WEN 10-K & 10-Q changes, risk factors and insider trading

The market segments in which Wendy’s restaurants compete are highly competitive with respect to, among other things, price and value perception, food quality and presentation, product innovation, service, convenience, digital engagement and the location and condition of the restaurant facilities. If Wendy’s fails to differentiate based on our focus on high quality food or if Wendy’s restaurants fail to deliver an exceptional customer experience, whether at a Company-operated or franchised restaurant, we may experience a decrease in customer counts.traffic. Further, Wendy’s restaurants compete with a variety of independent locally owned restaurants, as well as regional, national and global restaurantrestaurants and chains. Additionally, many of our competitors have introduced lower cost value meal menu options and have employed marketing strategies that include frequent use of price discounting (including through the use of coupons and other offers), frequent promotions and heavysignificant advertising expenditures. Some of our competitors have substantially greater financial, marketing, advertising, personnel and other resources than we do, which may allow them to react to changes in consumer tastes and preferences, pricing, marketing and operational strategies better than we can and drive higher levels of brand awareness among consumers. This product and price competition could result in reduced revenues and loss of market share.

Moreover, new companies, including operators outside the quick-service restaurant industry, may enter market areas in which Wendy’s restaurants operate and target our customer base. For example, additional competitive pressures for prepared food purchases have come from the deli or prepared foods sections of a number of major grocery store chains, as well as from convenience stores, casual dining outletsoutlets, delivery kitchens and food delivery providers. Additionally, convenience stores and retail outlets at gas stations frequently offer a wide variety of sandwiches and other prepared foods. Such competitors may have, among other things, lower operating costs, better locations, better facilities, more effective marketing and more efficient operations. Wendy’s also competes with grocery chains and other retail outlets or concepts that sell food to be prepared at home. Competition with these chains and other outlets could increase based on the gap between the price of food prepared at home compared to the price of food purchased at restaurants. This increased product and price competition could put deflationary pressure on the selling price of products offered at Wendy’s restaurants or lead to a decrease in customer counts.traffic. All such competition may adversely affect our brand, business, results of operations and financial condition.

Adverse economic conditions or volatility or disruptions in the national and global economies, or in regions that havewith a high concentration of Wendy’s restaurants, could adversely impact our business, results of operations and financial condition.

Adverse economic conditions or volatility or disruptions in the national and global economies could result in higher unemployment rates, labor shortages, increasing or prolonged inflation,inflation and other cost pressures, rising interest rates, financial market volatility, social unrest and geopolitical conditions or conflicts and declines in consumer confidence,sentiment, behaviorincome and spending. Health epidemics or pandemics –If such asconditions the global outbreak of COVID-19 in early 2020 – have in the past and may in the future impact macroeconomic conditions. If suchor disruptions occur, they may result in significant declines in consumer food-away-from-home spendingspending, shifts to lower-priced products and/or customerreduced countstraffic in Wendy’s restaurants.restaurants, Ongoingwhich disruptions in the national and global economies maycould adversely impact restaurant and franchisee profitability and our business, results of operationsoperational and financial condition.results. Additionally, adverse economic conditions or disruptions in the economies in regions that contain a high concentration of Wendy’s restaurants, including markets in which Company-operated restaurants are located, could also have a material adverse impact on our business, results of operations.operations and financial condition.

The success of the Wendy’s system depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions, consumers’ perceptions of general economic conditions and the availability of discretionary income. Material declinesDeclines in the amount of discretionary spending or consumer food-away-from-home spending, or significant increases in expenses incurred by consumers, such as living expenses or gasoline prices, could hurt our business, results of operations and financial condition. Our success also depends to a large extent on continued consumer acceptance of, and demand for, our offerings, the success of our operating, growth, promotional, marketing and new product development initiatives and the reputation of our brand. If the quick-service restaurant hamburger segment contracts or does not grow as quickly as other categories within the food service industry, or if we are unable to continue to achieve consumer acceptance or adapt to changes in consumer demographics or preferences, including with respect to product mix, pricing, nutrition, health or dietary trends (including the use of weight loss medications), environmentalcorporate or socialresponsibility concerns or the use of digital channels, Wendy’s restaurants may lose customers, and the resulting revenues from Company-operated restaurants and the royalties that we receive from franchisees may decline.

