstanding	221,874		223,123		222,604		223,329
Dilutive effect of stock options and restricted shares	3,526		4,051		3,459		4,262
Weighted average diluted shares outstanding	225,400		227,174		226,063		227,591
Net income per share:
Basic	$	.30	$	.11	$	.48	$	.18
Diluted	$	.29	$	.11	$	.47	$	.17

Basic net income per share for the three and six months ended July 4, 2021 and June 28, 2020 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share for the three and six months ended July 4, 2021 and June 28, 2020 was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 1,825 and 1,847 for the three and six months ended July 4, 2021, respectively, and 2,636 and 2,652 for the three and six months ended June 28, 2020, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(12) Stockholders’ Equity

Dividends

During the first and second quarter of 2021, the Company paid dividends per share of $.09 and $.10, respectively. During the first and second quarter of 2020, the Company paid dividends per share of $.12 and $.05, respectively.

Repurchases of Common Stock

In February 2020, our Board of Directors authorized a repurchase program for up to $100,000 of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible. As previously announced, beginning in March 2020, the Company temporarily suspended all share repurchase activity under the February 2020 authorization in connection with the Company’s response to the COVID-19 pandemic. In July 2020, the Company’s Board of Directors approved an extension of the February 2020 authorization by one year, through February 28, 2022, when and if market and economic conditions warrant and to the extent legally permissible. The Company resumed share repurchases in August 2020. In addition, in May 2021, the Board of Directors approved an increase of $50,000 to the February 2020 authorization, resulting in an aggregate authorization of $150,000 that continues to expire on February 28, 2022. During the six months ended July 4, 2021, the Company repurchased 3,956 shares under the February 2020 repurchase authorization with an aggregate purchase price of $83,320, of which $440 was accrued at July 4, 2021, and excluding commissions of $55. As of July 4, 2021, the Company had $34,396 of availability remaining under its February 2020 authorization. Subsequent to July 4, 2021 through August 4, 2021, the Company repurchased 193 shares under the February 2020 authorization with an aggregate purchase price of $4,396, excluding commissions of $2. In addition, in August 2021, the Board of Directors approved an increase of $70,000 to the February 2020 authorization, resulting in an aggregate authorization of $220,000 that continues to

23

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

expire on February 28, 2022. The Company has availability of $100,000 remaining under the authorization as of August 11, 2021.

In February 2019, our Board of Directors authorized a repurchase program for up to $225,000 of our common stock through March 1, 2020, when and if market conditions warranted and to the extent legally permissible. In November 2019, the Company entered into an accelerated share repurchase agreement (the “2019 ASR Agreement”) with a third-party financial institution to repurchase common stock as part of the Company’s existing share repurchase program. Under the 2019 ASR Agreement, the Company paid the financial institution an initial purchase price of $100,000 in cash and received an initial delivery of 4,051 shares of common stock, representing an estimated 85% of the total shares expected to be delivered under the 2019 ASR Agreement. In February 2020, the Company completed the 2019 ASR Agreement and received an additional 628 shares of common stock at an average purchase price of $23.89. The total number of shares of common stock ultimately purchased by the Company under the 2019 ASR Agreement was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2019 ASR Agreement, less an agreed upon discount. In total, 4,679 shares were delivered under the 2019 ASR Agreement at an average purchase price of $21.37 per share.

In addition to the shares repurchased in connection with the 2019 ASR Agreement, during the six months ended June 28, 2020, the Company repurchased 2,091 shares with an aggregate purchase price of $43,307, excluding commissions of $29, under the February 2020 authorization and the February 2019 authorization. After taking into consideration these repurchases, with the completion of the 2019 ASR Agreement in February 2020, the Company completed its February 2019 authorization.

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss:

	Six Months Ended
	July 4, 2021		June 28, 2020
Balance at beginning of period	$	(49,641)	$	(53,828)
Foreign currency translation	5,567		(8,358)
Balance at end of period	$	(44,074)	$	(62,186)

(13) Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At July 4, 2021, Wendy’s and its franchisees operated 6,866 Wendy’s restaurants. Of the 315 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 138 restaurants, owned the building and held long-term land leases for 120 restaurants and held leases covering the land and building for 57 restaurants. Wendy’s also owned 510 and leased 1,276 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

24

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Finance lease cost:
Amortization of finance lease assets	$	3,251	$	3,338	$	6,759	$	6,524
Interest on finance lease liabilities	10,267		10,160		20,560		20,218
	13,518		13,498		27,319		26,742
Operating lease cost	23,012		23,969		46,373		45,134
Variable lease cost (a)	16,583		13,848		31,771		28,218
Short-term lease cost	1,270		991		2,596		2,321
Total operating lease cost (b)	40,865		38,808		80,740		75,673
Total lease cost	$	54,383	$	52,306	$	108,059	$	102,415

_______________

(a)Includes expenses for executory costs of $10,087 and $9,457 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,150 and $19,200 for the six months ended July 4, 2021 and June 28, 2020, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $34,063 and $31,263 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $66,615 and $60,554 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,111 and $6,831 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $12,792 and $13,664 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

The following table includes supplemental cash flow and non-cash information related to leases:

	Six Months Ended
	July 4, 2021		June 28, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	20,957	$	18,853
Operating cash flows from operating leases	46,879		40,582
Financing cash flows from finance leases	5,777		3,707
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	30,863		12,962
Operating lease liabilities	4,577		13,380

25

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following table includes supplemental information related to leases:

	July 4, 2021			January 3, 2021
Weighted-average remaining lease term (years):
Finance leases	16.0			16.2
Operating leases	14.3			14.6
Weighted average discount rate:
Finance leases	9.29		%	9.54		%
Operating leases	5.03		%	5.06		%
Supplemental balance sheet information:
Finance lease assets, gross	$	264,824		$	261,308
Accumulated amortization	(58,238)			(55,155)
Finance lease assets	206,586			206,153
Operating lease assets	791,924			821,480

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of July 4, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	2,229	$	25,786	$	6,989	$	36,993
2022	3,476		51,490		14,240		74,000
2023	3,422		53,175		14,401		73,794
2024	3,489		53,608		14,462		73,761
2025	3,564		54,098		14,357		73,455
Thereafter	42,705		671,835		133,387		733,429
Total minimum payments	$	58,885	$	909,992	$	197,836	$	1,065,432
Less interest	(21,909)		(410,813)		(57,308)		(322,106)
Present value of minimum lease payments (c) (d)	$	36,976	$	499,179	$	140,528	$	743,326

_______________

(a)Represents future minimum rental payments for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental payments, the Company expects to pay $2,175 primarily during 2021 related to rent deferrals obtained due to the COVID-19 pandemic. The related payable is included in “Accrued expenses and other current liabilities.”

(c)The present value of minimum finance lease payments of $14,547 and $521,608 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(d)The present value of minimum operating lease payments of $45,269 and $838,585 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

26

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Company as Lessor

The components of lease income are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Sales-type and direct-financing leases:
Selling profit	$	1,627	$	569	$	3,539	$	1,197
Interest income (a)	7,586		7,260		15,075		14,508
Operating lease income	44,356		43,052		88,478		87,004
Variable lease income	16,512		13,805		31,266		27,709
Franchise rental income (b)	$	60,868	$	56,857	$	119,744	$	114,713

_______________

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $45,245 and $41,489 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $88,495 and $83,531 for the six months ended July 4, 2021 and June 28, 2020, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,195 and $9,450 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,069 and $19,159 for the six months ended July 4, 2021 and June 28, 2020, respectively.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of July 4, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	16,720	$	2,040	$	57,923	$	27,709
2022	33,942		2,612		116,647		56,397
2023	35,003		2,658		117,448		56,707
2024	37,004		2,669		117,667		57,816
2025	35,907		2,787		117,156		58,421
Thereafter	474,723		35,676		1,172,618		750,148
Total future minimum receipts	633,299		48,442		$	1,699,459	$	1,007,198
Unearned interest income	(346,389)		(26,004)
Net investment in sales-type and direct financing leases (c)	$	286,910	$	22,438

_______________

(a)Represents future minimum rental receipts for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental receipts, the Company expects to collect $1,088 primarily during 2021 related to its offer to franchisees to defer base rent payments in response to the COVID-19 pandemic. The related receivable is included in “Accounts and notes receivable, net.”

(c)The present value of minimum direct financing rental receipts of $6,654 and $302,694 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $521.

27

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Properties owned by the Company and leased to franchisees and other third parties under operating leases include:

	July 4, 2021		January 3, 2021
Land	$	280,879	$	279,956
Buildings and improvements	307,834		309,605
Restaurant equipment	1,701		1,701
	590,414		591,262
Accumulated depreciation and amortization	(176,125)		(170,722)
	$	414,289	$	420,540

(14) Transactions with Related Parties

Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.

TimWen Lease and Management Fee Payments

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. During the six months ended July 4, 2021 and June 28, 2020, Wendy’s paid TimWen $8,817 and $7,408, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $110 and $101 during the six months ended July 4, 2021 and June 28, 2020, respectively, which has been included as a reduction to “General and administrative.”

Transactions with Yellow Cab

Certain family members and affiliates of Mr. Nelson Peltz, our Chairman, and Mr. Peter May, our Vice Chairman, as well as Mr. Matthew Peltz, a director of the Company, hold indirect, minority ownership interests in operating companies managed by Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee, that as of July 4, 2021 owned and operated 78 Wendy’s restaurants (including Wendy’s restaurants acquired from NPC during the first quarter of 2021 as described below). During the six months ended July 4, 2021, the Company recognized $4,353 in royalty, advertising fund, lease and other income from Yellow Cab and related entities. As of July 4, 2021, $883 was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

In November 2020, the Company submitted a consortium bid together with a group of pre-qualified franchisees (of which Yellow Cab was a member) to acquire the Wendy’s restaurants owned by NPC, the Company’s largest franchisee, which filed for chapter 11 bankruptcy in July 2020. As part of the consortium bid, in November 2020, the Company received deposits from each of the pre-qualified franchisees (including Yellow Cab), which amounts were transferred to a third-party escrow account pending resolution of the bankruptcy sale process. On January 7, 2021, following a court-approved mediation process, Yellow Cab was selected as the purchaser for 54 of NPC’s Wendy’s restaurants. In March 2021, Yellow Cab closed on its acquisition of these restaurants and its deposit was applied against the purchase price for the restaurants. See Note 3 for further information.

(15) Guarantees and Other Commitments and Contingencies

Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $95,160 as of July 4, 2021. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of July 4, 2021. In the event of default by a franchise

28

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

owner, Wendy’s generally retains the right to acquire possession of the related restaurant locations. The liability recorded for our probable exposure associated with these lease guarantees was not material as of July 4, 2021.

Letters of Credit

As of July 4, 2021, the Company had outstanding letters of credit with various parties totaling $26,579. Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Class A-1 Notes. We do not expect any material loss to result from these letters of credit.

(16) Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have adequate accruals for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

We previously described certain legal proceedings in the Form 10-K. Except as set forth below, there were no material developments in those legal proceedings as of July 4, 2021.

In a Form 8-K filed with the Securities and Exchange Commission on June 28, 2021 (the “Form 8-K”), the Company provided an update on the proposed settlement of the previously-disclosed shareholder derivative action arising out of the criminal cyberattacks that targeted the point of sale systems of certain Wendy’s franchisees in 2015 and 2016 (the “Derivative Lawsuit”).

As described in the Form 8-K, on February 14, 2019, the Company entered into a Stipulation and Agreement of Settlement (the “Settlement”) to resolve the Derivative Lawsuit. On January 24, 2020, the United States District Court for the Southern District of Ohio (the “Court”) issued an order granting preliminary approval of the Settlement, which consists of certain corporate governance undertakings and the payment of plaintiffs’ attorneys’ fees and expenses up to $950. Pursuant to an order issued by the Court on June 3, 2021, a hearing to determine whether the Court should issue a final order approving the Settlement has been scheduled for September 2, 2021. If the Settlement is approved by the Court, the Derivative Lawsuit will be dismissed with prejudice subject to any appeal, and the Company expects the monetary terms of the Settlement to be covered by applicable insurance.

(17) Segment Information

Revenues by segment were as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Wendy’s U.S.	$	409,843	$	331,258	$	791,797	$	662,299
Wendy’s International	21,316		14,003		39,566		29,475
Global Real Estate & Development	62,178		57,045		122,177		115,492
Total revenues	$	493,337	$	402,306	$	953,540	$	807,266

29

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Wendy’s U.S. (a)	$	126,650	$	93,136	$	238,737	$	174,964
Wendy’s International	6,528		3,594		14,212		8,689
Global Real Estate & Development	26,569		23,711		52,822		50,201
Total segment profit	$	159,747	$	120,441	$	305,771	$	233,854
Advertising funds deficit	(1,602)		(1,020)		(2,866)		(2,407)
Unallocated general and administrative (b)	(28,864)		(23,051)		(53,971)		(47,170)
Depreciation and amortization	(30,761)		(34,714)		(62,303)		(65,760)
System optimization gains, net	30,766		1,987		31,282		2,310
Reorganization and realignment costs	(2,102)		(2,911)		(7,036)		(6,821)
Impairment of long-lived assets	(630)		(117)		(1,265)		(4,704)
Unallocated other operating income, net	192		46		256		91
Interest expense, net	(28,204)		(29,085)		(56,990)		(57,610)
Loss on early extinguishment of debt	(17,917)		—		(17,917)		—
Other income (expense), net	161		(144)		290		932
Income before income taxes	$	80,786	$	31,432	$	135,251	$	52,715

_______________

(a)Includes advertising funds expense of $3,990 and $7,524 for the three and six months ended July 4, 2021, respectively, and $2,185 for the three and six months ended June 28, 2020 related to the Company funding of incremental advertising.

(b)Includes corporate overhead costs, such as employee compensation and related benefits.

(18) New Accounting Standards

In July 2021, the Financial Accounting Standards Board issued an amendment that addresses an issue related to a lessor’s accounting for certain leases with variable lease payments that could result in the recognition of a selling loss at lease commencement even if the lessor expects the arrangement to be profitable overall. The amendment specifies lessors should classify and account for such a lease with variable lease payments as an operating lease, dependent upon meeting certain criteria, for which a selling profit or loss is not recognized. The amendment is effective commencing with our 2022 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

30

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us,” or “our”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the related notes included elsewhere within this report and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 3, 2021 (the “Form 10-K”). There have been no material changes as of July 4, 2021 to the application of our critical accounting policies as described in Item 7 of the Form 10-K. Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements and Projections” in “Part II. Other Information” of this report. You should consider our forward-looking statements in light of the risks discussed in “Item 1A. Risk Factors” in “Part II. Other Information” of this report and our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this report, the Form 10-K and our other filings with the Securities and Exchange Commission (the “SEC”).

The Wendy’s Company is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”). The principal 100% owned subsidiary of Wendy’s Restaurants is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). Wendy’s is primarily engaged in the business of operating, developing and franchising a system of distinctive quick-service restaurants serving high quality food. Wendy’s opened its first restaurant in Columbus, Ohio in 1969. Today, Wendy’s is the second largest quick-service restaurant company in the hamburger sandwich segment in the United States (the “U.S.”) based on traffic share, and the third largest globally with 6,866 restaurants in the U.S. and 31 foreign countries and U.S. territories as of July 4, 2021.

Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring filet of chicken breast sandwiches, which are prepared to order with the customer’s choice of condiments. Wendy’s menu also includes chicken nuggets, chili, french fries, baked potatoes, freshly prepared salads, soft drinks, Frosty® desserts and kids’ meals. In addition, Wendy’s restaurants sell a variety of promotional products on a limited time basis. In March 2020, Wendy’s entered the breakfast daypart across the U.S. system. Wendy’s breakfast menu features a variety of breakfast sandwiches, biscuits and croissants, sides such as seasoned potatoes, oatmeal bars and seasonal fruit, and a beverage platform that includes hot coffee, cold brew iced coffee and our vanilla and chocolate Frosty-ccino iced coffee.

The Company is comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Wendy’s International includes the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our TimWen real estate joint venture. In addition, Global Real Estate & Development earns fees from facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”) and providing other development-related services to franchisees. In this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Company reports on the segment profit for each of the three segments described above. The Company measures segment profit based on segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”). Segment adjusted EBITDA excludes certain unallocated general and administrative expenses and other items that vary from period to period without correlation to the Company’s core operating performance. See “Results of Operations” below and Note 17 to the Condensed Consolidated Financial Statements contained in Item 1 herein for segment financial information.

The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

31

Executive Overview

Our Business

As of July 4, 2021, the Wendy’s restaurant system was comprised of 6,866 restaurants, with 5,895 Wendy’s restaurants in operation in the U.S. Of the U.S. restaurants, 314 were operated by the Company and 5,581 were operated by a total of 225 franchisees. In addition, at July 4, 2021, there were 971 Wendy’s restaurants in operation in 31 foreign countries and U.S. territories. Of the international restaurants, 970 were operated by franchisees and one was operated by the Company in the United Kingdom (the “U.K.”).

The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants. Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of July 4, 2021.

Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and consumer spending levels, general economic and market trends and weather. The COVID-19 pandemic has had and may continue to have the effect of heightening the impact of many of these factors.

Wendy’s long-term growth opportunities include investing in accelerated global growth through (1) building our breakfast daypart, (2) continued implementation of consumer-facing digital platforms and technologies and (3) expanding the Company’s footprint through targeted U.S. expansion and accelerated international expansion through same-restaurant sales growth and new restaurant development, including the Company’s plan to open additional Company-operated restaurants in the U.K. during 2021 and beyond.

Key Business Measures

We track our results of operations and manage our business using the following key business measures, which includes a non-GAAP financial measure:

•Same-Restaurant Sales - We report same-restaurant sales commencing after new restaurants have been open for 15 continuous months and as soon as reimaged restaurants reopen. Restaurants temporarily closed for more than one fiscal week are excluded from same-restaurant sales. For fiscal 2020, same-restaurant sales excluded the impact of a 53rd operating week. In fiscal 2020, same-restaurant sales compared the 52 weeks from December 30, 2019 through December 27, 2020 to the 52 weeks from December 31, 2018 through December 29, 2019. For fiscal 2021, same-restaurant sales will compare the 52 weeks from January 4, 2021 through January 2, 2022 to the 52 weeks from January 6, 2020 through January 3, 2021. This methodology is consistent with the metric used by our management for internal reporting and analysis. The table summarizing same-restaurant sales below in “Results of Operations” provides the same-restaurant sales percent changes.

•Restaurant Margin - We define restaurant margin as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs. Restaurant margin is influenced by factors such as price increases, the effectiveness of our advertising and marketing initiatives, featured products, product mix, fluctuations in food and labor costs, restaurant openings, remodels and closures and the level of our fixed and semi-variable costs.

•Systemwide Sales - Systemwide sales is a non-GAAP financial measure, which includes sales by both Company-operated restaurants and franchised restaurants. Franchised restaurants’ sales are reported by our franchisees and represent their revenues from sales at franchised Wendy’s restaurants. The Company’s consolidated financial statements do not include sales by franchised restaurants to their customers. The Company’s royalty and advertising funds revenues are computed as percentages of sales made by Wendy’s franchisees. As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty and advertising funds revenues and profitability.

The Company calculates same-restaurant sales and systemwide sales growth on a constant currency basis. Constant currency results exclude the impact of foreign currency translation and are derived by translating current year results at prior year average exchange rates. The Company believes excluding the impact of foreign currency translation provides better year over year comparability.

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Same-restaurant sales and systemwide sales exclude sales from Argentina and Venezuela due to the highly inflationary economies of those countries. The Company considers economies that have had cumulative inflation in excess of 100% over a three-year period as highly inflationary.

The Company believes its presentation of same-restaurant sales, restaurant margin and systemwide sales provide a meaningful perspective of the underlying operating performance of the Company’s current business and enables investors to better understand and evaluate the Company’s historical and prospective operating performance. The Company believes that these metrics are important supplemental measures of operating performance because they highlight trends in the Company’s business that may not otherwise be apparent when relying solely on GAAP financial measures. The Company believes investors, analysts and other interested parties use these metrics in evaluating issuers and that the presentation of these measures facilitates a comparative assessment of the Company’s operating performance. With respect to same-restaurant sales and systemwide sales, the Company also believes that the data is useful in assessing consumer demand for the Company’s products and the overall success of the Wendy’s brand.

The non-GAAP financial measure discussed above does not replace the presentation of the Company’s financial results in accordance with GAAP. Because all companies do not calculate non-GAAP financial measures in the same way, this measure as used by other companies may not be consistent with the way the Company calculates such measure.

Second Quarter Financial Highlights

•Revenue increased 22.6% to $493.3 million in the second quarter of 2021 compared to $402.3 million in the second quarter of 2020;

•Global same-restaurant sales increased 17.4%, U.S. same-restaurant sales increased 16.1% and international same-restaurant sales increased 31.4% compared to the second quarter of 2020;

•Company-operated restaurant margin was 20.3% in the second quarter of 2021, an increase of 590 basis points from the second quarter of 2020; and

•Net income was $65.7 million in the second quarter of 2021 compared to $24.9 million in the second quarter of 2020.

Year-to-Date Financial Highlights

•Revenue increased 18.1% to $953.5 million in the first six months of 2021 compared to $807.3 million in the first six months of 2020;

•Global same-restaurant sales increased 15.2%, U.S. same-restaurant sales increased 14.9% and international same-restaurant sales increased 19.0% compared to the first six months of 2020;

•Company-operated restaurant margin was 18.7% in the first six months of 2021, an increase of 650 basis points from the first six months of 2020; and

•Net income was $107.1 million in the first six months of 2021 compared to $39.3 million in the first six months of 2020.

COVID-19 Update

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic. We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition; however, we cannot predict the ultimate duration, scope or severity of the COVID-19 pandemic or its ultimate impact on our results of operations, financial condition and prospects.

In response to the pandemic, in March 2020, Wendy’s updated its brand standard to include the closure of all dining rooms except where there were specific needs, or a drive-thru or pick-up window option was not available, subject to applicable federal, state and local requirements. Substantially all Wendy’s restaurants continued to offer drive-thru and delivery service to our customers. During the second quarter of 2020, the Company began to implement its restaurant and dining room reopening process through a phased approach in accordance with federal, state and local requirements, with customer and team member

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safety as its top priority. Dining rooms have been re-opening at each restaurant owner’s discretion, subject to applicable regulatory restrictions. As of July 4, 2021, approximately 95% of dining rooms were open across the Wendy’s system offering carryout and, in many cases, dine in services. Global systemwide same-restaurant sales during the first six months of 2021 increased 15.2%, in part due to a significant increase in customer count compared with the adversely impacted fiscal months of March through June 2020.

