Segment Information (Notes)

12 Months Ended

Jan. 02, 2022

Segment Reporting [Abstract]

Segment Information

Segment InformationThe 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 Franchise Flips and providing other development-related services to franchisees. The Company measures segment profit using 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. When the Company’s chief operating decision maker reviews balance sheet information, it is at a consolidated level. The accounting policies of the Company’s segments are the same as those described in Note 1.

Revenues by segment are as follows:

	Year Ended
	2021		2020		2019
Wendy’s U.S.	$	1,567,496	$	1,431,382	$	1,404,307
Wendy’s International	86,369		65,642		68,198
Global Real Estate & Development	243,133		236,801		236,497
Total revenues	$	1,896,998	$	1,733,825	$	1,709,002

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

	Year Ended
	2021		2020		2019
Wendy’s U.S. (a)	$	450,117	$	393,314	$	369,193
Wendy’s International	27,386		20,119		20,246
Global Real Estate & Development	106,113		100,731		107,116
Total segment profit	583,616		514,164		496,555
Unallocated franchise support and other costs	(753)		—		—
Advertising funds surplus	2,770		2,904		1,337
Unallocated general and administrative (b)	(116,273)		(94,256)		(81,230)
Depreciation and amortization	(125,540)		(132,775)		(131,693)
System optimization gains, net	33,545		3,148		1,283
Reorganization and realignment costs	(8,548)		(16,030)		(16,965)
Impairment of long-lived assets	(2,251)		(8,037)		(6,999)
Unallocated other operating income, net	394		190		291
Interest expense, net	(109,185)		(117,737)		(115,971)
Loss on early extinguishment of debt	(17,917)		—		(8,496)
Investment income (loss), net	39		(225)		25,598
Other income, net	681		1,449		7,771
Income before income taxes	$	240,578	$	152,795	$	171,481

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(a)Includes advertising funds expense of $25,000 and $14,600 for 2021 and 2020, respectively, related to the Company funding of incremental advertising to support the breakfast daypart.

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

Net income (loss) of our equity method investments for the Brazil JV and TimWen are included in segment profit for the Wendy’s International and Global Real Estate & Development segments, respectively. Net income (loss) of equity method investments by segment was as follows:

	Year Ended
	2021		2020		2019
Wendy’s International	$	—	$	(417)	$	(1,022)
Global Real Estate & Development	11,203		6,513		9,695
Total net income of equity method investments	$	11,203	$	6,096	$	8,673