Breakfast

Wendy’s long-term growth opportunities include investing in accelerated global growth, which includes building upon our breakfast daypart. Since the launch of breakfast across the U.S. system on March 2, 2020, systemwide sales have benefited from this new daypart, with breakfast representing approximately 7.2% of U.S. systemwide sales during the six months ended July 4, 2021. Subsequent to July 4, 2021, the Company revised its planned 2021 advertising expenses to include an additional $10.0 million of incremental advertising to support the breakfast daypart, resulting in an expected total 2021 incremental Company investment of $25.0 million. The Company expects this incremental investment will continue to drive trial and acceleration of the Company’s breakfast offering.

Digital

Wendy’s long-term growth opportunities include accelerating same-restaurant sales through continued implementation of consumer-facing digital platforms and technologies. The Company has invested significant resources to focus on consumer-facing technology, including activating mobile ordering via Wendy’s mobile app, launching the Wendy’s Rewards loyalty program and establishing delivery agreements with third-party vendors. The Company’s digital business continues to grow and represented approximately 7.5% of U.S. systemwide sales during the six months ended July 4, 2021.

Debt Refinancing

In June 2021, the Company completed a refinancing transaction under which the Company issued fixed rate senior secured notes in the following 2021-1 series: Class A-2-I with an interest rate of 2.370% and initial principal amount of $450.0 million and Class A-2-II with an interest rate of 2.775% and initial principal amount of $650.0 million (collectively, the “Series 2021-1 Class A-2 Notes”). A portion of the net proceeds from the sale of the Series 2021-1 Class A-2 Notes were used to repay in full the Company’s outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes, including the payment of prepayment and transaction costs. The Company also entered into a revolving financing facility of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2021-1 Class A-1 Notes”), which allows for the drawing of up to $300.0 million on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2021-1 Class A-1 Notes during the three months ended July 4, 2021. The Series 2021-1 Class A-1 Notes replaced the Company’s $150.0 million Series 2019-1 Class A-1 Notes and $100.0 million Series 2020-1 Class A-1 Notes, which were cancelled on the closing date. As a result of the refinancing transaction, the Company incurred a loss on the early extinguishment of debt of $17.9 million, which was comprised of a specified make-whole payment of $9.6 million and the write-off of certain unamortized deferred financing costs of $8.3 million. See “Liquidity and Capital Resources” below and Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the Company’s debt refinancing transaction.

New Restaurant Development

REEF Kitchens Development Commitment

On August 11, 2021, the Company announced a development commitment by REEF Kitchens (“REEF”) to open and operate 700 delivery kitchens over the next five years across the U.S., Canada and the U.K. The Company expects that REEF will open approximately 50 delivery kitchens in 2021 with the remainder to be opened in 2022 through 2025.

Strategic Build to Suit Development Fund

On August 11, 2021, the Company announced the creation of a $100.0 million strategic build to suit development fund to drive additional new restaurant growth that is being funded by the additional cash that was obtained as part of the Company’s debt refinancing transaction completed in June 2021. The Company expects the development fund to drive approximately 80 to 90 new franchise restaurants from 2022 to 2025.

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System Optimization Initiative

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 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, the Company expects to continue to optimize the Wendy’s 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.

During the three months ended July 4, 2021, the Company completed the sale of 47 Company-operated restaurants in New York (including Manhattan) to franchisees, resulting in net gains totaling $30.8 million. Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our condensed consolidated statements of operations.

NPC Quality Burgers, Inc. (“NPC”)

As previously announced, NPC, formerly the Company’s largest franchisee, filed for chapter 11 bankruptcy in July 2020 and commenced a process to sell all or substantially all of its assets, including its interest in approximately 393 Wendy’s restaurants across eight different markets, pursuant to a court-approved auction process. On November 18, 2020, the Company submitted a consortium bid together with a group of pre-qualified franchisees to acquire NPC’s Wendy’s restaurants. Under the terms of the consortium bid, several existing and new franchisees would have been the ultimate purchasers of seven of the NPC markets, while the Company would have acquired one market.

During the three months ended April 4, 2021, following a court-approved mediation process, NPC and certain affiliates of Flynn Restaurant Group (“FRG”) and the Company entered into separate asset purchase agreements under which all of NPC’s Wendy’s restaurants were sold to Wendy’s approved franchisees. Under the transaction, FRG acquired approximately half of NPC’s Wendy’s restaurants in four markets, while several existing Wendy’s franchisees that were part of the Company’s consortium bid acquired the other half of NPC’s Wendy’s restaurants in the other four markets. The Company did not acquire any restaurants as part of this transaction.

Operations and Field Realignment

In September 2020, the Company initiated a plan to reallocate resources to better support the long-term growth strategies for Company and franchise operations (the “Operations and Field Realignment Plan”). The Operations and Field Realignment Plan realigned the Company’s restaurant operations team, including transitioning from separate leaders of Company and franchise operations to a single leader of all U.S. restaurant operations. The Operations and Field Realignment Plan also includes contract terminations, including the closure of certain field offices. The Company expects to incur total costs aggregating approximately $6.0 million to $8.0 million, of which approximately $5.5 million to $7.5 million will be cash expenditures, related to the Operations and Field Realignment Plan. Costs related to the Operations and Field Realignment Plan are recorded to “Reorganization and realignment costs.” During the six months ended July 4, 2021, the Company recognized costs totaling $1.5 million, which primarily included third-party and other costs. The Company expects to incur additional costs aggregating approximately $1.0 million to $3.0 million, comprised primarily of third-party and other costs. The Company expects to recognize the majority of the remaining costs and make the majority of the remaining cash expenditures associated with the Operations and Field Realignment Plan during the remainder of 2021.

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Results of Operations

The tables included throughout this Results of Operations set forth in millions the Company’s condensed consolidated results of operations for the second quarter and the first six months of 2021 and 2020.

	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Revenues:
Sales	$	193.5	$	164.2	$	29.3	$	382.6	$	331.0	$	51.6
Franchise royalty revenue and fees	136.6		103.1		33.5		259.5		204.9		54.6
Franchise rental income	60.9		56.9		4.0		119.7		114.7		5.0
Advertising funds revenue	102.3		78.1		24.2		191.7		156.7		35.0
	493.3		402.3		91.0		953.5		807.3		146.2
Costs and expenses:
Cost of sales	154.2		140.6		13.6		311.0		290.6		20.4
Franchise support and other costs	8.9		5.5		3.4		16.6		13.5		3.1
Franchise rental expense	34.1		31.3		2.8		66.6		60.6		6.0
Advertising funds expense	107.9		81.3		26.6		202.1		161.3		40.8
General and administrative	63.1		48.6		14.5		115.7		100.2		15.5
Depreciation and amortization	30.8		34.7		(3.9)		62.3		65.8		(3.5)
System optimization gains, net	(30.8)		(2.0)		(28.8)		(31.3)		(2.3)		(29.0)
Reorganization and realignment costs	2.1		2.9		(0.8)		7.0		6.8		0.2
Impairment of long-lived assets	0.6		0.1		0.5		1.3		4.7		(3.4)
Other operating income, net	(4.3)		(1.4)		(2.9)		(7.7)		(3.3)		(4.4)
	366.6		341.6		25.0		743.6		697.9		45.7
Operating profit	126.7		60.7		66.0		209.9		109.4		100.5
Interest expense, net	(28.2)		(29.1)		0.9		(57.0)		(57.6)		0.6
Loss on early extinguishment of debt	(17.9)		—		(17.9)		(17.9)		—		(17.9)
Other income (expense), net	0.2		(0.2)		0.4		0.3		0.9		(0.6)
Income before income taxes	80.8		31.4		49.4		135.3		52.7		82.6
Provision for income taxes	(15.1)		(6.5)		(8.6)		(28.2)		(13.4)		(14.8)
Net income	$	65.7	$	24.9	$	40.8	$	107.1	$	39.3	$	67.8

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	Second Quarter								Six Months
	2021		% of Total Revenues		2020		% of Total Revenues		2021		% of Total Revenues		2020		% of Total Revenues
Revenues:
Sales	$	193.5	39.2	%	$	164.2	40.8	%	$	382.6	40.1	%	$	331.0	41.0	%
Franchise royalty revenue and fees:
Franchise royalty revenue	119.5		24.2	%	97.2		24.2	%	227.9		23.9	%	192.6		23.9	%
Franchise fees	17.1		3.5	%	5.9		1.4	%	31.6		3.3	%	12.3		1.5	%
Total franchise royalty revenue and fees	136.6		27.7	%	103.1		25.6	%	259.5		27.2	%	204.9		25.4	%
Franchise rental income	60.9		12.4	%	56.9		14.2	%	119.7		12.6	%	114.7		14.2	%
Advertising funds revenue	102.3		20.7	%	78.1		19.4	%	191.7		20.1	%	156.7		19.4	%
Total revenues	$	493.3	100.0	%	$	402.3	100.0	%	$	953.5	100.0	%	$	807.3	100.0	%
	Second Quarter								Six Months
	2021		% of  Sales		2020		% of  Sales		2021		% of  Sales		2020		% of  Sales
Cost of sales:
Food and paper	$	55.8	28.9	%	$	49.3	30.0	%	$	110.7	28.9	%	$	101.8	30.8	%
Restaurant labor	58.7		30.3	%	54.0		32.9	%	118.7		31.0	%	111.0		33.5	%
Occupancy, advertising and other operating costs	39.7		20.5	%	37.3		22.7	%	81.6		21.4	%	77.8		23.5	%
Total cost of sales	$	154.2	79.7	%	$	140.6	85.6	%	$	311.0	81.3	%	$	290.6	87.8	%

	Second Quarter								Six Months
	2021		% of Sales		2020		% of Sales		2021		% of Sales		2020		% of Sales
Restaurant margin	$	39.3	20.3	%	$	23.6	14.4	%	$	71.6	18.7	%	$	40.4	12.2	%

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The table below presents certain of the Company’s key business measures, which are defined and further discussed in the “Executive Overview” section included herein.

	Second Quarter						Six Months
	2021			2020			2021			2020
Key business measures:
U.S. same-restaurant sales:
Company-operated	23.9		%	(10.0)		%	18.3		%	(5.5)		%
Franchised	15.6		%	(4.0)		%	14.6		%	(2.0)		%
Systemwide	16.1		%	(4.4)		%	14.9		%	(2.3)		%
International same-restaurant sales (a)	31.4		%	(18.4)		%	19.0		%	(10.1)		%
Global same-restaurant sales:
Company-operated	23.9		%	(10.0)		%	18.3		%	(5.5)		%
Franchised (a)	17.0		%	(5.5)		%	15.0		%	(2.9)		%
Systemwide (a)	17.4		%	(5.8)		%	15.2		%	(3.1)		%
Systemwide sales: (b)
U.S. Company-operated	$	193.3		$	164.2		$	382.4		$	331.0
U.S. franchised	2,704.1			2,239.2			5,162.4			4,413.4
U.S. systemwide	2,897.4			2,403.4			5,544.8			4,744.4
International Company-operated	0.2			—			0.2			—
International franchised (a)	353.4			220.2			657.0			492.8
International systemwide (a)	353.6			220.2			657.2			492.8
Global systemwide (a)	$	3,251.0		$	2,623.6		$	6,202.0		$	5,237.2

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(a)Excludes Argentina and Venezuela due to the impact of the highly inflationary economies of those countries.

(b)During the second quarter of 2021 and 2020, global systemwide sales increased 22.9% and decreased 6.2%, respectively, U.S. systemwide sales increased 20.6% and decreased 4.0%, respectively, and international systemwide sales increased 48.2% and decreased 24.5%, respectively, on a constant currency basis. During the first six months of 2021 and 2020, global systemwide sales increased 17.7% and decreased 2.7%, respectively, U.S. systemwide sales increased 16.9% and decreased 1.6%, respectively, and international systemwide sales increased 25.6% and decreased 12.4%, respectively, on a constant currency basis.

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	Second Quarter
	U.S. Company-operated	U.S. Franchised	International Company-operated	International Franchised	Systemwide
Restaurant count:
Restaurant count at April 4, 2021	362	5,523	—	953	6,838
Opened	1	21	1	20	43
Closed (a)	(1)	(11)	—	(3)	(15)
Net (sold to) purchased by franchisees	(48)	48	—	—	—
Restaurant count at July 4, 2021	314	5,581	1	970	6,866
	Six Months
	U.S. Company-operated	U.S. Franchised	International Company-operated	International Franchised	Systemwide
Restaurant count at January 3, 2021	361	5,520	—	947	6,828
Opened	3	39	1	38	81
Closed (a)	(2)	(26)	—	(15)	(43)
Net (sold to) purchased by franchisees	(48)	48	—	—	—
Restaurant count at July 4, 2021	314	5,581	1	970	6,866

________________

(a)Excludes restaurants temporarily closed due to the impact of the COVID-19 pandemic.

Sales	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Sales	$	193.5	$	164.2	$	29.3	$	382.6	$	331.0	$	51.6

The increase in sales for the second quarter and the first six months of 2021 was primarily due to a 23.9% and 18.3% increase in Company-operated same-restaurant sales, respectively, partially offset by the impact of the sale of 47 Company-operated restaurants in New York during the second quarter of 2021. Company-operated same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check. Company-operated same-restaurant sales during the first six months of 2021 also benefited from (1) government stimulus payments to consumers during the first quarter of 2021 and (2) the positive impact from the breakfast daypart.

Franchise Royalty Revenue and Fees	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Franchise royalty revenue	$	119.5	$	97.2	$	22.3	$	227.9	$	192.6	$	35.3
Franchise fees	17.1		5.9		11.2		31.6		12.3		19.3
	$	136.6	$	103.1	$	33.5	$	259.5	$	204.9	$	54.6

The increase in franchise royalty revenue during the second quarter and the first six months of 2021 was primarily due to (1) a 17.0% and 15.0% increase in global franchise same-restaurant sales, respectively, and (2) a net increase in the number of franchise restaurants in operation during 2021 compared to 2020. Franchise same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check. Franchise same-restaurant sales during the first six months of 2021 also benefited from (1) government stimulus payments to consumers during the first quarter of 2021 and (2) the positive impact from the breakfast daypart.

The increase in franchise fees during the second quarter and the first six months of 2021 was primarily due to an increase in fees for providing information technology services to franchisees. Franchise fees during the first six months of 2021 also

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benefited from the accelerated recognition of fees associated with development agreements that were canceled primarily as a result of the NPC bankruptcy sale process.

Franchise Rental Income	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Franchise rental income	$	60.9	$	56.9	$	4.0	$	119.7	$	114.7	$	5.0

The increase in franchise rental income during the second quarter and the first six months of 2021 was primarily due to (1) an increase in percent rent, reflecting higher systemwide sales compared with 2020, and (2) the impact of the sale of 47 Company-operated restaurants in New York during the second quarter of 2021.

Advertising Funds Revenue	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Advertising funds revenue	$	102.3	$	78.1	$	24.2	$	191.7	$	156.7	$	35.0

The Company maintains two national advertising funds established to collect and administer funds contributed for use in advertising and promotional programs for Company-operated and franchised restaurants in the U.S. and Canada. Franchisees make contributions to the national advertising funds based on a percentage of sales of the franchised restaurants. The increase in advertising funds revenue during the second quarter and the first six months of 2021 was primarily due to (1) an increase in franchise same-restaurant sales in the U.S. and Canada and (2) the prior year abatement of national advertising fund contributions on breakfast sales.

Cost of Sales, as a Percent of Sales	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Food and paper	28.9	%	30.0	%	(1.1)	%	28.9	%	30.8	%	(1.9)	%
Restaurant labor	30.3	%	32.9	%	(2.6)	%	31.0	%	33.5	%	(2.5)	%
Occupancy, advertising and other operating costs	20.5	%	22.7	%	(2.2)	%	21.4	%	23.5	%	(2.1)	%
	79.7	%	85.6	%	(5.9)	%	81.3	%	87.8	%	(6.5)	%

The decrease in cost of sales, as a percent of sales, during the second quarter and the first six months of 2021 was primarily due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, (2) higher average check and (3) incremental recognition pay during April and May of 2020. These impacts were partially offset by restaurant labor rate increases. In addition, cost of sales, as a percent of sales, during the second quarter of 2021 was negatively impacted by higher commodity costs.

Franchise Support and Other Costs	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Franchise support and other costs	$	8.9	$	5.5	$	3.4	$	16.6	$	13.5	$	3.1

The increase in franchise support and other costs during the second quarter and the first six months of 2021 was primarily due to an increase in costs incurred to provide information technology and other services to our franchisees. These increases were partially offset by investments made during the first six months of 2020 to support U.S. franchisees in preparation of the national launch of breakfast on March 2, 2020.

Franchise Rental Expense	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Franchise rental expense	$	34.1	$	31.3	$	2.8	$	66.6	$	60.6	$	6.0

The increase in franchise rental expense during the second quarter and the first six months of 2021 was primarily due to an increase in percent rent, reflecting higher systemwide sales compared with 2020. Franchise rental expense for the first six months of 2021 also increased due to the impact of assigning certain leases to a franchisee in 2020.

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Advertising Funds Expense	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Advertising funds expense	$	107.9	$	81.3	$	26.6	$	202.1	$	161.3	$	40.8

On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue. As of July 4, 2021, the Company expected advertising funds expense to exceed advertising funds revenue by approximately $21.0 million for 2021, which includes (1) the Company’s decision to fund up to $15.0 million of incremental advertising and (2) the amount by which advertising funds revenue exceeded advertising funds expense in 2020 (excluding the Company’s funding of $14.6 million of incremental advertising) and 2019 of approximately $6.0 million. During the second quarter and the first six months of 2021, advertising funds expense increased due to (1) an increase in franchise same-restaurant sales in the U.S. and Canada and (2) the recognition of $5.6 million and $10.4 million, respectively, of the expected advertising spend in excess of advertising funds revenue. Subsequent to July 4, 2021, the Company revised its planned 2021 advertising expenses to include an additional $10.0 million of incremental advertising, resulting in an expected total 2021 incremental Company investment of $25.0 million.

General and Administrative	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Incentive compensation	$	15.1	$	6.0	$	9.1	22.5		9.0		13.5
Professional fees	9.1		6.5		2.6		17.8		12.8		5.0
Share-based compensation	5.9		4.7		1.2		11.0		9.2		1.8
Travel-related expenses	1.5		0.8		0.7		2.0		3.9		(1.9)
Other, net	31.5		30.6		0.9		62.4		65.3		(2.9)
	$	63.1	$	48.6	$	14.5	$	115.7	$	100.2	$	15.5

The increase in general and administrative expenses during the second quarter and the first six months of 2021 was primarily due to (1) an increase in incentive compensation accruals and higher share-based compensation, reflecting higher operating performance in the first six months of 2021 compared to the first six months of 2020, and (2) higher professional fees, primarily as a result of costs associated with the Company’s enterprise resource planning implementation. During the first six months of 2021, these increases were partially offset by a decrease in travel-related expenses as a result of reduced travel.

Depreciation and Amortization	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Restaurants	$	18.7	$	23.0	$	(4.3)	$	38.1	$	42.5	$	(4.4)
Technology support, corporate and other	12.1		11.7		0.4		24.2		23.3		0.9
	$	30.8	$	34.7	$	(3.9)	$	62.3	$	65.8	$	(3.5)

The decrease in depreciation and amortization during the second quarter and the first six months of 2021 was primarily due to (1) assets becoming fully depreciated and (2) the impact of a prior year change in useful lives for certain asset categories. These decreases were partially offset by an increase in depreciation and amortization for technology investments.

System Optimization Gains, Net	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
System optimization gains, net	$	(30.8)	$	(2.0)	$	(28.8)	$	(31.3)	$	(2.3)	$	(29.0)

System optimization gains, net for the second quarter and the first six months of 2021 were primarily comprised of a gain on the sale of 47 Company-operated restaurants in New York. System optimization gains, net for the second quarter and first six months of 2020 were primarily comprised of gains on the sale of surplus and other properties. See Note 4 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the sale of the Company-operated restaurants in New York.

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Reorganization and Realignment Costs	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Operations and field realignment	$	1.2	$	—	$	1.2	$	1.5	$	—	$	1.5
IT realignment	—		2.8		(2.8)		—		6.4		(6.4)
G&A realignment	—		0.1		(0.1)		—		0.3		(0.3)
System optimization initiative	0.9		—		0.9		5.5		0.1		5.4
	$	2.1	$	2.9	$	(0.8)	$	7.0	$	6.8	$	0.2

In September 2020, the Company initiated the Operations and Field Realignment Plan. The Operations and Field Realignment Plan realigned the Company’s restaurant operations team, including transitioning from separate leaders of Company and franchise operations to a single leader of all U.S. restaurant operations. The Operations and Field Realignment Plan also includes contract terminations, including the closure of certain field offices. During the second quarter and the first six months of 2021, the Company recognized costs totaling $1.2 million and $1.5 million, respectively, which primarily included third-party and other costs. The Company expects to incur additional costs aggregating approximately $1.0 million to $3.0 million, comprised primarily of third-party and other costs. The Company expects to recognize the majority of the remaining costs associated with the Operations and Field Realignment Plan during the remainder of 2021.

As part of the Company’s system optimization initiative, the Company expects to continue to optimize the Wendy’s system through strategic restaurant acquisitions and dispositions, as well as by facilitating Franchise Flips. During the second quarter of 2021, the Company recognized costs associated with its system optimization initiative totaling $0.9 million, which were primarily comprised of severance and related employee costs and professional fees associated with the sale of 47 Company-operated restaurants in New York. During the six months ended July 4, 2021, the Company recognized costs associated with its system optimization initiative totaling $5.5 million, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the NPC bankruptcy sale process. The Company expects to recognize a gain of approximately $1.0 million related to the write-off of certain NPC-related lease liabilities upon final termination of the leases.

Impairment of Long-Lived Assets	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Impairment of long-lived assets	$	0.6	$	0.1	$	0.5	$	1.3	$	4.7	$	(3.4)

The change in impairment charges during the second quarter of 2021 was primarily driven by higher impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants when compared to the second quarter of 2020. The change in impairment charges during the first six months of 2021 was primarily driven by the expected deterioration in operating performance of certain Company-operated restaurants in the first six months of 2020 as a result of the COVID-19 pandemic.

Other Operating Income, Net	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Gains on sales-type leases	$	(1.6)	$	(0.6)	$	(1.0)	$	(3.5)	$	(1.2)	$	(2.3)
Lease buyout	(0.8)		0.1		(0.9)		(0.9)		0.1		(1.0)
Equity in earnings in joint ventures, net	(1.7)		(0.9)		(0.8)		(3.3)		(2.4)		(0.9)
Other, net	(0.2)		—		(0.2)		—		0.2		(0.2)
	$	(4.3)	$	(1.4)	$	(2.9)	$	(7.7)	$	(3.3)	$	(4.4)

The change in other operating income, net during the second quarter and the first six months of 2021 was primarily due to (1) gains on new and modified sales-type leases, (2) lease buyout activity and (3) an increase in the equity in earnings from our TimWen joint venture.

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Interest Expense, Net	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Interest expense, net	$	28.2	$	29.1	$	(0.9)	$	57.0	$	57.6	$	(0.6)

Interest expense, net decreased during the second quarter and the first six months of 2021 primarily due to the impact of completing the refinancing of a portion of the Company’s securitized financing facility in the second quarter of 2021.

Loss on Early Extinguishment of Debt	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Loss on early extinguishment of debt	$	17.9	$	—	$	17.9	$	17.9	$	—	$	17.9

During the second quarter of 2021, in connection with the refinancing of a portion of the Company’s securitized financing facility, the Company incurred a loss on the early extinguishment of debt as a result of repaying the outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes with the proceeds from the issuance of its Series 2021-1 Class A-2 Notes. The loss on the early extinguishment of debt of $17.9 million was comprised of a specified make-whole payment of $9.6 million and the write-off of certain unamortized deferred financing costs of $8.3 million.

Other Income (Expense), Net	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Other income (expense), net	$	0.2	$	(0.2)	$	0.4	$	0.3	$	0.9	$	(0.6)

The change in other income (expense), net during the second quarter and the first six months of 2021 was primarily due to fluctuations in interest income earned on our cash equivalents.

Provision for Income Taxes	Second Quarter									Six Months
	2021			2020			Change			2021			2020			Change
Income before income taxes	$	80.8		$	31.4		$	49.4		$	135.3		$	52.7		$	82.6
Provision for income taxes	(15.1)			(6.5)			(8.6)			(28.2)			(13.4)			(14.8)
Effective tax rate on income	18.6		%	20.8		%	(2.2)		%	20.8		%	25.4		%	(4.6)		%

Our effective tax rates for the second quarter and the first six months of 2021 and 2020 were impacted by variations in income before income taxes, including uncertainty in 2020 income before income taxes arising from the COVID-19 pandemic, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items. The decrease in the effective tax rate for the second quarter of 2021 compared with the second quarter of 2020 was primarily due to an increase in the benefit of share-based compensation, partially offset by an increase due to state income taxes, including discrete changes to state deferred taxes. The decrease in the effective tax rate for the first six months of 2021 compared with the first six months of 2020 was primarily due to a decrease in the tax effects of our foreign operations, partially offset by an increase due to state income taxes, including discrete changes to state deferred taxes.

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Segment Information

See Note 17 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s segments.

Wendy’s U.S.

	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Sales	$	193.3	$	164.2	$	29.1	$	382.4	$	331.0	$	51.4
Franchise royalty revenue	106.0		88.1		17.9		202.8		173.0		29.8
Franchise fees	14.3		5.4		8.9		26.2		10.6		15.6
Advertising fund revenue	96.2		73.6		22.6		180.4		147.7		32.7
Total revenues	$	409.8	$	331.3	$	78.5	$	791.8	$	662.3	$	129.5
Segment profit	$	126.7	$	93.1	$	33.6	$	238.7	$	175.0	$	63.7

The increase in Wendy’s U.S. revenues during the second quarter and the first six months of 2021 was primarily due to an increase in systemwide same-restaurant sales, partially offset by the impact of the sale of 47 Company-operated restaurants in New York during the second quarter of 2021. Same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check. Same-restaurant sales during the first six months of 2021 also benefited from the positive impact from the breakfast daypart. In addition, during the second quarter and the first six months of 2021, Wendy’s U.S. revenues benefited from higher franchise fees, primarily due to an increase in fees for providing information technology services to franchisees.

The increase in Wendy’s U.S. segment profit during the second quarter and the first six months of 2021 was primarily due to (1) higher revenues and (2) lower cost of sales, as a percent of sales, for Company-operated restaurants driven by the same factors as described above for “Cost of Sales, as a Percent of Sales.” These changes were partially offset by higher general and administrative expenses.

Wendy’s International

	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Sales	$	0.2	$	—	$	0.2	$	0.2	$	—	$	0.2
Franchise royalty revenue	13.6		9.1		4.5		25.1		19.6		5.5
Franchise fees	1.4		0.4		1.0		3.0		0.9		2.1
Advertising fund revenue	6.1		4.5		1.6		11.3		9.0		2.3
Total revenues	$	21.3	$	14.0	$	7.3	$	39.6	$	29.5	$	10.1
Segment profit	$	6.5	$	3.6	$	2.9	$	14.2	$	8.7	$	5.5

The increase in Wendy’s International revenues during the second quarter and the first six months of 2021 was primarily due to an increase in same-restaurant sales. Same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check. The increase in Wendy’s International segment profit during the second quarter and the first six months of 2021 was primarily due to higher revenues, partially offset by higher general and administrative expenses.

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Global Real Estate & Development

	Second Quarter						Six Months
	2021		2020		Change		2021		2020		Change
Franchise fees	$	1.3	$	0.1	$	1.2	$	2.5	$	0.8	$	1.7
Franchise rental income	60.9		56.9		4.0		119.7		114.7		5.0
Total revenues	$	62.2	$	57.0	$	5.2	$	122.2	$	115.5	$	6.7
Segment profit	$	26.6	$	23.7	$	2.9	$	52.8	$	50.2	$	2.6

The increase in Global Real Estate & Development revenues during the second quarter and the first six months of 2021 was primarily due to higher franchise rental income. See “Franchise Rental Income” above for further information.

The increase in Global Real Estate & Development segment profit during the second quarter and the first six months of 2021 was primarily due to (1) gains on new and modified sales-type leases, (2) lease buyout activity and (3) an increase in the equity in earnings from the TimWen joint venture. These increases were partially offset by higher general and administrative expenses.

Liquidity and Capital Resources

Cash Flows

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under our securitized financing facility. Our principal uses of cash are operating expenses, capital expenditures, repurchases of common stock and dividends to stockholders.

Our anticipated cash requirements for the remainder of 2021, exclusive of operating cash flow requirements, consist principally of:

•capital expenditures of approximately $55.0 million to $65.0 million, resulting in total anticipated cash capital expenditures for the year of approximately $80.0 million to $90.0 million;

•cash dividends aggregating approximately $53.5 million as discussed below in “Dividends;” and

•potential stock repurchases of up to $104.4 million, of which $4.4 million was repurchased subsequent to July 4, 2021 through August 4, 2021, as discussed below in “Stock Repurchases.”

Based on current levels of operations, the Company expects that available cash and cash flows from operations will provide sufficient liquidity to meet operating cash requirements for the next 12 months.

We currently believe we have the ability to pursue additional sources of liquidity if needed or desired to fund operating cash requirements or for other purposes. However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.

The table below summarizes our cash flows from operating, investing and financing activities for the first six months of 2021 and 2020:

	Six Months
	2021		2020		Change
Net cash provided by (used in):
Operating activities	$	158.8	$	30.6	$	128.2
Investing activities	32.0		(24.9)		56.9
Financing activities	28.9		48.3		(19.4)
Effect of exchange rate changes on cash	2.2		(3.2)		5.4
Net increase in cash, cash equivalents and restricted cash	$	221.9	$	50.8	$	171.1

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Operating Activities

Cash provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities. Cash provided by operating activities was $158.8 million and $30.6 million in the first six months of 2021 and 2020, respectively. The increase was primarily due to (1) higher net income, adjusted for non-cash expenses, (2) the prior year extension of payment terms for royalties beginning in April 2020 for a three month period, (3) a cash payment of $24.7 million related to the settlement of the financial institutions class action in January 2020, (4) the timing of receipt of franchisee rental payments and (5) a decrease in payments for incentive compensation for the 2020 fiscal year paid in 2021. These increases were partially offset by (1) the timing of payments for marketing expenses of the national advertising funds and (2) an increase in cash paid for income taxes.

Investing Activities

Cash provided by (used in) investing activities was $32.0 million and $(24.9) million in the first six months of 2021 and 2020, respectively. The change was primarily due to (1) an increase in proceeds from dispositions of $46.2 million associated with the sale of 47 Company-operated restaurants in New York during the second quarter of 2021, (2) a decrease in capital expenditures of $5.3 million and (3) the net settlement of deposits associated with the Company’s consortium bid to acquire NPC’s Wendy’s restaurants of $4.9 million in the first quarter of 2021.

Financing Activities

Cash provided by financing activities was $28.9 million and $48.3 million in the first six months of 2021 and 2020, respectively. The decrease was primarily due to (1) an increase in repurchases of common stock of $38.5 million and (2) an increase in dividends of $4.3 million. These changes were partially offset by (1) an increase in proceeds from stock option exercises, net of payments related to tax withholding for share-based compensation, of $14.6 million and (2) a net increase in cash provided by long-term debt activities of $11.0 million, reflecting the respective impacts of the completion of the Company’s debt refinancing transaction during the second quarter of 2021 and the draw downs under the 2019-1 Class A-1 Notes and the Company’s other lines of credit in the first quarter of 2020.

Long-Term Debt, Including Current Portion

Wendy’s Funding, LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015. In June 2021, the Master Issuer completed a refinancing transaction with respect to this facility under which the Master Issuer issued the Series 2021-1 Class A-2 Notes with initial principal amounts totaling $1.1 billion. The net proceeds from the sale of the Series 2021-1 Class A-2 Notes were used to repay in full the Master Issuer’s outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes, including the payment of prepayment and transaction costs. The remaining funds will be used for general corporate purposes, which may include funding for growth initiatives, return of capital to shareholders, or additional debt retirement.

In connection with the issuance of the Series 2021-1 Class A-2 Notes, the Master Issuer also issued the Series 2021-1 Class A-1 Notes, which allow for the drawing of up to $300.0 million on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2021-1 Class A-1 Notes during the three months ended July 4, 2021. The Series 2021-1 Class A-1 Notes replaced the Company’s $150.0 million Series 2019-1 Class A-1 Notes and $100.0 million Series 2020-1 Class A-1 Notes, which were cancelled on the closing date, and the letters of credit outstanding against the Series 2019-1 Class A-1 Notes were transferred to the Series 2021-1 Class A-1 Notes.

Except as described above, there were no material changes to the terms of any debt obligations since January 3, 2021. The Company was in compliance with its debt covenants as of July 4, 2021. See Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

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Dividends

On March 15, 2021 and June 15, 2021, the Company paid quarterly cash dividends per share of $.09 and $0.10, respectively, aggregating $42.3 million. On August 11, 2021, the Company announced a dividend of $.12 per share to be paid on September 15, 2021 to stockholders of record as of September 1, 2021. If the Company pays regular quarterly cash dividends for the remainder of 2021 at the same rate as declared in the third quarter of 2021, the Company’s total cash requirement for dividends for the remainder of 2021 will be approximately $53.5 million based on the number of shares of its common stock outstanding at August 4, 2021. The Company currently intends to continue to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.

Stock Repurchases

In February 2020, our Board of Directors authorized a repurchase program for up to $100.0 million of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible. As previously announced, beginning in March 2020, the Company temporarily suspended all share repurchase activity under the February 2020 authorization in connection with the Company’s response to the COVID-19 pandemic. In July 2020, the Company’s Board of Directors approved an extension of the February 2020 authorization by one year, through February 28, 2022, when and if market and economic conditions warrant and to the extent legally permissible. The Company resumed share repurchases in August 2020. In addition, in May 2021, the Board of Directors approved an increase of $50.0 million to the February 2020 authorization, resulting in an aggregate authorization of $150.0 million that continues to expire on February 28, 2022. During the six months ended July 4, 2021, the Company repurchased 4.0 million shares under the February 2020 repurchase authorization with an aggregate purchase price of $83.3 million, of which $0.4 million was accrued at July 4, 2021, and excluding commissions of $0.1 million. As of July 4, 2021, the Company had $34.4 million of availability remaining under its February 2020 authorization. Subsequent to July 4, 2021 through August 4, 2021, the Company repurchased 0.2 million shares under the February 2020 authorization with an aggregate purchase price of $4.4 million, excluding commissions. In addition, in August 2021, the Board of Directors approved an increase of $70.0 million to the February 2020 authorization, resulting in an aggregate authorization of $220.0 million that continues to expire on February 28, 2022. The Company has availability of $100.0 million remaining under the authorization as of August 11, 2021.

General Inflation, Commodities and Changing Prices

We believe that general inflation did not have a significant effect on our consolidated results of operations. We attempt to manage any inflationary costs and commodity price increases through product mix and selective menu price increases. Delays in implementing such menu price increases and competitive pressures may limit our ability to recover such cost increases in the future. Inherent volatility experienced in certain commodity markets, such as those for beef, chicken, pork, cheese and grains, could have a significant effect on our results of operations and may have an adverse effect on us in the future. The extent of any impact will depend on our ability to manage such volatility through product mix and selective menu price increases.

Seasonality

Wendy’s restaurant operations are moderately seasonal. Wendy’s average restaurant sales are normally higher during the summer months than during the winter months. Because our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

This “Quantitative and Qualitative Disclosures about Market Risk” should be read in conjunction with “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our annual report on Form 10-K for the fiscal year ended January 3, 2021 (the “Form 10-K”).

As of July 4, 2021, there were no material changes from the information contained in the Form 10-K, except as described below.

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Interest Rate Risk

Following the Company’s debt refinancing transaction, our long-term debt, including the current portion, aggregated $2,451.6 million as of July 4, 2021 (excluding unamortized debt issuance costs and the effect of purchase accounting adjustments). The Company’s predominantly fixed-rate debt structure reduces its exposure to interest rate increases that could adversely affect its earnings and cash flows. The Company is exposed to interest rate increases under its Series 2021-1 Class A-1 Notes and other lines of credit; however, the Company had no outstanding borrowings under the 2021-1 Class A-1 Notes and other lines of credit as of July 4, 2021. See “Liquidity and Capital Resources” in “Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s debt refinancing transaction.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The management of the Company, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of July 4, 2021. Based on such evaluations, the Chief Executive Officer and Chief Financial Officer concluded that as of July 4, 2021, the disclosure controls and procedures of the Company were effective at a reasonable assurance level in (1) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and (2) ensuring that information required to be disclosed by the Company in such reports is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in the internal control over financial reporting of the Company during the second quarter of 2021 that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, the management of the Company, including its Chief Executive Officer and Chief Financial Officer, does not expect that the control system can prevent or detect all error or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies or procedures.

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PART II. OTHER INFORMATION

Special Note Regarding Forward-Looking Statements and Projections

This Quarterly Report on Form 10-Q and oral statements made from time to time by representatives of the Company may contain or incorporate by reference certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “may,” “believes,” “plans,” “expects,” “anticipates,” “intends,” “estimate,” “goal,” “upcoming,” “outlook,” “guidance” or the negation thereof, or similar expressions. In addition, all statements that address future operating, financial or business performance, strategies or initiatives, future efficiencies or savings, anticipated costs or charges, future capitalization, anticipated impacts of recent or pending investments or transactions and statements expressing general views about future results or brand health are forward-looking statements within the meaning of the Reform Act. Forward-looking statements are based on our expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Our actual results, performance and achievements may differ materially from any future results, performance or achievements expressed in or implied by our forward-looking statements. Many important factors could affect our future results and cause those results to differ materially from those expressed in or implied by our forward-looking statements. Such factors include, but are not limited to, the following:

•the disruption to our business from the novel coronavirus (COVID-19) pandemic and the impact of the pandemic on our results of operations, financial condition and prospects;

•the impact of competition or poor customer experiences at Wendy’s restaurants;

•economic disruptions, including in regions with a high concentration of Wendy’s restaurants;

•changes in discretionary consumer spending and consumer tastes and preferences;

•impacts to our corporate reputation or the value and perception of our brand;

•the effectiveness of our marketing and advertising programs and new product development;

•our ability to manage the accelerated impact of social media;

•our ability to protect our intellectual property;

•food safety events or health concerns involving our products;

•our ability to achieve our growth strategy through new restaurant development and our Image Activation program;

•our ability to effectively manage the acquisition and disposition of restaurants or successfully implement other

strategic initiatives;

•risks associated with leasing and owning significant amounts of real estate, including environmental matters;

•our ability to achieve and maintain market share in the breakfast daypart;

•risks associated with our international operations, including our ability to execute our international growth strategy;

•changes in commodity and other operating costs;

•shortages or interruptions in the supply or distribution of our products and other risks associated with our independent

supply chain purchasing co-op;

•the impact of increased labor costs or labor shortages;

•the continued succession and retention of key personnel and the effectiveness of our leadership structure;

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•risks associated with our digital commerce strategy, platforms and technologies, including our ability to adapt to changes in industry trends and consumer preferences;

•our dependence on computer systems and information technology, including risks associated with the failure, misuse, interruption or breach of our systems or technology or other cyber incidents or deficiencies;

•risks associated with our securitized financing facility and other debt agreements, including compliance with operational and financial covenants, restrictions on our ability to raise additional capital, the impact of our overall debt levels and our ability to generate sufficient cash flow to meet our debt service obligations and operate our business;

•risks associated with our capital allocation policy, including the amount and timing of equity and debt repurchases and

dividend payments;

•risks associated with complaints and litigation, compliance with legal and regulatory requirements and an increased focus on environmental, social and governance issues;

•risks associated with the availability and cost of insurance, changes in accounting standards, the recognition of impairment or other charges, the impact of realignment and reorganization initiatives, changes in tax rates or tax laws and fluctuations in foreign currency exchange rates;

•conditions beyond our control, such as adverse weather conditions, natural disasters, hostilities, social unrest, health epidemics or pandemics or other catastrophic events; and

•other risks and uncertainties affecting us and our subsidiaries referred to in our Annual Report on Form 10-K filed with the SEC on March 3, 2021 (see especially “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and in our other current and periodic filings with the SEC.

In addition to the factors described above, there are risks associated with our predominantly franchised business model that could impact our results, performance and achievements. Such risks include our ability to identify, attract and retain experienced and qualified franchisees, effectively manage the transfer of restaurants between and among franchisees, the business and financial health of franchisees, the ability of franchisees to meet their royalty, advertising, development, reimaging and other commitments, participation by franchisees in brand strategies and the fact that franchisees are independent third parties that own, operate and are responsible for overseeing the operations of their restaurants. Our predominantly franchised business model may also impact the ability of the Wendy’s system to effectively respond and adapt to market changes. Many of these risks have been or in the future may be heightened due to the business disruption and impact from the COVID-19 pandemic.

All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q as a result of new information, future events or developments, except as required by federal securities laws, although we may do so from time to time. We do not endorse any projections regarding future performance that may be made by third parties.

Item 1. Legal Proceedings.

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

50

Item 1A. Risk Factors.

In addition to the information contained in this report, you should carefully consider the risk factors disclosed in our Form 10-K, which could materially affect our business, financial condition or future results. Except as described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the second quarter of 2021:

Issuer Repurchases of Equity Securities

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (2)
April 5, 2021 through May 9, 2021	528,908	$22.08	528,908	$38
May 10, 2021 through June 6, 2021	476,284	$23.43	466,718	$39,065,340
June 7, 2021 through July 4, 2021	254,385	$24.38	197,748	$34,395,558
Total	1,259,577	$23.05	1,193,374	$34,395,558

(1)Includes 66,203 shares reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award. The shares were valued at the fair market value of the Company’s common stock on the vesting or exercise date of such awards, as set forth in the applicable plan document.

(2)In February 2020, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible. As previously announced, in March 2020, the Company temporarily suspended all share repurchase activity in connection with the Company’s response to the COVID-19 pandemic. In July 2020, the Company’s Board of Directors approved an extension of the February 2020 authorization by one year, through February 28, 2022, when and if market and economic conditions warrant and to the extent legally permissible. The Company resumed share repurchases in August 2020. In addition, in May 2021, the Board of Directors approved an increase of $50.0 million to the February 2020 authorization, resulting in an aggregate authorization of $150.0 million that continues to expire on February 28, 2022.

Subsequent to July 4, 2021 through August 4, 2021, the Company repurchased 0.2 million shares under the February 2020 authorization with an aggregate purchase price of $4.4 million, excluding commissions. In addition, in August 2021, the Board of Directors approved an increase of $70.0 million to the February 2020 authorization, resulting in an aggregate authorization of $220.0 million that continues to expire on February 28, 2022.

51

Item 6. Exhibits.

EXHIBIT NO.	DESCRIPTION
4.1	Series 2021-1 Supplement to Base Indenture, dated as of June 22, 2021, by and between Wendy’s Funding, LLC, as Master Issuer of the Series 2021-1 fixed rate senior secured notes, Class A-2, and Series 2021-1 variable funding senior notes, Class A-1, and Citibank, N.A., as Trustee and Series 2021-1 Securities Intermediary, incorporated herein by reference to Exhibit 4.1 of The Wendy’s Company Current Report on Form 8-K filed on June 23, 2021 (SEC file no. 001-02207).
4.2	Seventh Supplement to the Base Indenture, dated as of June 22, 2021, by and between Wendy’s Funding, LLC, as Master Issuer, and Citibank, N.A., as Trustee and Securities Intermediary, incorporated herein by reference to Exhibit 4.2 of The Wendy’s Company Current Report on Form 8-K filed on June 23, 2021 (SEC file no. 001-02207).
10.1	2021-1 Class A-2 Note Purchase Agreement, dated as of June 15, 2021, by and among The Wendy’s Company, the subsidiaries of The Wendy’s Company party thereto and Guggenheim Securities, LLC and Jefferies LLC, each acting on behalf of itself and as the representatives of the initial purchasers, incorporated herein by reference to Exhibit 10.1 of The Wendy’s Company Current Report on Form 8-K filed on June 16, 2021 (SEC file no. 001-02207).
10.2	Class A-1 Note Purchase Agreement, dated as of June 22, 2021, by and among Wendy’s Funding, LLC, as Master Issuer, each of Quality Is Our Recipe, LLC, Wendy’s Properties, LLC and Wendy’s SPV Guarantor, LLC, as Guarantors, Wendy’s International, LLC, as Manager, the conduit investors party thereto, the financial institutions party thereto, certain funding agents, and Coöperatieve Rabobank, U.A., New York Branch, as L/C Provider, Swingline Lender and Administrative Agent, incorporated herein by reference to Exhibit 10.1 of The Wendy’s Company Current Report on Form 8-K filed on June 23, 2021 (SEC file no. 001-02207).
10.3	Fourth Amendment to the Management Agreement, dated as of June 22, 2021, by and among Wendy’s Funding, LLC, as Master Issuer, certain subsidiaries of Wendy’s Funding, LLC party thereto, Wendy’s International, LLC, as Manager, and Citibank, N.A., as Trustee, incorporated herein by reference to Exhibit 10.2 of The Wendy’s Company Current Report on Form 8-K filed on June 23, 2021 (SEC file no. 001-02207).
31.1	Certification of the Chief Executive Officer of The Wendy’s Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of the Chief Financial Officer of The Wendy’s Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101	The following financial information from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2021 formatted in Inline eXtensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
104	The cover page from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2021, formatted in Inline XBRL and contained in Exhibit 101.

____________________

* Filed herewith.

52

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE WENDY’S COMPANY (Registrant)
Date: August 11, 2021	By: /s/ Gunther Plosch
	Gunther Plosch
	Chief Financial Officer
	(On behalf of the registrant)
Date: August 11, 2021	By: /s/ Leigh A. Burnside
	Leigh A. Burnside
	Senior Vice President, Finance and
	Chief Accounting Officer
	(Principal Accounting Officer)

53

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Todd A. Penegor, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2021

/s/ Todd A. Penegor          

Todd A. Penegor

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gunther Plosch, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2021

/s/ Gunther Plosch          

Gunther Plosch

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of The Wendy’s Company, a Delaware corporation (the “Company”), does hereby certify, to the best of such officer’s knowledge, that in connection with the Quarterly Report on Form 10-Q of the Company for the quarter ended July 4, 2021 (the “Form 10-Q”):

1.the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2021

/s/ Todd A. Penegor             

Todd A. Penegor

President and Chief Executive Officer

Date: August 11, 2021

/s/ Gunther Plosch               

Gunther Plosch

Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jul. 04, 2021	Aug. 04, 2021
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 04, 2021
Document Transition Report	false
Entity File Number	1-2207
Entity Registrant Name	THE WENDY’S COMPANY
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-0471180
Entity Address, Address Line One	One Dave Thomas Blvd.
Entity Address, City or Town	Dublin,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43017
City Area Code	614
Local Phone Number	764-3100
Title of 12(b) Security	Common Stock, $.10 par value
Trading Symbol	WEN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0000030697
Current Fiscal Year End Date	--01-02
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		222,787,694

XML

Condensed Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Thousands	Jul. 04, 2021	Jan. 03, 2021
Current assets:
Cash and cash equivalents	$ 568,139	$ 306,989
Restricted cash	37,792	33,973
Accounts and notes receivable, net	103,257	109,891
Inventories	4,261	4,732
Prepaid expenses and other current assets	24,219	89,732
Advertising funds restricted assets	101,858	142,306
Total current assets	839,526	687,623
Properties	881,798	915,889
Finance lease assets	206,586	206,153
Operating lease assets	791,924	821,480
Goodwill	752,552	751,049
Other intangible assets	1,217,275	1,224,960
Investments	43,676	44,574
Net investment in sales-type and direct financing leases	302,694	268,221
Other assets	130,843	120,057
Total assets	5,166,874	5,040,006
Current liabilities:
Current portion of long-term debt	32,750	28,962
Current portion of finance lease liabilities	14,547	12,105
Current portion of operating lease liabilities	45,269	45,346
Accounts payable	32,430	31,063
Accrued expenses and other current liabilities	137,991	155,321
Advertising funds restricted liabilities	109,799	140,511
Total current liabilities	372,786	413,308
Long-term debt	2,373,610	2,218,163
Long-term finance lease liabilities	521,608	506,076
Long-term operating lease liabilities	838,585	865,325
Deferred income taxes	279,837	280,755
Deferred franchise fees	89,286	89,094
Other liabilities	120,806	117,689
Total liabilities	4,596,518	4,490,410
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 222,960 and 224,268 shares outstanding, respectively	47,042	47,042
Additional paid-in capital	2,907,274	2,899,276
Retained earnings	303,475	238,674
Common stock held in treasury, at cost; 247,464 and 246,156 shares, respectively	(2,643,361)	(2,585,755)
Accumulated other comprehensive loss	(44,074)	(49,641)
Total stockholders’ equity	570,356	549,596
Total liabilities and stockholders’ equity	$ 5,166,874	$ 5,040,006
Common Stock, Par Value	$ 0.10	$ 0.10
Common Stock, Shares Authorized	1,500,000	1,500,000
Common Stock, Shares Issued	470,424	470,424
Common Stock, Shares, Outstanding	222,960	224,268
Treasury Stock, Shares	247,464	246,156

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Revenues
Franchise rental income	$ 60,868	$ 56,857	$ 119,744	$ 114,713
Revenues	493,337	402,306	953,540	807,266
Costs and expenses
Cost of sales	154,154	140,626	311,004	290,625
Franchise support and other costs	8,885	5,454	16,571	13,467
Franchise rental expense	34,068	31,297	66,634	60,598
Advertising funds expense	107,875	81,317	202,113	161,305
General and administrative	63,114	48,592	115,736	100,231
Depreciation and amortization	30,761	34,714	62,303	65,760
System optimization gains, net	(30,766)	(1,987)	(31,282)	(2,310)
Reorganization and realignment costs	2,102	2,911	7,036	6,821
Impairment of long-lived assets	630	117	1,265	4,704
Other operating income, net	(4,232)	(1,396)	(7,708)	(3,328)
Costs and expenses	366,591	341,645	743,672	697,873
Operating profit	126,746	60,661	209,868	109,393
Interest expense, net	(28,204)	(29,085)	(56,990)	(57,610)
Loss on early extinguishment of debt	(17,917)	0	(17,917)	0
Other income (expense), net	161	(144)	290	932
Income before income taxes	80,786	31,432	135,251	52,715
Provision for income taxes	(15,062)	(6,528)	(28,161)	(13,370)
Net income	$ 65,724	$ 24,904	$ 107,090	$ 39,345
Earnings per share
Earnings Per Share, Basic	$ 0.30	$ 0.11	$ 0.48	$ 0.18
Earnings Per Share, Diluted	$ 0.29	$ 0.11	$ 0.47	$ 0.17
Sales
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 193,525	$ 164,217	$ 382,582	$ 331,015
Franchise royalty revenue and fees
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	136,661	103,120	259,491	204,825
Advertising funds revenue
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 102,283	$ 78,112	$ 191,723	$ 156,713

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Net income	$ 65,724	$ 24,904	$ 107,090	$ 39,345
Other comprehensive income (loss):
Foreign currency translation adjustment	3,347	4,149	5,567	(8,358)
Other comprehensive income (loss)	3,347	4,149	5,567	(8,358)
Comprehensive income	$ 69,071	$ 29,053	$ 112,657	$ 30,987

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Common Stock Held in Treasury	Accumulated Other Comprehensive Loss
Stockholders' Equity, beginning of period at Dec. 29, 2019	$ 516,359	$ 47,042	$ 2,874,001	$ 185,725	$ (2,536,581)	$ (53,828)
Increase (Decrease) in Stockholders' Equity
Net income	14,441	0	0	14,441	0	0
Other comprehensive income (loss)	(12,507)	0	0	0	0	(12,507)
Cash dividends	(26,793)	0	0	(26,793)	0	0
Repurchases of common stock	(43,336)	0	15,000	0	(58,336)	0
Share-based compensation	4,539	0	4,539	0	0	0
Common stock issued upon exercises of stock options	1,610	0	280	0	1,330	0
Common stock issued upon vesting of restricted shares	(3,291)	0	(4,017)	0	726	0
Other	53	0	33	(7)	27	0
Stockholders' Equity, end of period at Mar. 29, 2020	451,075	47,042	2,889,836	173,366	(2,592,834)	(66,335)
Stockholders' Equity, beginning of period at Dec. 29, 2019	516,359	47,042	2,874,001	185,725	(2,536,581)	(53,828)
Increase (Decrease) in Stockholders' Equity
Net income	39,345
Other comprehensive income (loss)	(8,358)
Stockholders' Equity, end of period at Jun. 28, 2020	483,983	47,042	2,892,699	187,086	(2,580,658)	(62,186)
Stockholders' Equity, beginning of period at Mar. 29, 2020	451,075	47,042	2,889,836	173,366	(2,592,834)	(66,335)
Increase (Decrease) in Stockholders' Equity
Net income	24,904	0	0	24,904	0	0
Other comprehensive income (loss)	4,149	0	0	0	0	4,149
Cash dividends	(11,181)	0	0	(11,181)	0	0
Share-based compensation	4,787	0	4,787	0	0	0
Common stock issued upon exercises of stock options	10,459	0	(902)	0	11,361	0
Common stock issued upon vesting of restricted shares	(268)	0	(1,041)	0	773	0
Other	58	0	19	(3)	42	0
Stockholders' Equity, end of period at Jun. 28, 2020	483,983	47,042	2,892,699	187,086	(2,580,658)	(62,186)
Stockholders' Equity, beginning of period at Jan. 03, 2021	549,596	47,042	2,899,276	238,674	(2,585,755)	(49,641)
Increase (Decrease) in Stockholders' Equity
Net income	41,366	0	0	41,366	0	0
Other comprehensive income (loss)	2,220	0	0	0	0	2,220
Cash dividends	(20,156)	0	0	(20,156)	0	0
Repurchases of common stock	(56,084)	0	0	0	(56,084)	0
Share-based compensation	5,151	0	5,151	0	0	0
Common stock issued upon exercises of stock options	663	0	(20)	0	683	0
Common stock issued upon vesting of restricted shares	(2,179)	0	(2,996)	0	817	0
Other	88	0	49	(5)	44	0
Stockholders' Equity, end of period at Apr. 04, 2021	520,665	47,042	2,901,460	259,879	(2,640,295)	(47,421)
Stockholders' Equity, beginning of period at Jan. 03, 2021	549,596	47,042	2,899,276	238,674	(2,585,755)	(49,641)
Increase (Decrease) in Stockholders' Equity
Net income	107,090
Other comprehensive income (loss)	5,567
Stockholders' Equity, end of period at Jul. 04, 2021	570,356	47,042	2,907,274	303,475	(2,643,361)	(44,074)
Stockholders' Equity, beginning of period at Apr. 04, 2021	520,665	47,042	2,901,460	259,879	(2,640,295)	(47,421)
Increase (Decrease) in Stockholders' Equity
Net income	65,724	0	0	65,724	0	0
Other comprehensive income (loss)	3,347	0	0	0	0	3,347
Cash dividends	(22,123)	0	0	(22,123)	0	0
Repurchases of common stock	(27,291)	0	0	0	(27,291)	0
Share-based compensation	5,882	0	5,882	0	0	0
Common stock issued upon exercises of stock options	24,316	0	850	0	23,466	0
Common stock issued upon vesting of restricted shares	(245)	0	(959)	0	714	0
Other	81	0	41	(5)	45	0
Stockholders' Equity, end of period at Jul. 04, 2021	$ 570,356	$ 47,042	$ 2,907,274	$ 303,475	$ (2,643,361)	$ (44,074)

XML

Condensed Consolidated Statements of Cash Flows $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 04, 2021 USD ($)	Jul. 04, 2021 USD ($)	Jun. 28, 2020 USD ($)
Cash flows from operating activities:
Net income	$ 65,724	$ 107,090	$ 39,345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	30,761	62,303	65,760
Share-based compensation		11,033	9,326
Impairment of long-lived assets	630	1,265	4,704
Deferred income tax		(2,137)	1,920
Non-cash rental expense, net		20,075	12,251
Change in operating lease liabilities		(23,074)	(19,233)
Net receipt of deferred vendor incentives		3,332	7,728
System optimization gains, net	(30,766)	(31,282)	(2,310)
Distributions received from joint ventures, net of equity in earnings		2,354	1,262
Long-term debt-related activities, net		21,328	3,141
Changes in operating assets and liabilities and other, net		(13,536)	(93,332)
Net cash provided by operating activities		158,751	30,562
Cash flows from investing activities:
Capital expenditures		(24,069)	(29,402)
Acquisitions		4,879	0
Dispositions		50,531	4,320
Notes receivable, net		611	138
Net cash provided by (used in) investing activities		31,952	(24,944)
Cash flows from financing activities:
Proceeds from long-term debt		1,100,000	153,315
Repayments of long-term debt		(941,220)	(24,271)
Repayments of finance lease liabilities		(5,777)	(3,707)
Deferred financing costs		(20,873)	(2,122)
Repurchases of common stock		(83,658)	(45,137)
Dividends		(42,279)	(37,974)
Proceeds from stock option exercises		25,933	11,865
Payments related to tax withholding for share-based compensation		(3,197)	(3,704)
Net cash provided by financing activities		28,929	48,265
Net cash provided by operations before effect of exchange rate changes on cash		219,632	53,883
Effect of exchange rate changes on cash		2,283	(3,132)
Net increase in cash, cash equivalents and restricted cash		221,915	50,751
Cash, cash equivalents and restricted cash at beginning of period		418,241	358,707
Cash, cash equivalents and restricted cash at end of period	640,156	640,156	409,458
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable		7,242	6,082
Finance leases		30,863	12,962
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	568,139	568,139
Restricted cash	37,792	37,792
Restricted cash, included in Advertising funds restricted assets	34,225	34,225
Total cash, cash equivalents and restricted cash	$ 640,156	$ 640,156	$ 409,458

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Basis of Presentation

6 Months Ended

Jul. 04, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of July 4, 2021, the results of our operations for the three and six months ended July 4, 2021 and June 28, 2020 and cash flows for the six months ended July 4, 2021 and June 28, 2020. The results of operations for the six months ended July 4, 2021 are not necessarily indicative of the results to be expected for the full 2021 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2021 (the “Form 10-K”).

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic. We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition; however, we cannot predict the ultimate duration, scope or severity of the COVID-19 pandemic or its ultimate impact on our results of operations, financial condition and prospects.

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 17 for further information.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

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Revenue (Notes)

6 Months Ended

Jul. 04, 2021

Revenue [Abstract]

Revenue from Contract with Customer

Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Three Months Ended July 4, 2021
Sales at Company-operated restaurants	$	193,279	$	246	$	—	$	193,525
Franchise royalty revenue	106,006		13,560		—		119,566
Franchise fees (a)	14,331		1,454		1,310		17,095
Franchise rental income	—		—		60,868		60,868
Advertising funds revenue	96,227		6,056		—		102,283
Total revenues	$	409,843	$	21,316	$	62,178	$	493,337

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Six Months Ended July 4, 2021
Sales at Company-operated restaurants	$	382,336	$	246	$	—	$	382,582
Franchise royalty revenue	202,770		25,130		—		227,900
Franchise fees (a)	26,261		2,897		2,433		31,591
Franchise rental income	—		—		119,744		119,744
Advertising funds revenue	180,430		11,293		—		191,723
Total revenues	$	791,797	$	39,566	$	122,177	$	953,540
Three Months Ended June 28, 2020
Sales at Company-operated restaurants	$	164,217	$	—	$	—	$	164,217
Franchise royalty revenue	88,121		9,070		—		97,191
Franchise fees (a)	5,308		433		188		5,929
Franchise rental income	—		—		56,857		56,857
Advertising funds revenue	73,612		4,500		—		78,112
Total revenues	$	331,258	$	14,003	$	57,045	$	402,306
Six Months Ended June 28, 2020
Sales at Company-operated restaurants	$	331,015	$	—	$	—	$	331,015
Franchise royalty revenue	172,954		19,593		—		192,547
Franchise fees (a)	10,593		906		779		12,278
Franchise rental income	—		—		114,713		114,713
Advertising funds revenue	147,737		8,976		—		156,713
Total revenues	$	662,299	$	29,475	$	115,492	$	807,266

_______________

(a)Includes fees for providing information technology services to franchisees, which are recognized as revenue as earned.

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

	July 4, 2021 (a)		January 3, 2021 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	51,005	$	57,677
Receivables, which are included in “Advertising funds restricted assets”	62,468		63,252
Deferred franchise fees (c)	98,409		97,785

_______________

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,123 and $89,286 as of July 4, 2021, respectively, and $8,691 and $89,094 as of January 3, 2021, respectively.

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	July 4, 2021		June 28, 2020
Deferred franchise fees at beginning of period	$	97,785	$	100,689
Revenue recognized during the period	(6,845)		(3,898)
New deferrals due to cash received and other	7,469		1,772
Deferred franchise fees at end of period	$	98,409	$	98,563

Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

Estimate for fiscal year:
2021 (a)	$	6,073
2022	6,298
2023	6,126
2024	5,930
2025	5,746
Thereafter	68,236
	$	98,409

_______________

(a)Represents franchise fees expected to be recognized for the remainder of 2021, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

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Acquisitions (Notes)

6 Months Ended

Jul. 04, 2021

Business Combinations [Abstract]

Acquisitions

Acquisitions

No restaurants were acquired from franchisees during the six months ended July 4, 2021 and June 28, 2020.

NPC Quality Burgers, Inc. (“NPC”)

As previously announced, NPC, formerly the Company’s largest franchisee, filed for chapter 11 bankruptcy in July 2020 and commenced a process to sell all or substantially all of its assets, including its interest in approximately 393 Wendy’s restaurants across eight different markets, pursuant to a court-approved auction process. On November 18, 2020, the Company submitted a consortium bid together with a group of pre-qualified franchisees to acquire NPC’s Wendy’s restaurants. Under the terms of the consortium bid, several existing and new franchisees would have been the ultimate purchasers of seven of the NPC markets, while the Company would have acquired one market. As part of the consortium bid, the Company submitted a deposit of $43,240, which was included in “Prepaid expenses and other current assets” as of January 3, 2021. The deposit included $38,361 received from the group of prequalified franchisees, which was payable to the franchisees and included in “Accrued expenses and other current liabilities” as of January 3, 2021 pending resolution of the bankruptcy sale process.

During the three months ended April 4, 2021, following a court-approved mediation process, NPC and certain affiliates of Flynn Restaurant Group (“FRG”) and the Company entered into separate asset purchase agreements under which all of NPC’s Wendy’s restaurants were sold to Wendy’s approved franchisees. Under the transaction, FRG acquired approximately half of NPC’s Wendy’s restaurants in four markets, while several existing Wendy’s franchisees that were part of the Company’s consortium bid acquired the other half of NPC’s Wendy’s restaurants in the other four markets. The Company did not acquire any restaurants as part of this transaction. In addition, the deposits outstanding as of January 3, 2021 were settled during the three months ended April 4, 2021 upon resolution of the bankruptcy sale process. The net settlement of deposits of $4,879 is included in “Acquisitions” in the condensed consolidated statements of cash flows.

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System Optimization Gains, Net

6 Months Ended

Jul. 04, 2021

System Optimization

Property, Plant and Equipment

System Optimization Gains, Net

System Optimization Gains, 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, the Company expects to continue to optimize the Wendy’s 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. During the six months ended July 4, 2021 and June 28, 2020, the Company facilitated 19 and three Franchise Flips, respectively. In addition, during the three months ended July 4, 2021, the Company completed the sale of 47 Company-operated restaurants in New York (including Manhattan) to franchisees. No Company-operated restaurants were sold to franchisees during the six months ended June 28, 2020.

Gains and losses recognized on dispositions are recorded to “System optimization gains, 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 5. 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				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Number of restaurants sold to franchisees	47		—		47		—
Proceeds from sales of restaurants	$	50,518	$	—	$	50,518	$	—
Net assets sold (a)	(16,939)		—		(16,939)		—
Goodwill related to sales of restaurants	(4,847)		—		(4,847)		—
Net unfavorable leases (b)	(2,939)		—		(2,939)		—
Gain on sales-type leases	7,156		—		7,156		—
Other (c)	(2,148)		—		(2,148)		—
	30,801		—		30,801		—
Post-closing adjustments on sales of restaurants (d)	—		—		515		345
Gain on sales of restaurants, net	30,801		—		31,316		345
(Loss) gain on sales of other assets, net (e)	(35)		1,987		(34)		1,965
System optimization gains, net	$	30,766	$	1,987	$	31,282	$	2,310

_______________

(a)Net assets sold consist primarily of equipment.

(b)During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings, and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(c)The three and six months ended July 4, 2021 include a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(d)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(e)During the three and six months ended July 4, 2021, the Company received net cash proceeds of $10 and $13, respectively, primarily from the sale of surplus and other properties. During the three and six months ended June 28, 2020, the Company received net cash proceeds of $4,125 and $4,320, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

	July 4, 2021		January 3, 2021
Number of restaurants classified as held for sale	—		43
Net restaurant assets held for sale (a)	$	—	$	20,587
Other assets held for sale (b)	$	2,318	$	1,732

_______________

(a)Net restaurant assets held for sale as of January 3, 2021 included New York Company-operated restaurants (excluding Manhattan) and consisted primarily of cash, inventory, property and an estimate of allocable goodwill. During the three months ended April 4, 2021, the Company also classified its four Manhattan restaurants as held for sale.

(b)Other assets held for sale primarily consist of surplus properties.

Assets held for sale are included in “Prepaid expenses and other current assets.”

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Reorganization and Realignment Costs

6 Months Ended

Jul. 04, 2021

Restructuring and Related Activities [Abstract]

Reorganization and Realignment Costs

Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Operations and field realignment	$	1,215	$	—	$	1,489	$	—
IT realignment	6		2,847		6		6,406
G&A realignment	(16)		64		(34)		331
System optimization initiative	897		—		5,575		84
Reorganization and realignment costs	$	2,102	$	2,911	$	7,036	$	6,821

Operations and Field Realignment

In September 2020, the Company initiated a plan to reallocate resources to better support the long-term growth strategies for Company and franchise operations (the “Operations and Field Realignment Plan”). The Operations and Field Realignment Plan realigned the Company’s restaurant operations team, including transitioning from separate leaders of Company and franchise operations to a single leader of all U.S. restaurant operations. The Operations and Field Realignment Plan also includes contract terminations, including the closure of certain field offices. The Company expects to incur total costs aggregating approximately $6,000 to $8,000 related to the Operations and Field Realignment Plan. During the three and six months ended July 4, 2021, the Company recognized costs totaling $1,215 and $1,489, respectively, which primarily included third-party and other costs. The Company expects to incur additional costs aggregating approximately $1,000 to $3,000, comprised primarily of third-party and other costs. The Company expects to recognize the majority of the remaining costs associated with the Operations and Field Realignment Plan during the remainder of 2021.

The following is a summary of the activity recorded as a result of the Operations and Field Realignment Plan:

	Three Months Ended		Six Months Ended		Total Incurred Since Inception
	July 4, 2021		July 4, 2021
Severance and related employee costs	$	79	$	333	$	3,446
Third-party and other costs	1,136		1,156		1,223
	1,215		1,489		4,669
Share-based compensation (a)	—		—		621
Total operations and field realignment	$	1,215	$	1,489	$	5,290

_______________

(a)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the Operations and Field Realignment Plan.

The table below presents a rollforward of our accruals for the Operations and Field Realignment Plan, which are included in “Accrued expenses and other current liabilities” as of July 4, 2021.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	2,600	$	333	$	(1,924)	$	1,009
Third-party and other costs	—		1,156		(1,156)		—
	$	2,600	$	1,489	$	(3,080)	$	1,009

Information Technology (“IT”) Realignment

In December 2019, our Board of Directors approved a plan to realign and reinvest resources in the Company’s IT organization to strengthen its ability to accelerate growth (the “IT Realignment Plan”). The Company has partnered with a third-party global IT consultant on this new structure to leverage their global capabilities, enabling a more seamless integration between its digital and corporate IT assets. The IT Realignment Plan has reduced certain employee compensation and other related costs that the Company has reinvested back into IT to drive additional capabilities and capacity across all of its technology platforms. Additionally, in June 2020, the Company made changes to its leadership structure that included the elimination of the Chief Digital Experience Officer position and the creation of a Chief Information Officer position, for which the Company completed the hiring process in October 2020. During the three and six months ended June 28, 2020, the Company recognized costs totaling $2,847 and $6,406, which primarily included third-party and other costs and severance and related employee costs. The Company does not expect to incur any material additional costs under the IT Realignment Plan.

The following is a summary of the activity recorded as a result of the IT Realignment Plan:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs (a)	$	(8)	$	830	$	(119)	$	975	$	8,272
Recruitment and relocation costs	13		143		121		314		1,417
Third-party and other costs	1		1,874		4		5,117		6,539
	6		2,847		6		6,406		16,228
Share-based compensation (b)	—		—		—		—		193
Total IT realignment	$	6	$	2,847	$	6	$	6,406	$	16,421

_______________

(a)The three and six months ended July 4, 2021 include a reversal of an accrual as a result of a change in estimate.

(b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the IT Realignment Plan.

The accruals for the IT Realignment Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $462 and $10 as of July 4, 2021 and $4,039 and $371 as of June 28, 2020, respectively. The tables below present a rollforward of our accruals for the IT Realignment Plan.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	1,508	$	(119)	$	(917)	$	472
Recruitment and relocation costs	—		121		(121)		—
Third-party and other costs	—		4		(4)		—
	$	1,508	$	6	$	(1,042)	$	472

	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	7,548	$	975	$	(4,113)	$	4,410
Recruitment and relocation costs	—		314		(314)		—
Third-party and other costs	1,076		5,117		(6,193)		—
	$	8,624	$	6,406	$	(10,620)	$	4,410

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses (the “G&A Realignment Plan”). Additionally, in May 2019, the Company announced changes to its management and operating structure that included the creation of two new positions, a President, U.S. and Chief Commercial Officer and a President, International and Chief Development Officer, and the elimination of the Chief Operations Officer position. During the six months ended June 28, 2020, the Company recognized costs totaling $331, which primarily included share-based compensation and severance and related employee costs. The Company does not expect to incur any material additional costs under the G&A Realignment Plan.

The following is a summary of the activity recorded as a result of the G&A Realignment Plan:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs (a)	$	(22)	$	(6)	$	(53)	$	146	$	24,213
Recruitment and relocation costs	(1)		—		—		15		2,876
Third-party and other costs	(1)		—		—		1		2,223
	(24)		(6)		(53)		162		29,312
Share-based compensation (b)	8		70		19		169		8,130
Termination of defined benefit plans	—		—		—		—		1,335
Total G&A realignment	$	(16)	$	64	$	(34)	$	331	$	38,777

_______________

(a)The three and six months ended July 4, 2021 and June 28, 2020 include a reversal of an accrual as a result of a change in estimate.

(b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A Realignment Plan.

As of July 4, 2021, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities.” As of June 28, 2020, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled and $2,705 and $108, respectively. The tables below present a rollforward of our accruals for the G&A Realignment Plan.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	932	$	(53)	$	(738)	$	141
Recruitment and relocation costs	—		—		—		—
Third-party and other costs	—		—		—		—
	$	932	$	(53)	$	(738)	$	141

	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	5,276	$	146	$	(2,671)	$	2,751
Recruitment and relocation costs	83		15		(36)		62
Third-party and other costs	—		1		(1)		—
	$	5,359	$	162	$	(2,708)	$	2,813

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. During the six months ended July 4, 2021, the Company recognized costs totaling $5,575, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the NPC bankruptcy sale process. See Note 3 for further information. The Company expects to recognize a gain of approximately $1,000 related to the write-off of certain NPC-related lease liabilities upon final termination of the leases.

The following is a summary of the costs recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs	$	661	$	—	$	661	$	—	$	18,898
Professional fees	504		—		739		80		22,846
Other (a)	—		—		1,354		4		7,207
	1,165		—		2,754		84		48,951
Accelerated depreciation and amortization (b)	—		—		—		—		25,398
NPC lease termination costs (c)	(268)		—		2,821		—		2,821
Share-based compensation (d)	—		—		—		—		5,013
Total system optimization initiative	$	897	$	—	$	5,575	$	84	$	82,183

_______________

(a)The six months ended July 4, 2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c)The six months ended July 4, 2021 includes the write-off of lease assets of $1,341 and lease termination fees paid of $1,480.

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

The table below presents a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	—	$	661	$	(661)	$	—
Professional fees	1,230		739		(1,969)		—
Other	—		1,354		(1,354)		—
	$	1,230	$	2,754	$	(3,984)	$	—

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Investments

6 Months Ended

Jul. 04, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investment

(6) Investments

Equity Investments

Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand. (Tim Hortons is a registered trademark of Tim Hortons USA Inc.) In addition, a wholly-owned subsidiary of Wendy’s has a 20% share in a joint venture for the operation of Wendy’s restaurants in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method of accounting, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.”

Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements:

	Six Months Ended
	July 4, 2021		June 28, 2020
Balance at beginning of period	$	44,574	$	45,310
Equity in earnings for the period	4,921		3,455
Amortization of purchase price adjustments (a)	(1,658)		(1,105)
	3,263		2,350
Distributions received	(5,617)		(3,612)
Foreign currency translation adjustment included in “Other comprehensive income (loss)” and other	1,456		(1,631)
Balance at end of period	$	43,676	$	42,417

_______________

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

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Long-Term Debt (Notes)

6 Months Ended

Jul. 04, 2021

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consisted of the following:

	July 4, 2021		January 3, 2021
Series 2021-1 Class A-2 Notes:
2.370% Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029	$	450,000	$	—
2.775% Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031	650,000		—
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	378,000		386,000
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	425,250		434,250
Series 2018-1 Class A-2 Notes:
3.573% Series 2018-1 Class A-2-I Notes, repaid in connection with the June 2021 refinancing	—		436,500
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	458,375		460,750
Series 2015-1 Class A-2 Notes:
4.497% Series 2015-1 Class A-2-III Notes, repaid in connection with the June 2021 refinancing	—		473,750
Canadian revolving credit facility	—		1,962
7% debentures, due in 2025	84,585		83,998
Unamortized debt issuance costs	(39,850)		(30,085)
	2,406,360		2,247,125
Less amounts payable within one year	(32,750)		(28,962)
Total long-term debt	$	2,373,610	$	2,218,163

Senior Notes

Wendy’s Funding, LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015. In June 2021, the Master Issuer completed a refinancing transaction with respect to this facility under which the Master Issuer issued fixed rate senior secured notes in the following 2021-1 series: Class A-2-I with an initial principal amount of $450,000 and Class A-2-II with an initial principal amount of $650,000 (collectively, the “Series 2021-1 Class A-2 Notes”). Interest and principal payments on the Series 2021-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2021-1 Class A-2 Notes is in June 2051. If the Master Issuer has not repaid or refinanced the Series 2021-1 Class A-2 Notes prior to their respective anticipated repayment dates, additional interest will accrue pursuant to the indenture governing the Series 2021-1 Class A-2 Notes. The net proceeds from the sale of the Series 2021-1 Class A-2 Notes were used to repay in full the Master Issuer’s outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes, including the payment of prepayment and transaction costs. The remaining funds will be used for general corporate purposes, which may include funding for growth initiatives, return of capital to shareholders, or additional debt retirement. As a result of the refinancing, the Company recorded a loss on early extinguishment of debt of $17,917 during the three months ended July 4, 2021, which was comprised of a specified make-whole payment of $9,632 and the write-off of certain unamortized deferred financing costs of $8,285. The Series 2021-1 Class A-2 Notes have scheduled principal payments of $5,500 in 2021, $11,000 annually from 2022 through 2028, $422,750 in 2029, $6,500 in 2030 and $588,250 in 2031.

In connection with the issuance of the Series 2021-1 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2021-1 Class A-1 Notes” and, together with the Series 2021-1 Class A-2 Notes, the “Series 2021-1 Senior Notes”), which allows for the drawing of up to $300,000 on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2021-1 Class A-1 Notes during the three months ended July 4, 2021. The Series 2021-1 Class A-1 Notes replaced the Company’s $150,000 Series 2019-1 Class A-1 Notes and $100,000 Series 2020-1 Class A-1 Notes, which were canceled on the closing date, and the letters of credit outstanding against the Series 2019-1 Class A-1 Notes were transferred to the Series 2021-1 Class A-1 Notes.

The Series 2021-1 Senior Notes are secured by substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors, except for certain real estate assets and subject to certain limitations. The Series 2021-1 Senior Notes are subject to substantially the same series of covenants and restrictions as the Company’s outstanding Series 2019-1 Class A-2 Notes and Series 2018-1 Class A-2 Notes.

During the three and six months ended July 4, 2021, the Company incurred debt issuance costs of $20,873 in connection with the issuance of the Series 2021-1 Senior Notes. The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2021-1 Senior Notes utilizing the effective interest rate method.

Other Long-Term Debt

A Canadian subsidiary of Wendy’s has a revolving credit facility of C$6,000, which bears interest at the Bank of Montreal Prime Rate. Borrowings under the facility are guaranteed by Wendy’s. In March 2020, the Company drew down C$5,500 under the revolving credit facility, which the Company fully repaid through repayments of C$3,000 in the fourth quarter of 2020 and C$2,500 in the first quarter of 2021. As a result, as of July 4, 2021, the Company had no outstanding borrowings under the Canadian revolving credit facility.

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Fair Value Measurements

6 Months Ended

Jul. 04, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	July 4, 2021				January 3, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	125,037	$	125,037	$	75,067	$	75,067	Level 1
Financial liabilities
Series 2021-1 Class A-2-I Notes (a)	450,000		453,105		—		—		Level 2
Series 2021-1 Class A-2-II Notes (a)	650,000		658,190		—		—		Level 2
Series 2019-1 Class A-2-I Notes (a)	378,000		402,570		386,000		409,778		Level 2
Series 2019-1 Class A-2-II Notes (a)	425,250		466,669		434,250		469,555		Level 2
Series 2018-1 Class A-2-I Notes (a)	—		—		436,500		450,381		Level 2
Series 2018-1 Class A-2-II Notes (a)	458,375		489,407		460,750		491,021		Level 2
Series 2015-1 Class A-2-III Notes (a)	—		—		473,750		481,851		Level 2
Canadian revolving credit facility	—		—		1,962		1,962		Level 2
7% debentures, due in 2025 (a)	84,585		101,250		83,998		98,775		Level 2

_______________

(a)The fair values were based on quoted market prices in markets that are not considered active markets.

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

Non-Recurring Fair Value Measurements

Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.

Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) declines in operating performance at Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance.

Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 9 for further information on impairment of our long-lived assets.

			Fair Value Measurements
	July 4, 2021		Level 1		Level 2		Level 3
Held and used	$	718	$	—	$	—	$	718
Held for sale	340		—		—		340
Total	$	1,058	$	—	$	—	$	1,058

			Fair Value Measurements
	January 3, 2021		Level 1		Level 2		Level 3
Held and used	$	2,653	$	—	$	—	$	2,653
Held for sale	855		—		—		855
Total	$	3,508	$	—	$	—	$	3,508

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Impairment of Long-Lived Assets

6 Months Ended

Jul. 04, 2021

Asset Impairment Charges [Abstract]

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications, and (3) closing Company-operated restaurants and classifying such surplus properties as held for sale. Impairment charges during the six months ended June 28, 2020 were primarily due to the expected deterioration in operating performance of certain Company-operated restaurants as a result of the COVID-19 pandemic.

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Company-operated restaurants	$	488	$	—	$	934	$	4,395
Restaurants leased or subleased to franchisees	—		—		189		—
Surplus properties	142		117		142		309
	$	630	$	117	$	1,265	$	4,704

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Income Taxes

6 Months Ended

Jul. 04, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the three months ended July 4, 2021 and June 28, 2020 was 18.6% and 20.8%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the three months ended July 4, 2021 primarily due to a reduction for the benefit of share-based compensation, partially offset by an increase due to state income taxes.

The Company’s effective tax rate for the six months ended July 4, 2021 and June 28, 2020 was 20.8% and 25.4%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the six months ended July 4, 2021 primarily due to a reduction for the benefit of share-based compensation, partially offset by an increase due to state income taxes, including discrete changes to state deferred taxes.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and six months ended July 4, 2021. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $2,016 due primarily to the lapse of statutes of limitations and expected settlements.

The current portion of refundable income taxes was $4,528 and $5,399 as of July 4, 2021 and January 3, 2021, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of July 4, 2021 and January 3, 2021.

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Net Income Per Share

6 Months Ended

Jul. 04, 2021

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Net income	$	65,724	$	24,904	$	107,090	$	39,345
Common stock:
Weighted average basic shares outstanding	221,874		223,123		222,604		223,329
Dilutive effect of stock options and restricted shares	3,526		4,051		3,459		4,262
Weighted average diluted shares outstanding	225,400		227,174		226,063		227,591
Net income per share:
Basic	$	.30	$	.11	$	.48	$	.18
Diluted	$	.29	$	.11	$	.47	$	.17

Basic net income per share for the three and six months ended July 4, 2021 and June 28, 2020 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share for the three and six months ended July 4, 2021 and June 28, 2020 was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 1,825 and 1,847 for the three and six months ended July 4, 2021, respectively, and 2,636 and 2,652 for the three and six months ended June 28, 2020, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

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Stockholders' Equity

6 Months Ended

Jul. 04, 2021

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Dividends

During the first and second quarter of 2021, the Company paid dividends per share of $.09 and $.10, respectively. During the first and second quarter of 2020, the Company paid dividends per share of $.12 and $.05, respectively.

Repurchases of Common Stock

In February 2020, our Board of Directors authorized a repurchase program for up to $100,000 of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible. As previously announced, beginning in March 2020, the Company temporarily suspended all share repurchase activity under the February 2020 authorization in connection with the Company’s response to the COVID-19 pandemic. In July 2020, the Company’s Board of Directors approved an extension of the February 2020 authorization by one year, through February 28, 2022, when and if market and economic conditions warrant and to the extent legally permissible. The Company resumed share repurchases in August 2020. In addition, in May 2021, the Board of Directors approved an increase of $50,000 to the February 2020 authorization, resulting in an aggregate authorization of $150,000 that continues to expire on February 28, 2022. During the six months ended July 4, 2021, the Company repurchased 3,956 shares under the February 2020 repurchase authorization with an aggregate purchase price of $83,320, of which $440 was accrued at July 4, 2021, and excluding commissions of $55. As of July 4, 2021, the Company had $34,396 of availability remaining under its February 2020 authorization. Subsequent to July 4, 2021 through August 4, 2021, the Company repurchased 193 shares under the February 2020 authorization with an aggregate purchase price of $4,396, excluding commissions of $2. In addition, in August 2021, the Board of Directors approved an increase of $70,000 to the February 2020 authorization, resulting in an aggregate authorization of $220,000 that continues to

expire on February 28, 2022. The Company has availability of $100,000 remaining under the authorization as of August 11, 2021.

In February 2019, our Board of Directors authorized a repurchase program for up to $225,000 of our common stock through March 1, 2020, when and if market conditions warranted and to the extent legally permissible. In November 2019, the Company entered into an accelerated share repurchase agreement (the “2019 ASR Agreement”) with a third-party financial institution to repurchase common stock as part of the Company’s existing share repurchase program. Under the 2019 ASR Agreement, the Company paid the financial institution an initial purchase price of $100,000 in cash and received an initial delivery of 4,051 shares of common stock, representing an estimated 85% of the total shares expected to be delivered under the 2019 ASR Agreement. In February 2020, the Company completed the 2019 ASR Agreement and received an additional 628 shares of common stock at an average purchase price of $23.89. The total number of shares of common stock ultimately purchased by the Company under the 2019 ASR Agreement was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2019 ASR Agreement, less an agreed upon discount. In total, 4,679 shares were delivered under the 2019 ASR Agreement at an average purchase price of $21.37 per share.

In addition to the shares repurchased in connection with the 2019 ASR Agreement, during the six months ended June 28, 2020, the Company repurchased 2,091 shares with an aggregate purchase price of $43,307, excluding commissions of $29, under the February 2020 authorization and the February 2019 authorization. After taking into consideration these repurchases, with the completion of the 2019 ASR Agreement in February 2020, the Company completed its February 2019 authorization.

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss:

	Six Months Ended
	July 4, 2021		June 28, 2020
Balance at beginning of period	$	(49,641)	$	(53,828)
Foreign currency translation	5,567		(8,358)
Balance at end of period	$	(44,074)	$	(62,186)

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Leases

6 Months Ended

Jul. 04, 2021

Leases [Abstract]

Leases, Company as Lessee

Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At July 4, 2021, Wendy’s and its franchisees operated 6,866 Wendy’s restaurants. Of the 315 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 138 restaurants, owned the building and held long-term land leases for 120 restaurants and held leases covering the land and building for 57 restaurants. Wendy’s also owned 510 and leased 1,276 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Finance lease cost:
Amortization of finance lease assets	$	3,251	$	3,338	$	6,759	$	6,524
Interest on finance lease liabilities	10,267		10,160		20,560		20,218
	13,518		13,498		27,319		26,742
Operating lease cost	23,012		23,969		46,373		45,134
Variable lease cost (a)	16,583		13,848		31,771		28,218
Short-term lease cost	1,270		991		2,596		2,321
Total operating lease cost (b)	40,865		38,808		80,740		75,673
Total lease cost	$	54,383	$	52,306	$	108,059	$	102,415

_______________

(a)Includes expenses for executory costs of $10,087 and $9,457 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,150 and $19,200 for the six months ended July 4, 2021 and June 28, 2020, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $34,063 and $31,263 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $66,615 and $60,554 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,111 and $6,831 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $12,792 and $13,664 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

The following table includes supplemental cash flow and non-cash information related to leases:

	Six Months Ended
	July 4, 2021		June 28, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	20,957	$	18,853
Operating cash flows from operating leases	46,879		40,582
Financing cash flows from finance leases	5,777		3,707
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	30,863		12,962
Operating lease liabilities	4,577		13,380

The following table includes supplemental information related to leases:

	July 4, 2021			January 3, 2021
Weighted-average remaining lease term (years):
Finance leases	16.0			16.2
Operating leases	14.3			14.6
Weighted average discount rate:
Finance leases	9.29		%	9.54		%
Operating leases	5.03		%	5.06		%
Supplemental balance sheet information:
Finance lease assets, gross	$	264,824		$	261,308
Accumulated amortization	(58,238)			(55,155)
Finance lease assets	206,586			206,153
Operating lease assets	791,924			821,480

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of July 4, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	2,229	$	25,786	$	6,989	$	36,993
2022	3,476		51,490		14,240		74,000
2023	3,422		53,175		14,401		73,794
2024	3,489		53,608		14,462		73,761
2025	3,564		54,098		14,357		73,455
Thereafter	42,705		671,835		133,387		733,429
Total minimum payments	$	58,885	$	909,992	$	197,836	$	1,065,432
Less interest	(21,909)		(410,813)		(57,308)		(322,106)
Present value of minimum lease payments (c) (d)	$	36,976	$	499,179	$	140,528	$	743,326

_______________

(a)Represents future minimum rental payments for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental payments, the Company expects to pay $2,175 primarily during 2021 related to rent deferrals obtained due to the COVID-19 pandemic. The related payable is included in “Accrued expenses and other current liabilities.”

(c)The present value of minimum finance lease payments of $14,547 and $521,608 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(d)The present value of minimum operating lease payments of $45,269 and $838,585 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

Leases, Company as Lessor

Company as Lessor

The components of lease income are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Sales-type and direct-financing leases:
Selling profit	$	1,627	$	569	$	3,539	$	1,197
Interest income (a)	7,586		7,260		15,075		14,508
Operating lease income	44,356		43,052		88,478		87,004
Variable lease income	16,512		13,805		31,266		27,709
Franchise rental income (b)	$	60,868	$	56,857	$	119,744	$	114,713

_______________

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $45,245 and $41,489 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $88,495 and $83,531 for the six months ended July 4, 2021 and June 28, 2020, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,195 and $9,450 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,069 and $19,159 for the six months ended July 4, 2021 and June 28, 2020, respectively.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of July 4, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	16,720	$	2,040	$	57,923	$	27,709
2022	33,942		2,612		116,647		56,397
2023	35,003		2,658		117,448		56,707
2024	37,004		2,669		117,667		57,816
2025	35,907		2,787		117,156		58,421
Thereafter	474,723		35,676		1,172,618		750,148
Total future minimum receipts	633,299		48,442		$	1,699,459	$	1,007,198
Unearned interest income	(346,389)		(26,004)
Net investment in sales-type and direct financing leases (c)	$	286,910	$	22,438

_______________

(a)Represents future minimum rental receipts for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental receipts, the Company expects to collect $1,088 primarily during 2021 related to its offer to franchisees to defer base rent payments in response to the COVID-19 pandemic. The related receivable is included in “Accounts and notes receivable, net.”

(c)The present value of minimum direct financing rental receipts of $6,654 and $302,694 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $521.

Properties owned by the Company and leased to franchisees and other third parties under operating leases include:

	July 4, 2021		January 3, 2021
Land	$	280,879	$	279,956
Buildings and improvements	307,834		309,605
Restaurant equipment	1,701		1,701
	590,414		591,262
Accumulated depreciation and amortization	(176,125)		(170,722)
	$	414,289	$	420,540

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Transactions with Related Parties

6 Months Ended

Jul. 04, 2021

Related Party Transactions [Abstract]

Transactions with Related Parties

Transactions with Related Parties

Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.

TimWen Lease and Management Fee Payments

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. During the six months ended July 4, 2021 and June 28, 2020, Wendy’s paid TimWen $8,817 and $7,408, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $110 and $101 during the six months ended July 4, 2021 and June 28, 2020, respectively, which has been included as a reduction to “General and administrative.”

Transactions with Yellow Cab

Certain family members and affiliates of Mr. Nelson Peltz, our Chairman, and Mr. Peter May, our Vice Chairman, as well as Mr. Matthew Peltz, a director of the Company, hold indirect, minority ownership interests in operating companies managed by Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee, that as of July 4, 2021 owned and operated 78 Wendy’s restaurants (including Wendy’s restaurants acquired from NPC during the first quarter of 2021 as described below). During the six months ended July 4, 2021, the Company recognized $4,353 in royalty, advertising fund, lease and other income from Yellow Cab and related entities. As of July 4, 2021, $883 was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

In November 2020, the Company submitted a consortium bid together with a group of pre-qualified franchisees (of which Yellow Cab was a member) to acquire the Wendy’s restaurants owned by NPC, the Company’s largest franchisee, which filed for chapter 11 bankruptcy in July 2020. As part of the consortium bid, in November 2020, the Company received deposits from each of the pre-qualified franchisees (including Yellow Cab), which amounts were transferred to a third-party escrow account pending resolution of the bankruptcy sale process. On January 7, 2021, following a court-approved mediation process, Yellow Cab was selected as the purchaser for 54 of NPC’s Wendy’s restaurants. In March 2021, Yellow Cab closed on its acquisition of these restaurants and its deposit was applied against the purchase price for the restaurants. See Note 3 for further information.

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Guarantees and Other Commitments and Contingencies

6 Months Ended

Jul. 04, 2021

Commitments and Contingencies Disclosure [Abstract]

Guarantees and Other Commitments and Contingencies

Guarantees and Other Commitments and Contingencies

Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $95,160 as of July 4, 2021. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of July 4, 2021. In the event of default by a franchise

owner, Wendy’s generally retains the right to acquire possession of the related restaurant locations. The liability recorded for our probable exposure associated with these lease guarantees was not material as of July 4, 2021.

Letters of Credit

As of July 4, 2021, the Company had outstanding letters of credit with various parties totaling $26,579. Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Class A-1 Notes. We do not expect any material loss to result from these letters of credit.

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Legal and Environmental Matters

6 Months Ended

Jul. 04, 2021

Loss Contingency [Abstract]

Legal and Environmental Matters

Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have adequate accruals for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

We previously described certain legal proceedings in the Form 10-K. Except as set forth below, there were no material developments in those legal proceedings as of July 4, 2021.

In a Form 8-K filed with the Securities and Exchange Commission on June 28, 2021 (the “Form 8-K”), the Company provided an update on the proposed settlement of the previously-disclosed shareholder derivative action arising out of the criminal cyberattacks that targeted the point of sale systems of certain Wendy’s franchisees in 2015 and 2016 (the “Derivative Lawsuit”).

As described in the Form 8-K, on February 14, 2019, the Company entered into a Stipulation and Agreement of Settlement (the “Settlement”) to resolve the Derivative Lawsuit. On January 24, 2020, the United States District Court for the Southern District of Ohio (the “Court”) issued an order granting preliminary approval of the Settlement, which consists of certain corporate governance undertakings and the payment of plaintiffs’ attorneys’ fees and expenses up to $950. Pursuant to an order issued by the Court on June 3, 2021, a hearing to determine whether the Court should issue a final order approving the Settlement has been scheduled for September 2, 2021. If the Settlement is approved by the Court, the Derivative Lawsuit will be dismissed with prejudice subject to any appeal, and the Company expects the monetary terms of the Settlement to be covered by applicable insurance.

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Segment Information (Notes)

6 Months Ended

Jul. 04, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information

Revenues by segment were as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Wendy’s U.S.	$	409,843	$	331,258	$	791,797	$	662,299
Wendy’s International	21,316		14,003		39,566		29,475
Global Real Estate & Development	62,178		57,045		122,177		115,492
Total revenues	$	493,337	$	402,306	$	953,540	$	807,266

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Wendy’s U.S. (a)	$	126,650	$	93,136	$	238,737	$	174,964
Wendy’s International	6,528		3,594		14,212		8,689
Global Real Estate & Development	26,569		23,711		52,822		50,201
Total segment profit	$	159,747	$	120,441	$	305,771	$	233,854
Advertising funds deficit	(1,602)		(1,020)		(2,866)		(2,407)
Unallocated general and administrative (b)	(28,864)		(23,051)		(53,971)		(47,170)
Depreciation and amortization	(30,761)		(34,714)		(62,303)		(65,760)
System optimization gains, net	30,766		1,987		31,282		2,310
Reorganization and realignment costs	(2,102)		(2,911)		(7,036)		(6,821)
Impairment of long-lived assets	(630)		(117)		(1,265)		(4,704)
Unallocated other operating income, net	192		46		256		91
Interest expense, net	(28,204)		(29,085)		(56,990)		(57,610)
Loss on early extinguishment of debt	(17,917)		—		(17,917)		—
Other income (expense), net	161		(144)		290		932
Income before income taxes	$	80,786	$	31,432	$	135,251	$	52,715

_______________

(a)Includes advertising funds expense of $3,990 and $7,524 for the three and six months ended July 4, 2021, respectively, and $2,185 for the three and six months ended June 28, 2020 related to the Company funding of incremental advertising.

(b)Includes corporate overhead costs, such as employee compensation and related benefits

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New Accounting Standards	6 Months Ended
	Jul. 04, 2021
Accounting Standards Update and Change in Accounting Principle [Abstract]
New Accounting Standards	New Accounting StandardsIn July 2021, the Financial Accounting Standards Board issued an amendment that addresses an issue related to a lessor’s accounting for certain leases with variable lease payments that could result in the recognition of a selling loss at lease commencement even if the lessor expects the arrangement to be profitable overall. The amendment specifies lessors should classify and account for such a lease with variable lease payments as an operating lease, dependent upon meeting certain criteria, for which a selling profit or loss is not recognized. The amendment is effective commencing with our 2022 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

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Revenue (Tables)

6 Months Ended

Jul. 04, 2021

Revenue [Abstract]

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Three Months Ended July 4, 2021
Sales at Company-operated restaurants	$	193,279	$	246	$	—	$	193,525
Franchise royalty revenue	106,006		13,560		—		119,566
Franchise fees (a)	14,331		1,454		1,310		17,095
Franchise rental income	—		—		60,868		60,868
Advertising funds revenue	96,227		6,056		—		102,283
Total revenues	$	409,843	$	21,316	$	62,178	$	493,337

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Six Months Ended July 4, 2021
Sales at Company-operated restaurants	$	382,336	$	246	$	—	$	382,582
Franchise royalty revenue	202,770		25,130		—		227,900
Franchise fees (a)	26,261		2,897		2,433		31,591
Franchise rental income	—		—		119,744		119,744
Advertising funds revenue	180,430		11,293		—		191,723
Total revenues	$	791,797	$	39,566	$	122,177	$	953,540
Three Months Ended June 28, 2020
Sales at Company-operated restaurants	$	164,217	$	—	$	—	$	164,217
Franchise royalty revenue	88,121		9,070		—		97,191
Franchise fees (a)	5,308		433		188		5,929
Franchise rental income	—		—		56,857		56,857
Advertising funds revenue	73,612		4,500		—		78,112
Total revenues	$	331,258	$	14,003	$	57,045	$	402,306
Six Months Ended June 28, 2020
Sales at Company-operated restaurants	$	331,015	$	—	$	—	$	331,015
Franchise royalty revenue	172,954		19,593		—		192,547
Franchise fees (a)	10,593		906		779		12,278
Franchise rental income	—		—		114,713		114,713
Advertising funds revenue	147,737		8,976		—		156,713
Total revenues	$	662,299	$	29,475	$	115,492	$	807,266

_______________

(a)Includes fees for providing information technology services to franchisees, which are recognized as revenue as earned.

Contract balances, assets and liabilities

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

	July 4, 2021 (a)		January 3, 2021 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	51,005	$	57,677
Receivables, which are included in “Advertising funds restricted assets”	62,468		63,252
Deferred franchise fees (c)	98,409		97,785

_______________

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,123 and $89,286 as of July 4, 2021, respectively, and $8,691 and $89,094 as of January 3, 2021, respectively.

Deferred franchise fee rollforward

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	July 4, 2021		June 28, 2020
Deferred franchise fees at beginning of period	$	97,785	$	100,689
Revenue recognized during the period	(6,845)		(3,898)
New deferrals due to cash received and other	7,469		1,772
Deferred franchise fees at end of period	$	98,409	$	98,563

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

Estimate for fiscal year:
2021 (a)	$	6,073
2022	6,298
2023	6,126
2024	5,930
2025	5,746
Thereafter	68,236
	$	98,409

_______________

(a)Represents franchise fees expected to be recognized for the remainder of 2021, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

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System Optimization Gains, Net (Tables)

6 Months Ended

Jul. 04, 2021

System optimization gains, net

Summary of Disposition Activity

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Number of restaurants sold to franchisees	47		—		47		—
Proceeds from sales of restaurants	$	50,518	$	—	$	50,518	$	—
Net assets sold (a)	(16,939)		—		(16,939)		—
Goodwill related to sales of restaurants	(4,847)		—		(4,847)		—
Net unfavorable leases (b)	(2,939)		—		(2,939)		—
Gain on sales-type leases	7,156		—		7,156		—
Other (c)	(2,148)		—		(2,148)		—
	30,801		—		30,801		—
Post-closing adjustments on sales of restaurants (d)	—		—		515		345
Gain on sales of restaurants, net	30,801		—		31,316		345
(Loss) gain on sales of other assets, net (e)	(35)		1,987		(34)		1,965
System optimization gains, net	$	30,766	$	1,987	$	31,282	$	2,310

_______________

(a)Net assets sold consist primarily of equipment.

(b)During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings, and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(c)The three and six months ended July 4, 2021 include a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(d)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(e)During the three and six months ended July 4, 2021, the Company received net cash proceeds of $10 and $13, respectively, primarily from the sale of surplus and other properties. During the three and six months ended June 28, 2020, the Company received net cash proceeds of $4,125 and $4,320, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

	July 4, 2021		January 3, 2021
Number of restaurants classified as held for sale	—		43
Net restaurant assets held for sale (a)	$	—	$	20,587
Other assets held for sale (b)	$	2,318	$	1,732

_______________

(a)Net restaurant assets held for sale as of January 3, 2021 included New York Company-operated restaurants (excluding Manhattan) and consisted primarily of cash, inventory, property and an estimate of allocable goodwill. During the three months ended April 4, 2021, the Company also classified its four Manhattan restaurants as held for sale.

(b)Other assets held for sale primarily consist of surplus properties.

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Reorganization and Realignment Costs (Tables)

6 Months Ended

Jul. 04, 2021

Restructuring Cost and Reserve

Restructuring and Related Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Operations and field realignment	$	1,215	$	—	$	1,489	$	—
IT realignment	6		2,847		6		6,406
G&A realignment	(16)		64		(34)		331
System optimization initiative	897		—		5,575		84
Reorganization and realignment costs	$	2,102	$	2,911	$	7,036	$	6,821

Operations and Field Realignment

Restructuring Cost and Reserve

Restructuring and Related Costs

The following is a summary of the activity recorded as a result of the Operations and Field Realignment Plan:

	Three Months Ended		Six Months Ended		Total Incurred Since Inception
	July 4, 2021		July 4, 2021
Severance and related employee costs	$	79	$	333	$	3,446
Third-party and other costs	1,136		1,156		1,223
	1,215		1,489		4,669
Share-based compensation (a)	—		—		621
Total operations and field realignment	$	1,215	$	1,489	$	5,290

_______________

(a)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the Operations and Field Realignment Plan.

Schedule of Restructuring Reserve by Type of Cost

The table below presents a rollforward of our accruals for the Operations and Field Realignment Plan, which are included in “Accrued expenses and other current liabilities” as of July 4, 2021.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	2,600	$	333	$	(1,924)	$	1,009
Third-party and other costs	—		1,156		(1,156)		—
	$	2,600	$	1,489	$	(3,080)	$	1,009

IT Realignment

Restructuring Cost and Reserve

Restructuring and Related Costs

The following is a summary of the activity recorded as a result of the IT Realignment Plan:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs (a)	$	(8)	$	830	$	(119)	$	975	$	8,272
Recruitment and relocation costs	13		143		121		314		1,417
Third-party and other costs	1		1,874		4		5,117		6,539
	6		2,847		6		6,406		16,228
Share-based compensation (b)	—		—		—		—		193
Total IT realignment	$	6	$	2,847	$	6	$	6,406	$	16,421

_______________

(a)The three and six months ended July 4, 2021 include a reversal of an accrual as a result of a change in estimate.

(b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the IT Realignment Plan.

Schedule of Restructuring Reserve by Type of Cost

The accruals for the IT Realignment Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $462 and $10 as of July 4, 2021 and $4,039 and $371 as of June 28, 2020, respectively. The tables below present a rollforward of our accruals for the IT Realignment Plan.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	1,508	$	(119)	$	(917)	$	472
Recruitment and relocation costs	—		121		(121)		—
Third-party and other costs	—		4		(4)		—
	$	1,508	$	6	$	(1,042)	$	472

	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	7,548	$	975	$	(4,113)	$	4,410
Recruitment and relocation costs	—		314		(314)		—
Third-party and other costs	1,076		5,117		(6,193)		—
	$	8,624	$	6,406	$	(10,620)	$	4,410

G&A Realignment

Restructuring Cost and Reserve

Restructuring and Related Costs

The following is a summary of the activity recorded as a result of the G&A Realignment Plan:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs (a)	$	(22)	$	(6)	$	(53)	$	146	$	24,213
Recruitment and relocation costs	(1)		—		—		15		2,876
Third-party and other costs	(1)		—		—		1		2,223
	(24)		(6)		(53)		162		29,312
Share-based compensation (b)	8		70		19		169		8,130
Termination of defined benefit plans	—		—		—		—		1,335
Total G&A realignment	$	(16)	$	64	$	(34)	$	331	$	38,777

_______________

(a)The three and six months ended July 4, 2021 and June 28, 2020 include a reversal of an accrual as a result of a change in estimate.

(b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A Realignment Plan.

Schedule of Restructuring Reserve by Type of Cost

As of July 4, 2021, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities.” As of June 28, 2020, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled and $2,705 and $108, respectively. The tables below present a rollforward of our accruals for the G&A Realignment Plan.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	932	$	(53)	$	(738)	$	141
Recruitment and relocation costs	—		—		—		—
Third-party and other costs	—		—		—		—
	$	932	$	(53)	$	(738)	$	141

	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	5,276	$	146	$	(2,671)	$	2,751
Recruitment and relocation costs	83		15		(36)		62
Third-party and other costs	—		1		(1)		—
	$	5,359	$	162	$	(2,708)	$	2,813

System Optimization Initiative

Restructuring Cost and Reserve

Restructuring and Related Costs

The following is a summary of the costs recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Severance and related employee costs	$	661	$	—	$	661	$	—	$	18,898
Professional fees	504		—		739		80		22,846
Other (a)	—		—		1,354		4		7,207
	1,165		—		2,754		84		48,951
Accelerated depreciation and amortization (b)	—		—		—		—		25,398
NPC lease termination costs (c)	(268)		—		2,821		—		2,821
Share-based compensation (d)	—		—		—		—		5,013
Total system optimization initiative	$	897	$	—	$	5,575	$	84	$	82,183

_______________

(a)The six months ended July 4, 2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c)The six months ended July 4, 2021 includes the write-off of lease assets of $1,341 and lease termination fees paid of $1,480.

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

Schedule of Restructuring Reserve by Type of Cost

The table below presents a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	—	$	661	$	(661)	$	—
Professional fees	1,230		739		(1,969)		—
Other	—		1,354		(1,354)		—
	$	1,230	$	2,754	$	(3,984)	$	—

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Investments (Tables)

6 Months Ended

Jul. 04, 2021

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investments

Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements:

	Six Months Ended
	July 4, 2021		June 28, 2020
Balance at beginning of period	$	44,574	$	45,310
Equity in earnings for the period	4,921		3,455
Amortization of purchase price adjustments (a)	(1,658)		(1,105)
	3,263		2,350
Distributions received	(5,617)		(3,612)
Foreign currency translation adjustment included in “Other comprehensive income (loss)” and other	1,456		(1,631)
Balance at end of period	$	43,676	$	42,417

_______________

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

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Long-Term Debt (Tables)

6 Months Ended

Jul. 04, 2021

Debt Disclosure [Abstract]

Long-term debt

Long-term debt consisted of the following:

	July 4, 2021		January 3, 2021
Series 2021-1 Class A-2 Notes:
2.370% Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029	$	450,000	$	—
2.775% Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031	650,000		—
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	378,000		386,000
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	425,250		434,250
Series 2018-1 Class A-2 Notes:
3.573% Series 2018-1 Class A-2-I Notes, repaid in connection with the June 2021 refinancing	—		436,500
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	458,375		460,750
Series 2015-1 Class A-2 Notes:
4.497% Series 2015-1 Class A-2-III Notes, repaid in connection with the June 2021 refinancing	—		473,750
Canadian revolving credit facility	—		1,962
7% debentures, due in 2025	84,585		83,998
Unamortized debt issuance costs	(39,850)		(30,085)
	2,406,360		2,247,125
Less amounts payable within one year	(32,750)		(28,962)
Total long-term debt	$	2,373,610	$	2,218,163

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Fair Value Measurements (Tables)

6 Months Ended

Jul. 04, 2021

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	July 4, 2021				January 3, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	125,037	$	125,037	$	75,067	$	75,067	Level 1
Financial liabilities
Series 2021-1 Class A-2-I Notes (a)	450,000		453,105		—		—		Level 2
Series 2021-1 Class A-2-II Notes (a)	650,000		658,190		—		—		Level 2
Series 2019-1 Class A-2-I Notes (a)	378,000		402,570		386,000		409,778		Level 2
Series 2019-1 Class A-2-II Notes (a)	425,250		466,669		434,250		469,555		Level 2
Series 2018-1 Class A-2-I Notes (a)	—		—		436,500		450,381		Level 2
Series 2018-1 Class A-2-II Notes (a)	458,375		489,407		460,750		491,021		Level 2
Series 2015-1 Class A-2-III Notes (a)	—		—		473,750		481,851		Level 2
Canadian revolving credit facility	—		—		1,962		1,962		Level 2
7% debentures, due in 2025 (a)	84,585		101,250		83,998		98,775		Level 2

_______________

(a)The fair values were based on quoted market prices in markets that are not considered active markets.

Fair value of assets and liabilities (other than cash and cash equivalents) measured at fair value on a nonrecurring basis

			Fair Value Measurements
	July 4, 2021		Level 1		Level 2		Level 3
Held and used	$	718	$	—	$	—	$	718
Held for sale	340		—		—		340
Total	$	1,058	$	—	$	—	$	1,058

			Fair Value Measurements
	January 3, 2021		Level 1		Level 2		Level 3
Held and used	$	2,653	$	—	$	—	$	2,653
Held for sale	855		—		—		855
Total	$	3,508	$	—	$	—	$	3,508

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Impairment of Long-Lived Assets (Tables)

6 Months Ended

Jul. 04, 2021

Asset Impairment Charges [Abstract]

Impairment of Long-Lived Assets

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Company-operated restaurants	$	488	$	—	$	934	$	4,395
Restaurants leased or subleased to franchisees	—		—		189		—
Surplus properties	142		117		142		309
	$	630	$	117	$	1,265	$	4,704

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Net Income Per Share (Tables)

6 Months Ended

Jul. 04, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The calculation of basic and diluted net income per share was as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Net income	$	65,724	$	24,904	$	107,090	$	39,345
Common stock:
Weighted average basic shares outstanding	221,874		223,123		222,604		223,329
Dilutive effect of stock options and restricted shares	3,526		4,051		3,459		4,262
Weighted average diluted shares outstanding	225,400		227,174		226,063		227,591
Net income per share:
Basic	$	.30	$	.11	$	.48	$	.18
Diluted	$	.29	$	.11	$	.47	$	.17

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Stockholders' Equity (Tables)

6 Months Ended

Jul. 04, 2021

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss:

	Six Months Ended
	July 4, 2021		June 28, 2020
Balance at beginning of period	$	(49,641)	$	(53,828)
Foreign currency translation	5,567		(8,358)
Balance at end of period	$	(44,074)	$	(62,186)

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Leases (Tables)

6 Months Ended

Jul. 04, 2021

Leases [Abstract]

Lease, Cost

The components of lease cost are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Finance lease cost:
Amortization of finance lease assets	$	3,251	$	3,338	$	6,759	$	6,524
Interest on finance lease liabilities	10,267		10,160		20,560		20,218
	13,518		13,498		27,319		26,742
Operating lease cost	23,012		23,969		46,373		45,134
Variable lease cost (a)	16,583		13,848		31,771		28,218
Short-term lease cost	1,270		991		2,596		2,321
Total operating lease cost (b)	40,865		38,808		80,740		75,673
Total lease cost	$	54,383	$	52,306	$	108,059	$	102,415

_______________

(a)Includes expenses for executory costs of $10,087 and $9,457 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,150 and $19,200 for the six months ended July 4, 2021 and June 28, 2020, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $34,063 and $31,263 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $66,615 and $60,554 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,111 and $6,831 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $12,792 and $13,664 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Schedule of Supplemental Cash Flow and Non-Cash Information Related to Leases

The following table includes supplemental cash flow and non-cash information related to leases:

	Six Months Ended
	July 4, 2021		June 28, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	20,957	$	18,853
Operating cash flows from operating leases	46,879		40,582
Financing cash flows from finance leases	5,777		3,707
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	30,863		12,962
Operating lease liabilities	4,577		13,380

Schedule of Supplemental Information Related to Leases

The following table includes supplemental information related to leases:

	July 4, 2021			January 3, 2021
Weighted-average remaining lease term (years):
Finance leases	16.0			16.2
Operating leases	14.3			14.6
Weighted average discount rate:
Finance leases	9.29		%	9.54		%
Operating leases	5.03		%	5.06		%
Supplemental balance sheet information:
Finance lease assets, gross	$	264,824		$	261,308
Accumulated amortization	(58,238)			(55,155)
Finance lease assets	206,586			206,153
Operating lease assets	791,924			821,480

Finance Lease, Liability, Maturity

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of July 4, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	2,229	$	25,786	$	6,989	$	36,993
2022	3,476		51,490		14,240		74,000
2023	3,422		53,175		14,401		73,794
2024	3,489		53,608		14,462		73,761
2025	3,564		54,098		14,357		73,455
Thereafter	42,705		671,835		133,387		733,429
Total minimum payments	$	58,885	$	909,992	$	197,836	$	1,065,432
Less interest	(21,909)		(410,813)		(57,308)		(322,106)
Present value of minimum lease payments (c) (d)	$	36,976	$	499,179	$	140,528	$	743,326

_______________

(a)Represents future minimum rental payments for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental payments, the Company expects to pay $2,175 primarily during 2021 related to rent deferrals obtained due to the COVID-19 pandemic. The related payable is included in “Accrued expenses and other current liabilities.”

(c)The present value of minimum finance lease payments of $14,547 and $521,608 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(d)The present value of minimum operating lease payments of $45,269 and $838,585 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

Lessee, Operating Lease, Liability, Maturity

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of July 4, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	2,229	$	25,786	$	6,989	$	36,993
2022	3,476		51,490		14,240		74,000
2023	3,422		53,175		14,401		73,794
2024	3,489		53,608		14,462		73,761
2025	3,564		54,098		14,357		73,455
Thereafter	42,705		671,835		133,387		733,429
Total minimum payments	$	58,885	$	909,992	$	197,836	$	1,065,432
Less interest	(21,909)		(410,813)		(57,308)		(322,106)
Present value of minimum lease payments (c) (d)	$	36,976	$	499,179	$	140,528	$	743,326

_______________

(a)Represents future minimum rental payments for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental payments, the Company expects to pay $2,175 primarily during 2021 related to rent deferrals obtained due to the COVID-19 pandemic. The related payable is included in “Accrued expenses and other current liabilities.”

(c)The present value of minimum finance lease payments of $14,547 and $521,608 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(d)The present value of minimum operating lease payments of $45,269 and $838,585 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

Lease, Income

The components of lease income are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Sales-type and direct-financing leases:
Selling profit	$	1,627	$	569	$	3,539	$	1,197
Interest income (a)	7,586		7,260		15,075		14,508
Operating lease income	44,356		43,052		88,478		87,004
Variable lease income	16,512		13,805		31,266		27,709
Franchise rental income (b)	$	60,868	$	56,857	$	119,744	$	114,713

_______________

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $45,245 and $41,489 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $88,495 and $83,531 for the six months ended July 4, 2021 and June 28, 2020, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,195 and $9,450 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,069 and $19,159 for the six months ended July 4, 2021 and June 28, 2020, respectively.

Sales-type and Direct Financing Leases, Lease Receivable, Maturity

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of July 4, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	16,720	$	2,040	$	57,923	$	27,709
2022	33,942		2,612		116,647		56,397
2023	35,003		2,658		117,448		56,707
2024	37,004		2,669		117,667		57,816
2025	35,907		2,787		117,156		58,421
Thereafter	474,723		35,676		1,172,618		750,148
Total future minimum receipts	633,299		48,442		$	1,699,459	$	1,007,198
Unearned interest income	(346,389)		(26,004)
Net investment in sales-type and direct financing leases (c)	$	286,910	$	22,438

_______________

(a)Represents future minimum rental receipts for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental receipts, the Company expects to collect $1,088 primarily during 2021 related to its offer to franchisees to defer base rent payments in response to the COVID-19 pandemic. The related receivable is included in “Accounts and notes receivable, net.”

(c)The present value of minimum direct financing rental receipts of $6,654 and $302,694 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $521.

Lessor, Operating Lease, Payment to be Received, Maturity

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of July 4, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	16,720	$	2,040	$	57,923	$	27,709
2022	33,942		2,612		116,647		56,397
2023	35,003		2,658		117,448		56,707
2024	37,004		2,669		117,667		57,816
2025	35,907		2,787		117,156		58,421
Thereafter	474,723		35,676		1,172,618		750,148
Total future minimum receipts	633,299		48,442		$	1,699,459	$	1,007,198
Unearned interest income	(346,389)		(26,004)
Net investment in sales-type and direct financing leases (c)	$	286,910	$	22,438

_______________

(a)Represents future minimum rental receipts for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental receipts, the Company expects to collect $1,088 primarily during 2021 related to its offer to franchisees to defer base rent payments in response to the COVID-19 pandemic. The related receivable is included in “Accounts and notes receivable, net.”

(c)The present value of minimum direct financing rental receipts of $6,654 and $302,694 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $521.

Schedule of Property Subject To Operating Lease

Properties owned by the Company and leased to franchisees and other third parties under operating leases include:

	July 4, 2021		January 3, 2021
Land	$	280,879	$	279,956
Buildings and improvements	307,834		309,605
Restaurant equipment	1,701		1,701
	590,414		591,262
Accumulated depreciation and amortization	(176,125)		(170,722)
	$	414,289	$	420,540

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Segment Information (Tables)

6 Months Ended

Jul. 04, 2021

Segment Reporting [Abstract]

Reconciliation of Revenue from Segments to Consolidated

Revenues by segment were as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Wendy’s U.S.	$	409,843	$	331,258	$	791,797	$	662,299
Wendy’s International	21,316		14,003		39,566		29,475
Global Real Estate & Development	62,178		57,045		122,177		115,492
Total revenues	$	493,337	$	402,306	$	953,540	$	807,266

Reconciliation of Profit from Segments to Consolidated

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Wendy’s U.S. (a)	$	126,650	$	93,136	$	238,737	$	174,964
Wendy’s International	6,528		3,594		14,212		8,689
Global Real Estate & Development	26,569		23,711		52,822		50,201
Total segment profit	$	159,747	$	120,441	$	305,771	$	233,854
Advertising funds deficit	(1,602)		(1,020)		(2,866)		(2,407)
Unallocated general and administrative (b)	(28,864)		(23,051)		(53,971)		(47,170)
Depreciation and amortization	(30,761)		(34,714)		(62,303)		(65,760)
System optimization gains, net	30,766		1,987		31,282		2,310
Reorganization and realignment costs	(2,102)		(2,911)		(7,036)		(6,821)
Impairment of long-lived assets	(630)		(117)		(1,265)		(4,704)
Unallocated other operating income, net	192		46		256		91
Interest expense, net	(28,204)		(29,085)		(56,990)		(57,610)
Loss on early extinguishment of debt	(17,917)		—		(17,917)		—
Other income (expense), net	161		(144)		290		932
Income before income taxes	$	80,786	$	31,432	$	135,251	$	52,715

_______________

(a)Includes advertising funds expense of $3,990 and $7,524 for the three and six months ended July 4, 2021, respectively, and $2,185 for the three and six months ended June 28, 2020 related to the Company funding of incremental advertising.

(b)Includes corporate overhead costs, such as employee compensation and related benefits

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Revenue Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Disaggregation of Revenue
Franchise rental income	$ 60,868	$ 56,857	$ 119,744	$ 114,713
Total revenues	493,337	402,306	953,540	807,266
Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	193,525	164,217	382,582	331,015
Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	119,566	97,191	227,900	192,547
Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	17,095	5,929	31,591	12,278
Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	102,283	78,112	191,723	156,713
Wendy's U.S.
Disaggregation of Revenue
Franchise rental income	0	0	0	0
Total revenues	409,843	331,258	791,797	662,299
Wendy's U.S. | Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	193,279	164,217	382,336	331,015
Wendy's U.S. | Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	106,006	88,121	202,770	172,954
Wendy's U.S. | Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	14,331	5,308	26,261	10,593
Wendy's U.S. | Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	96,227	73,612	180,430	147,737
Wendy's International
Disaggregation of Revenue
Franchise rental income	0	0	0	0
Total revenues	21,316	14,003	39,566	29,475
Wendy's International | Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	246	0	246	0
Wendy's International | Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	13,560	9,070	25,130	19,593
Wendy's International | Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	1,454	433	2,897	906
Wendy's International | Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	6,056	4,500	11,293	8,976
Global Real Estate & Development
Disaggregation of Revenue
Franchise rental income	60,868	56,857	119,744	114,713
Total revenues	62,178	57,045	122,177	115,492
Global Real Estate & Development | Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Global Real Estate & Development | Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Global Real Estate & Development | Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	1,310	188	2,433	779
Global Real Estate & Development | Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	$ 0	$ 0	$ 0	$ 0

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Revenue Contract Balances (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jan. 03, 2021
Contract balances
Deferred franchise fees at beginning of period	$ 97,785	$ 100,689
Revenue recognized during the period	(6,845)	(3,898)
New deferrals due to cash received and other	7,469	1,772
Deferred franchise fees at end of period	98,409	$ 98,563
Deferred franchise fees, current	9,123		$ 8,691
Deferred franchise fees, noncurrent	89,286		89,094
Accounts Receivable | Short-term Contract with Customer
Contract balances
Receivables, Net, Current	51,005		57,677
Advertising funds restricted assets | Short-term Contract with Customer
Contract balances
Receivables, Net, Current	$ 62,468		$ 63,252

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Revenue Revenue, Remaining Performance Obligation (Details) $ in Thousands	Jul. 04, 2021 USD ($)
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	$ 98,409
2021
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	6,073
2022
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	6,298
2023
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	6,126
2024
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	5,930
2025
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	5,746
Thereafter
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	$ 68,236

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Acquisitions (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Apr. 04, 2021 USD ($) numberOfMarkets	Jul. 04, 2021 USD ($) number_of_restaurants	Jun. 28, 2020 USD ($) number_of_restaurants	Jan. 03, 2021 USD ($)	Nov. 18, 2020 numberOfMarkets	Jul. 31, 2020 number_of_restaurants numberOfMarkets
Business Acquisition
Number of restaurants | number_of_restaurants		6,866
Number of markets to be sold by NPC						8
NPC Consortium Bid: Number of Markets to be Purchased by Franchisees					7
NPC Consortium Bid: Number of Markets to be Purchased by Company					1
NPC Consortium bid deposit | $				$ 43,240
NPC Consortium bid payable | $				$ 38,361
NPC Asset Purchase Agreement: Number of Markets to be Purchased by FRG	4
NPC Asset Purchase Agreement: Number of Markets to be Purchased by Franchisees	4
Acquisitions | $	$ 4,879	$ 4,879	$ 0
NPC Franchised Restaurants
Business Acquisition
Number of restaurants | number_of_restaurants						393
Acquisitions
Business Acquisition
Restaurants acquired from franchisees | number_of_restaurants		0	0

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System Optimization Gains, Net Summary of Disposition Activity (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021 USD ($) number_of_restaurants	Jun. 28, 2020 USD ($) number_of_restaurants	Jul. 04, 2021 USD ($) number_of_restaurants	Jun. 28, 2020 USD ($) number_of_restaurants	Jan. 01, 2017
System optimization gains, net
Company-operated restaurant ownership percentage					5.00%
Proceeds from sales of restaurants			$ 50,531	$ 4,320
Gain on sales-type leases	$ 1,627	$ 569	3,539	1,197
System optimization gains, net	$ 30,766	$ 1,987	$ 31,282	$ 2,310
Sale of franchise-operated restaurant to franchisee
System optimization gains, net
Number of restaurants sold to franchisees | number_of_restaurants			19	3
Sale of company-operated restaurants to franchisees
System optimization gains, net
Number of restaurants sold to franchisees | number_of_restaurants	47	0	47	0
Proceeds from sales of restaurants	$ 50,518	$ 0	$ 50,518	$ 0
Net Assets Sold	(16,939)	0	(16,939)	0
Goodwill related to sales of restaurants	(4,847)	0	(4,847)	0
Net unfavorable leases	(2,939)	0	(2,939)	0
Gain on sales-type leases	7,156	0	7,156	0
Other	(2,148)	0	(2,148)	0
Gain on sale of restaurants, net, before post-closing adjustments	30,801	0	30,801	0
Post closing adjustments on sales of restaurants	0	0	515	345
System optimization gains, net	30,801	0	31,316	345
Favorable lease	3,799		3,799
Unfavorable lease	6,738		6,738
Deferred gain on sale of property	3,500		3,500
Sale of other assets
System optimization gains, net
Proceeds from sales of restaurants	10	4,125	13	4,320
System optimization gains, net	$ (35)	$ 1,987	$ (34)	$ 1,965

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System Optimization Gains, Net Assets Held for Sale (Details) $ in Thousands	Jul. 04, 2021 USD ($) number_of_restaurants	Apr. 04, 2021 Restaurant	Jan. 03, 2021 USD ($) number_of_restaurants
Long lived assets held for sale
Number of restaurants classified as held for sale | number_of_restaurants	0		43
Number of Manhattan restaurants classified as assets held for sale | Restaurant		4
Net restaurant assets held for sale
Long lived assets held for sale
Assets held for sale	$ 0		$ 20,587
Other assets held for sale
Long lived assets held for sale
Assets held for sale	$ 2,318		$ 1,732

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Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 2,102	$ 2,911	$ 7,036	$ 6,821
Operations and Field Realignment
Restructuring Cost and Reserve
Reorganization and realignment costs	1,215	0	1,489	0
IT Realignment
Restructuring Cost and Reserve
Reorganization and realignment costs	6	2,847	6	6,406
G&A Realignment
Restructuring Cost and Reserve
Reorganization and realignment costs	(16)	64	(34)	331
System Optimization
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 897	$ 0	$ 5,575	$ 84

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Reorganization and Realignment Costs Operations and Field Realignment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 2,102	$ 2,911	$ 7,036	$ 6,821
Operations and Field Realignment
Restructuring Cost and Reserve
Reorganization and realignment costs	1,215	$ 0	1,489	$ 0
Restructuring and Related Cost, Incurred Cost	1,215		1,489
Restructuring and Related Cost, Cost Incurred to Date	4,669		4,669
Restructuring Charges, Incurred to Date	5,290		5,290
Operations and Field Realignment | Minimum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost	6,000		6,000
Restructuring and Related Cost, Expected Cost Remaining	1,000		1,000
Operations and Field Realignment | Maximum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost	8,000		8,000
Restructuring and Related Cost, Expected Cost Remaining	3,000		3,000
Operations and Field Realignment | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	79		333
Restructuring and Related Cost, Cost Incurred to Date	3,446		3,446
Operations and Field Realignment | Third-party and other costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	1,136		1,156
Restructuring and Related Cost, Cost Incurred to Date	1,223		1,223
Operations and Field Realignment | Share-based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0		0
Restructuring and Related Cost, Cost Incurred to Date	$ 621		$ 621

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Reorganization and Realignment Costs Operations and Field Realignment Accrual Rollforward (Details) - Operations and Field Realignment - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 04, 2021	Jul. 04, 2021
Restructuring Cost and Reserve
Beginning balance		$ 2,600
Charges	$ 1,215	1,489
Payments		(3,080)
Ending balance	1,009	1,009
Severance and related employee costs
Restructuring Cost and Reserve
Beginning balance		2,600
Charges	79	333
Payments		(1,924)
Ending balance	1,009	1,009
Third-party and other costs
Restructuring Cost and Reserve
Beginning balance		0
Charges	1,136	1,156
Payments		(1,156)
Ending balance	$ 0	$ 0

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Reorganization and Realignment Costs IT Realignment Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 2,102	$ 2,911	$ 7,036	$ 6,821
IT Realignment
Restructuring Cost and Reserve
Reorganization and realignment costs	6	2,847	6	6,406
Restructuring and Related Cost, Incurred Cost	6	2,847	6	6,406
Restructuring and Related Cost, Cost Incurred to Date	16,228		16,228
Restructuring Charges, Incurred to Date	16,421		16,421
IT Realignment | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	(8)	830	(119)	975
Restructuring and Related Cost, Cost Incurred to Date	8,272		8,272
IT Realignment | Recruitment and relocation costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	13	143	121	314
Restructuring and Related Cost, Cost Incurred to Date	1,417		1,417
IT Realignment | Third-party and other costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	1	1,874	4	5,117
Restructuring and Related Cost, Cost Incurred to Date	6,539		6,539
IT Realignment | Share-based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	$ 0	0	$ 0
Restructuring and Related Cost, Cost Incurred to Date	$ 193		$ 193

XML

Reorganization and Realignment Costs IT Realignment Accrual Rollforward (Details) - IT Realignment - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Beginning balance			$ 1,508	$ 8,624
Charges	$ 6	$ 2,847	6	6,406
Payments			(1,042)	(10,620)
Ending balance	472	4,410	472	4,410
Severance and related employee costs
Restructuring Cost and Reserve
Beginning balance			1,508	7,548
Charges	(8)	830	(119)	975
Payments			(917)	(4,113)
Ending balance	472	4,410	472	4,410
Recruitment and relocation costs
Restructuring Cost and Reserve
Beginning balance			0	0
Charges	13	143	121	314
Payments			(121)	(314)
Ending balance	0	0	0	0
Third-party and other costs
Restructuring Cost and Reserve
Beginning balance			0	1,076
Charges	1	1,874	4	5,117
Payments			(4)	(6,193)
Ending balance	0	0	0	0
Accrued expenses and other current liabilities
Restructuring Cost and Reserve
Ending balance	462	4,039	462	4,039
Other Liabilities
Restructuring Cost and Reserve
Ending balance	$ 10	$ 371	$ 10	$ 371

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Reorganization and Realignment Costs G&A Realignment Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 2,102	$ 2,911	$ 7,036	$ 6,821
G&A Realignment
Restructuring Cost and Reserve
Reorganization and realignment costs	(16)	64	(34)	331
Restructuring and Related Cost, Incurred Cost	(24)	(6)	(53)	162
Restructuring and Related Cost, Cost Incurred to Date	29,312		29,312
Restructuring Charges, Incurred to Date	38,777		38,777
G&A Realignment | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	(22)	(6)	(53)	146
Restructuring and Related Cost, Cost Incurred to Date	24,213		24,213
G&A Realignment | Recruitment and relocation costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	(1)	0	0	15
Restructuring and Related Cost, Cost Incurred to Date	2,876		2,876
G&A Realignment | Third-party and other costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	(1)	0	0	1
Restructuring and Related Cost, Cost Incurred to Date	2,223		2,223
G&A Realignment | Share-based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	8	70	19	169
Restructuring and Related Cost, Cost Incurred to Date	8,130		8,130
G&A Realignment | Termination of defined benefit plans
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	$ 0	0	$ 0
Restructuring and Related Cost, Cost Incurred to Date	$ 1,335		$ 1,335

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Reorganization and Realignment Costs G&A Realignment Accrual Rollforward (Details) - G&A Realignment - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Beginning balance			$ 932	$ 5,359
Charges	$ (24)	$ (6)	(53)	162
Payments			(738)	(2,708)
Ending balance	141	2,813	141	2,813
Severance and related employee costs
Restructuring Cost and Reserve
Beginning balance			932	5,276
Charges	(22)	(6)	(53)	146
Payments			(738)	(2,671)
Ending balance	141	2,751	141	2,751
Recruitment and relocation
Restructuring Cost and Reserve
Beginning balance			0	83
Charges	(1)	0	0	15
Payments			0	(36)
Ending balance	0	62	0	62
Third-party and other costs
Restructuring Cost and Reserve
Beginning balance			0	0
Charges	(1)	0	0	1
Payments			0	(1)
Ending balance	$ 0	0	$ 0	0
Accrued expenses and other current liabilities
Restructuring Cost and Reserve
Ending balance		2,705		2,705
Other Liabilities
Restructuring Cost and Reserve
Ending balance		$ 108		$ 108

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Reorganization and Realignment Costs System Optimization Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 2,102	$ 2,911	$ 7,036	$ 6,821
System Optimization Initiative
Restructuring Cost and Reserve
Reorganization and realignment costs	897	0	5,575	84
Restructuring and Related Cost, Expected Benefit Remaining	1,000		1,000
Restructuring and Related Cost, Incurred Cost	1,165	0	2,754	84
Restructuring and Related Cost, Cost Incurred to Date	48,951		48,951
Restructuring Charges, Incurred to Date	82,183		82,183
System Optimization Initiative | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	661	0	661	0
Restructuring and Related Cost, Cost Incurred to Date	18,898		18,898
System Optimization Initiative | Professional fees
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	504	0	739	80
Restructuring and Related Cost, Cost Incurred to Date	22,846		22,846
System Optimization Initiative | Other
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	0	1,354	4
Restructuring and Related Cost, Cost Incurred to Date	7,207		7,207
System Optimization Initiative | Other | NPC Transaction Fees
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost			1,350
System Optimization Initiative | Accelerated depreciation and amortization
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	0	0	0
Restructuring and Related Cost, Cost Incurred to Date	25,398		25,398
System Optimization Initiative | NPC lease termination costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	(268)	0	2,821	0
Restructuring and Related Cost, Cost Incurred to Date	2,821		2,821
System Optimization Initiative | NPC lease termination costs | Write-Off of Lease Assets
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost			1,341
System Optimization Initiative | NPC lease termination costs | Lease Termination Fees
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost			1,480
System Optimization Initiative | Share-based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	$ 0	0	$ 0
Restructuring and Related Cost, Cost Incurred to Date	$ 5,013		$ 5,013

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Reorganization and Realignment Costs System Optimization Accrual Rollforward (Details) - System Optimization Initiative - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Restructuring Cost and Reserve
Beginning balance			$ 1,230
Charges	$ 1,165	$ 0	2,754	$ 84
Payments			(3,984)
Ending balance	0		0
Severance and related employee costs
Restructuring Cost and Reserve
Beginning balance			0
Charges	661	0	661	0
Payments			(661)
Ending balance	0		0
Professional fees
Restructuring Cost and Reserve
Beginning balance			1,230
Charges	504	0	739	80
Payments			(1,969)
Ending balance	0		0
Other
Restructuring Cost and Reserve
Beginning balance			0
Charges	0	$ 0	1,354	$ 4
Payments			(1,354)
Ending balance	$ 0		$ 0

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Investments Equity Investment Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Schedule of Equity Method Investments
Balance at beginning of period			$ 44,574
Foreign currency translation adjustment included in “Other comprehensive income (loss)” and other	$ 3,347	$ 4,149	5,567	$ (8,358)
Balance at end of period	$ 43,676		$ 43,676
TimWen
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	50.00%		50.00%
Equity Method Investment, Purchase Price Adjustment, Amortization Period			21 years	21 years
Brazil JV
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	20.00%		20.00%
TimWen and Brazil JV
Schedule of Equity Method Investments
Balance at beginning of period			$ 44,574	$ 45,310
Equity in earnings for the period			4,921	3,455
Amortization of purchase price adjustments			(1,658)	(1,105)
Equity in earnings for the period, net of amortization of purchase price adjustments			3,263	2,350
Distributions received			(5,617)	(3,612)
Foreign currency translation adjustment included in “Other comprehensive income (loss)” and other			1,456	(1,631)
Balance at end of period	$ 43,676	$ 42,417	$ 43,676	$ 42,417

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Long-Term Debt Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Jul. 04, 2021	Jan. 03, 2021
Debt Instrument
Unamortized debt issuance costs	$ (39,850)	$ (30,085)
Total debt	2,406,360	2,247,125
Less amounts payable within one year	(32,750)	(28,962)
Total long-term debt	2,373,610	2,218,163
Series 2021-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 450,000
Debt Instrument, Interest Rate, Stated Percentage	2.37%
Series 2021-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 650,000
Debt Instrument, Interest Rate, Stated Percentage	2.775%
Series 2019-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 378,000	$ 386,000
Debt Instrument, Interest Rate, Stated Percentage	3.783%	3.783%
Series 2019-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 425,250	$ 434,250
Debt Instrument, Interest Rate, Stated Percentage	4.08%	4.08%
Series 2018-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 0	$ 436,500
Debt Instrument, Interest Rate, Stated Percentage	3.573%	3.573%
Series 2018-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 458,375	$ 460,750
Debt Instrument, Interest Rate, Stated Percentage	3.884%	3.884%
Series 2015-1 Class A-2-III Notes
Debt Instrument
Senior Notes	$ 0	$ 473,750
Debt Instrument, Interest Rate, Stated Percentage	4.497%	4.497%
Canadian revolving credit facility
Debt Instrument
Line of Credit, Outstanding, Amount	$ 0	$ 1,962
7% debentures
Debt Instrument
7% debentures	$ 84,585	$ 83,998
Debt Instrument, Interest Rate, Stated Percentage	7.00%	7.00%

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Long-Term Debt Senior Notes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Debt Instrument
Loss on early extinguishment of debt	$ 17,917	$ 0	$ 17,917	$ 0
Series 2021-1 Class A-2-I Notes
Debt Instrument
Debt Instrument, Face Amount	450,000		450,000
Series 2021-1 Class A-2-II Notes
Debt Instrument
Debt Instrument, Face Amount	650,000		650,000
Series 2021-1 Senior Notes
Debt Instrument
Loss on early extinguishment of debt	17,917
Specified make-whole payment	9,632
Write off of Deferred Debt Issuance Cost	8,285
Debt Issuance Costs, Gross	20,873		20,873
Series 2021-1 Class A-2 Notes
Debt Instrument
Long-term Debt, Maturities, Repayments of Principal Annually Through 2021	5,500		5,500
Long-term Debt, Maturities, Repayments of Principal Annually from 2022 through 2028	11,000		11,000
Long-term Debt, Maturities, Repayments of Principal Annually in 2029	422,750		422,750
Long-term Debt, Maturities, Repayments of Principal Annually in 2030	6,500		6,500
Long-term Debt, Maturities, Repayments of Principal Annually in 2031	588,250		588,250
Series 2021-1 Class A-1 Notes | Line of Credit
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity	300,000		300,000
Line of Credit, Outstanding, Amount	0		0
Series 2019-1 Class A-1 Notes | Line of Credit
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity	150,000		150,000
Series 2020-1 Class A-1 Notes | Line of Credit
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity	$ 100,000		$ 100,000

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Long-Term Debt Other Long-term Debt Disclosure (Details) - Canadian Subsidiary - Line of Credit - CAD ($) $ in Thousands		3 Months Ended
	Mar. 29, 2020	Apr. 04, 2021	Jan. 03, 2021	Jul. 04, 2021
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity				$ 6,000
Proceeds from Lines of Credit	$ 5,500
Repayments of Lines of Credit		$ 2,500	$ 3,000
Line of Credit, Outstanding, Amount				$ 0

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Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands	Jul. 04, 2021	Jan. 03, 2021
Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	$ 125,037	$ 75,067
Reported Value Measurement | Series 2021-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	450,000	0
Reported Value Measurement | Series 2021-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	650,000	0
Reported Value Measurement | Series 2019-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	378,000	386,000
Reported Value Measurement | Series 2019-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	425,250	434,250
Reported Value Measurement | Series 2018-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	0	436,500
Reported Value Measurement | Series 2018-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	458,375	460,750
Reported Value Measurement | Series 2015-1 Class A-2-III Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	0	473,750
Reported Value Measurement | Canadian revolving credit facility
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	0	1,962
Reported Value Measurement | 7% debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	84,585	83,998
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	125,037	75,067
Estimate of Fair Value Measurement | Series 2021-1 Class A-2-I Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	453,105	0
Estimate of Fair Value Measurement | Series 2021-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	658,190	0
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-I Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	402,570	409,778
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	466,669	469,555
Estimate of Fair Value Measurement | Series 2018-1 Class A-2-I Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	0	450,381
Estimate of Fair Value Measurement | Series 2018-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	489,407	491,021
Estimate of Fair Value Measurement | Series 2015-1 Class A-2-III Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	0	481,851
Estimate of Fair Value Measurement | Canadian revolving credit facility | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	0	1,962
Estimate of Fair Value Measurement | 7% debentures | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	$ 101,250	$ 98,775
Series 2021-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	2.37%
Series 2021-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	2.775%
Series 2019-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	3.783%	3.783%
Series 2019-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	4.08%	4.08%
Series 2018-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	3.573%	3.573%
Series 2018-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	3.884%	3.884%
Series 2015-1 Class A-2-III Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	4.497%	4.497%
7% debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	7.00%	7.00%

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Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Jul. 04, 2021	Jan. 03, 2021
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	$ 718	$ 2,653
Assets Held for sale, Long Lived, Fair Value Disclosure	340	855
Total	1,058	3,508
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	0	0
Assets Held for sale, Long Lived, Fair Value Disclosure	0	0
Total	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	0	0
Assets Held for sale, Long Lived, Fair Value Disclosure	0	0
Total	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	718	2,653
Assets Held for sale, Long Lived, Fair Value Disclosure	340	855
Total	$ 1,058	$ 3,508

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Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Impairment of Long-Lived Assets
Impairment of long-lived assets	$ 630	$ 117	$ 1,265	$ 4,704
Company-operated restaurants
Impairment of Long-Lived Assets
Impairment of long-lived assets	488	0	934	4,395
Restaurants leased or subleased to franchisees
Impairment of Long-Lived Assets
Impairment of long-lived assets	0	0	189	0
Surplus properties
Impairment of Long-Lived Assets
Impairment of long-lived assets	$ 142	$ 117	$ 142	$ 309

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020	Jan. 03, 2021
Effective Income Tax Rate	18.60%	20.80%	20.80%	25.40%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%	21.00%	21.00%
Decrease in Unrecognized Tax Benefits is Reasonably Possible	$ 2,016		$ 2,016
Income Taxes Receivable, Current	4,528		4,528		$ 5,399
Income Taxes Receivable, Noncurrent	$ 0		$ 0		$ 0

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Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jul. 04, 2021	Apr. 04, 2021	Jun. 28, 2020	Mar. 29, 2020	Jul. 04, 2021	Jun. 28, 2020
Earnings Per Share [Abstract]
Net income	$ 65,724	$ 41,366	$ 24,904	$ 14,441	$ 107,090	$ 39,345
Weighted average basic shares outstanding	221,874		223,123		222,604	223,329
Dilutive effect of stock options and restricted shares	3,526		4,051		3,459	4,262
Weighted average diluted shares outstanding	225,400		227,174		226,063	227,591
Earnings Per Share, Basic	$ 0.30		$ 0.11		$ 0.48	$ 0.18
Earnings Per Share, Diluted	$ 0.29		$ 0.11		$ 0.47	$ 0.17
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,825		2,636		1,847	2,652

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Stockholders' Equity Dividends (Details) - $ / shares	3 Months Ended
	Jul. 04, 2021	Apr. 04, 2021	Jun. 28, 2020	Mar. 29, 2020
Dividend Paid [Member]
Common Stock, Dividends, Per Share, Cash Paid	$ 0.10	$ 0.09	$ 0.05	$ 0.12

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Stockholders' Equity Repurchases of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands			1 Months Ended	4 Months Ended	6 Months Ended
	Feb. 29, 2020	Nov. 30, 2019	Aug. 04, 2021	Feb. 29, 2020	Jul. 04, 2021	Jun. 28, 2020	Aug. 11, 2021	May 12, 2021	Feb. 28, 2019
February 2020 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount	$ 100,000			$ 100,000
May 2021 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount								$ 50,000
February 2020 and May 2021 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount								$ 150,000
Treasury Stock, Shares, Acquired					3,956
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions					$ 83,320
Stock Repurchase Program, Repurchase Accrual					440
Stock Repurchase Program, Cost Incurred					55
Stock Repurchase Program, Remaining Authorized Repurchase Amount					$ 34,396
February 2020 and May 2021 Share Repurchase Program | Subsequent Event
Equity, Class of Treasury Stock
Treasury Stock, Shares, Acquired			193
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions			$ 4,396
Stock Repurchase Program, Cost Incurred			$ 2
August 2021 Share Repurchase Program | Subsequent Event
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount							$ 70,000
February 2020, May 2021 and August 2021 Share Repurchase Program | Subsequent Event
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount							220,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount							$ 100,000
February 2019 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount									$ 225,000
2019 Accelerated Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount		$ 100,000
Treasury Stock, Shares, Acquired	628	4,051		4,679
Initial Shares Delivered Under ASR Agreement Percentage		85.00%
Treasury Stock Acquired, Average Cost Per Share	$ 23.89			$ 21.37
February 2019 and February 2020 Share Repurchase Program
Equity, Class of Treasury Stock
Treasury Stock, Shares, Acquired						2,091
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions						$ 43,307
Stock Repurchase Program, Cost Incurred						$ 29

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Stockholders' Equity Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jul. 04, 2021	Apr. 04, 2021	Jun. 28, 2020	Mar. 29, 2020	Jul. 04, 2021	Jun. 28, 2020
Accumulated Other Comprehensive Loss
Balance at beginning of period		$ (49,641)			$ (49,641)
Foreign currency translation	$ 3,347	2,220	$ 4,149	$ (12,507)	5,567	$ (8,358)
Balance at end of period	(44,074)				(44,074)
Foreign Currency Translation
Accumulated Other Comprehensive Loss
Balance at beginning of period		$ (49,641)		$ (53,828)	(49,641)	(53,828)
Foreign currency translation					5,567	(8,358)
Balance at end of period	$ (44,074)		$ (62,186)		$ (44,074)	$ (62,186)

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Leases Lessee Lease Narrative (Details)	Jul. 04, 2021 number_of_restaurants
Lessee, Lease, Description
Number of restaurants	6,866
Entity Operated Units
Lessee, Lease, Description
Number of restaurants	315
Land And Building - Company Owned | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	138
Building - Company Owned; Land - Leased | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	120
Land And Building - Leased | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	57

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Leases Lessor Lease Narrative (Details)	Jul. 04, 2021 number_of_restaurants
Lessor, Lease, Description
Number of restaurants	6,866
Land And Building - Company Owned | Franchised Units
Lessor, Lease, Description
Number of restaurants	510
Land And Building - Leased | Franchised Units
Lessor, Lease, Description
Number of restaurants	1,276

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Leases Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Lease, Cost
Amortization of finance lease assets	$ 3,251	$ 3,338	$ 6,759	$ 6,524
Interest on finance lease liabilities	10,267	10,160	20,560	20,218
Total finance lease cost	13,518	13,498	27,319	26,742
Operating lease cost	23,012	23,969	46,373	45,134
Variable lease cost	16,583	13,848	31,771	28,218
Short-term lease cost	1,270	991	2,596	2,321
Total operating lease cost	40,865	38,808	80,740	75,673
Total lease cost	54,383	52,306	108,059	102,415
Franchise rental expense
Lease, Cost
Total operating lease cost	34,063	31,263	66,615	60,554
Cost of sales
Lease, Cost
Total operating lease cost	6,111	6,831	12,792	13,664
Executory costs paid by lessee
Lease, Cost
Variable lease cost	$ 10,087	$ 9,457	$ 20,150	$ 19,200

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Leases Supplemental Cash Flow and Non-Cash Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020
Cash Flow, Operating Activities, Lessee
Operating cash flows from finance leases	$ 20,957	$ 18,853
Operating cash flows from operating leases	46,879	40,582
Cash Flow, Financing Activities, Lessee
Financing cash flows from finance leases	5,777	3,707
Lessee, Lease, Description
Right-of-use assets obtained in exchange for finance lease liabilities	30,863	12,962
Right-of-use assets obtained in exchange for operating lease liabilities	$ 4,577	$ 13,380

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Leases Supplemental Information (Details) - USD ($) $ in Thousands	Jul. 04, 2021	Jan. 03, 2021
Lessee, Lease, Description
Weighted-average remaining lease term (years): Finance leases	16 years	16 years 2 months 12 days
Weighted-average remaining lease term (years): Operating leases	14 years 3 months 18 days	14 years 7 months 6 days
Weighted-average discount rate: Finance leases	9.29%	9.54%
Weighted average discount rate: Operating leases	5.03%	5.06%
Finance lease assets, gross	$ 264,824	$ 261,308
Accumulated amortization	(58,238)	(55,155)
Finance lease assets	206,586	206,153
Operating lease assets	$ 791,924	$ 821,480

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Leases Future Minimum Rental Payments for Non-cancelable Leases (Details) $ in Thousands	Jul. 04, 2021 USD ($)
Entity Operated Units
Finance Lease Liabilities, Payments, Due
Future minimum finance lease payments, remainder of fiscal year	$ 2,229
Future minimum finance lease payments, due year one	3,476
Future minimum finance lease payments, due year two	3,422
Future minimum finance lease payments, due year three	3,489
Future minimum finance lease payments, due year four	3,564
Future minimum finance lease payments, due thereafter	42,705
Total minimum finance lease payments	58,885
Interest incurred on total minimum finance lease payments	(21,909)
Present value of minimum finance lease payments	36,976
Operating Lease Liabilities, Payments Due
Future minimum operating lease payments, remainder of fiscal year	6,989
Future minimum operating lease payments, due year one	14,240
Future minimum operating lease payments, due year two	14,401
Future minimum operating lease payments, due year three	14,462
Future minimum operating lease payments, due year four	14,357
Future minimum operating lease payments, due thereafter	133,387
Total minimum operating lease payments	197,836
Interest incurred on total minimum operating lease payments	(57,308)
Present value of minimum operating lease payments	140,528
Franchised Units
Finance Lease Liabilities, Payments, Due
Future minimum finance lease payments, remainder of fiscal year	25,786
Future minimum finance lease payments, due year one	51,490
Future minimum finance lease payments, due year two	53,175
Future minimum finance lease payments, due year three	53,608
Future minimum finance lease payments, due year four	54,098
Future minimum finance lease payments, due thereafter	671,835
Total minimum finance lease payments	909,992
Interest incurred on total minimum finance lease payments	(410,813)
Present value of minimum finance lease payments	499,179
Operating Lease Liabilities, Payments Due
Future minimum operating lease payments, remainder of fiscal year	36,993
Future minimum operating lease payments, due year one	74,000
Future minimum operating lease payments, due year two	73,794
Future minimum operating lease payments, due year three	73,761
Future minimum operating lease payments, due year four	73,455
Future minimum operating lease payments, due thereafter	733,429
Total minimum operating lease payments	1,065,432
Interest incurred on total minimum operating lease payments	(322,106)
Present value of minimum operating lease payments	743,326
Current portion of finance lease liabilities
Finance Lease Liabilities, Payments, Due
Present value of minimum finance lease payments	14,547
Long-term finance lease liabilities
Finance Lease Liabilities, Payments, Due
Present value of minimum finance lease payments	521,608
Current portion of operating lease liabilities
Operating Lease Liabilities, Payments Due
Present value of minimum operating lease payments	45,269
Long-term operating lease liabilities
Operating Lease Liabilities, Payments Due
Present value of minimum operating lease payments	838,585
Accrued expenses and other current liabilities
Lessee, Lease, Description
Future rental payments, deferred rent	$ 2,175

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Leases Components of Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Lessor Lease Income
Sales-type leases, selling profit	$ 1,627	$ 569	$ 3,539	$ 1,197
Sales-type and direct-financing leases, interest income	7,586	7,260	15,075	14,508
Operating lease rental income	44,356	43,052	88,478	87,004
Variable lease income	16,512	13,805	31,266	27,709
Franchise rental income	60,868	56,857	119,744	114,713
Sublease income	45,245	41,489	88,495	83,531
Executory costs paid to lessor
Lessor Lease Income
Variable lease income	$ 10,195	$ 9,450	$ 20,069	$ 19,159

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Leases Future Minimum Rental Receipts for Non-cancelable Leases (Details) $ in Thousands	Jul. 04, 2021 USD ($)
Direct Financing Lease, Net Investment in Leases
Net investment in unguaranteed residual assets	$ 521
Subleases, sales-type and direct financing
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity
Future minimum sales-type and direct financing lease receipts, remainder of fiscal year	16,720
Future minimum sales-type and direct financing lease receipts, due year one	33,942
Future minimum sales-type and direct financing lease receipts, due year two	35,003
Future minimum sales-type and direct financing lease receipts, due year three	37,004
Future minimum sales-type and direct financing lease receipts, due year four	35,907
Future minimum sales-type and direct financing lease receipts, due thereafter	474,723
Total future minimum sales-type and direct financing lease receipts	633,299
Unearned interest on total minimum sales-type and direct financing lease receipts	(346,389)
Present value of minimum sales-type and direct financing lease receipts	286,910
Owned properties, sales-type and direct financing
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity
Future minimum sales-type and direct financing lease receipts, remainder of fiscal year	2,040
Future minimum sales-type and direct financing lease receipts, due year one	2,612
Future minimum sales-type and direct financing lease receipts, due year two	2,658
Future minimum sales-type and direct financing lease receipts, due year three	2,669
Future minimum sales-type and direct financing lease receipts, due year four	2,787
Future minimum sales-type and direct financing lease receipts, due thereafter	35,676
Total future minimum sales-type and direct financing lease receipts	48,442
Unearned interest on total minimum sales-type and direct financing lease receipts	(26,004)
Present value of minimum sales-type and direct financing lease receipts	22,438
Subleases, operating
Lessor, Operating Lease, Payments, Fiscal Year Maturity
Future minimum operating lease receipts, remainder of fiscal year	57,923
Future minimum operating lease receipts, due year one	116,647
Future minimum operating lease receipts, due year two	117,448
Future minimum operating lease receipts, due year three	117,667
Future minimum operating lease receipts, due year four	117,156
Future minimum operating lease receipts, due thereafter	1,172,618
Total future minimum operating lease receipts	1,699,459
Owned properties, operating
Lessor, Operating Lease, Payments, Fiscal Year Maturity
Future minimum operating lease receipts, remainder of fiscal year	27,709
Future minimum operating lease receipts, due year one	56,397
Future minimum operating lease receipts, due year two	56,707
Future minimum operating lease receipts, due year three	57,816
Future minimum operating lease receipts, due year four	58,421
Future minimum operating lease receipts, due thereafter	750,148
Total future minimum operating lease receipts	1,007,198
Accounts and notes receivable, net
Lessor, Lease, Description
Future rental receipts, deferred base rent payments	1,088
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity
Present value of minimum sales-type and direct financing lease receipts	6,654
Net investment in sales-type and direct financing leases
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity
Present value of minimum sales-type and direct financing lease receipts	$ 302,694

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Leases Properties Leased to Third Parties (Details) - USD ($) $ in Thousands	Jul. 04, 2021	Jan. 03, 2021
Property, Plant and Equipment
Properties	$ 881,798	$ 915,889
Assets Leased to Others
Property, Plant and Equipment
Land	280,879	279,956
Buildings and improvements	307,834	309,605
Restaurant equipment	1,701	1,701
Property, plant and equipment leased to others, gross	590,414	591,262
Accumulated depreciation and amortization	(176,125)	(170,722)
Properties	$ 414,289	$ 420,540

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Transactions with Related Parties (Details) $ in Thousands		6 Months Ended
	Jan. 07, 2021 number_of_restaurants	Jul. 04, 2021 USD ($) number_of_restaurants	Jun. 28, 2020 USD ($)
Related Party Transaction
Number of restaurants | number_of_restaurants		6,866
TimWen | Franchise rental expense
Related Party Transaction
Related Party Transaction, Expenses from Transactions with Related Party		$ 8,817	$ 7,408
TimWen | General and administrative | Management Fees
Related Party Transaction
Related Party Transaction, Other Income from Transactions with Related Party		110	$ 101
Yellow Cab | Royalty, Advertising Fund, Lease, and Other Income
Related Party Transaction
Related Party Transaction, Other Income from Transactions with Related Party		4,353
Yellow Cab | Accounts Receivable and Advertising Funds Restricted Assets | Royalty, Advertising Fund, Lease, and Other Income
Related Party Transaction
Accounts Receivable, Related Parties, Current		$ 883
Yellow Cab | Franchised Units
Related Party Transaction
Number of restaurants | number_of_restaurants		78
Significant Changes, Franchises Purchased During Period | number_of_restaurants	54

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Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands	Jul. 04, 2021 USD ($)
Property Lease Guarantee
Guarantor Obligations
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 95,160

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Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands	Jul. 04, 2021 USD ($)
Guarantor Obligations
Letters of Credit Outstanding, Amount	$ 26,579

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Legal and Environmental Matters (Details) $ in Thousands	Jul. 04, 2021 USD ($)
Derivative Lawsuit [Member]
Loss Contingency, Estimate [Abstract]
Loss Contingency, Estimate of Possible Loss	$ 950

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Segment Information Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Segment Reporting, Revenue Reconciling Item
Total revenues	$ 493,337	$ 402,306	$ 953,540	$ 807,266
Wendy's U.S.
Segment Reporting, Revenue Reconciling Item
Total revenues	409,843	331,258	791,797	662,299
Wendy's International
Segment Reporting, Revenue Reconciling Item
Total revenues	21,316	14,003	39,566	29,475
Global Real Estate & Development
Segment Reporting, Revenue Reconciling Item
Total revenues	$ 62,178	$ 57,045	$ 122,177	$ 115,492

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Segment Information Reconciliation of Profit from Segments to Consolidated (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2021	Jun. 28, 2020	Jul. 04, 2021	Jun. 28, 2020
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	$ 126,746	$ 60,661	$ 209,868	$ 109,393
Advertising funds deficit	(1,602)	(1,020)	(2,866)	(2,407)
Unallocated general and administrative	(63,114)	(48,592)	(115,736)	(100,231)
Depreciation and amortization	(30,761)	(34,714)	(62,303)	(65,760)
System optimization gains, net	30,766	1,987	31,282	2,310
Reorganization and realignment costs	(2,102)	(2,911)	(7,036)	(6,821)
Impairment on long-lived assets	(630)	(117)	(1,265)	(4,704)
Unallocated other operating income, net	4,232	1,396	7,708	3,328
Interest expense, net	(28,204)	(29,085)	(56,990)	(57,610)
Loss on early extinguishment of debt	(17,917)	0	(17,917)	0
Other income (expense), net	161	(144)	290	932
Income before income taxes	80,786	31,432	135,251	52,715
Corporate and Other
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Unallocated general and administrative	(28,864)	(23,051)	(53,971)	(47,170)
Unallocated other operating income, net	192	46	256	91
Operating Segments
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	159,747	120,441	305,771	233,854
Operating Segments | Wendy's U.S.
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	126,650	93,136	238,737	174,964
Advertising funds deficit	(3,990)	(2,185)	(7,524)	(2,185)
Operating Segments | Wendy's International
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	6,528	3,594	14,212	8,689
Operating Segments | Global Real Estate & Development
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	$ 26,569	$ 23,711	$ 52,822	$ 50,201

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Label	Element	Value
Restricted Cash, Advertising Funds Restricted Assets	wen_RestrictedCashAdvertisingFundsRestrictedAssets	$ 77,279,000