Our success depends in large part upon our ability to maintain and enhance the value of our brand, our customers’ loyalty to our brand and a positive relationship with our franchisees and other business partners. Brand value is based in part on consumer perceptions on a variety of subjective qualities. Erosion of trust in our brand can be caused by isolated or recurring incidents originating from us, our franchisees or our business partners, or from external events. Such incidents can significantly reduce brand value and consumer trust, particularly if the incidents receive considerable publicity or result in litigation.litigation or governmental investigations or proceedings. For example, our brand could be damaged by claims or perceptions about the qualityquality, value or safety of our products or the qualityquality, reputation or reputationactions of our employees, franchisees or other business partners, regardless of whether such claims or perceptions are true. Our brand could also be adversely impacted by other incidents described in this risk factors section, including incidents related to customer service, health or safety, a failure to attract and retain qualified employees, food safety or other health concerns regarding our products, the impact of social media, digital engagement, our use of emerging technologies, data privacy violations, cybercybersecurity incidents, environmental,corporate social and governanceresponsibility matters or reports of our employees, franchisees or business partners taking controversial positions or acting in an unethical, illegal or socially irresponsible manner. Any such incidents could cause a decline in consumer confidence in our brand and reduce consumer demand for our products, which could have a material adverse impact on our business, results of operations and financial condition.

Our results of operations and the value and perception of our brand are heavily influenced by the effectiveness of our brand marketing and advertising and by our ability to develop and launch new and innovative products. Our marketing and advertising programsprograms, including brand partnerships, may not be successful, or we may fail to develop commercially successful new products, which may impact our ability to attract new customers and retain existing customers, which, in turn, could materially and adversely affect our results of operations and the value and perception of our brand. For example, because of the wide range of our customers and channels of communication used by them, our marketing and advertising may not always reach consumers as intended. Moreover, because franchisees contribute to advertising funds based on a percentage of sales at their franchised restaurants, our advertising fund expenditures are dependent upon sales volumes across the Wendy’s system. If systemwide sales decline, including because of, but not limited to, macroeconomic factors, consumer sentiment, inflationary or competitive pressures, declines in traffic, restaurant closures, franchisee health or changes in strategy, this could result in a reduced amount of funds available for our marketing and advertising programs. In addition, to the extent we use value offerings or other promotions or discounts in our marketing and advertising programs to drive customer counts,traffic, these actions may condition our customers to resist higher menu prices or result in reduced demand for premium products.

Our inability or failure to recognize, respond to and effectively manage the impact of social or digital media could adversely impact our brand, business andbusiness, results of operations.operations and financial condition.

Social media platforms, including forms of internet-based communications, allow individuals access to a broad audience. The availability of information on social or digital media is virtually immediate and has given consumers the ability to more effectively organize collective actions such as boycotts and other brand-damaging behaviors. The dissemination of information by news media, customers, employees, social media influencersinfluencers, spokespersons and others via social or digital media, whether accurate or inaccurate, could harm our business, brand, reputation, results of operation and financial condition. This damage may be immediate, without an opportunity to correct inaccurate information or respond to or address particular issues. In addition, as part of our marketing efforts, we frequently use social media to communicate with consumers in order to build their awareness of, engagement with and loyalty to our brand. Our failure to use social media effectively or appropriately, particularly as compared to our competitors, could lead to a decline in brand value, customer visits and revenues. Laws and regulations governing the use of social media continue to rapidly evolve. A failure by us, our employees, our franchisees or third parties acting on our behalf to abide by applicable laws and regulations in the use of social media could adversely impact our reputation, brand, results of operations and financial condition or subject us to litigation, fines or other penalties. Social media risks could also arise from our employees, franchisees or business partners not following defined policies for the use of social media during business operations, or actions taken by Company or franchisee employees during personal activities outside of their employment, but which could still reflect negatively on the Wendy’s brand.

Our intellectual property is material to the conduct of our business. We rely on a combination of trademarks, service marks, copyrights, domain names, trade secrets and similar intellectual property rights to protect our brand and other intellectual property. The success of our business strategy depends, in part, on our continued ability to use our trademarksintellectual and service marksproperty to increase brand awareness and further develop our branded products in existing and new markets. If our efforts to protect our intellectual property are not adequate, or if any third party misappropriates, infringes, dilutes or otherwise violates our intellectual property, the value of our brand may be harmed, which could have a material adverse effect on our business. While we try to ensure that the quality of our brand is maintained by our franchisees, we cannot ensure that franchisees and other licensees of our intellectual property will not take actions that hurt the value of our intellectual property or the reputation of the Wendy’s brand or restaurant system. Any damage or violation of our intellectual property could harm our image, brand or competitive position and result in significant legal fees and the diversion of resources. If we do not attempt or are unable to successfully protect, maintain or enforce our intellectual property rights, there could be a material adverse effect on our business or results of operations as a result of, among other things, consumer confusion, dilution of the Wendy’s brand or increased competition from unauthorized users of our brand.

We have registered certain trademarks and have other trademark registrations pending in the United States and certain foreign jurisdictions. Not all of the trademarks or domain names that are used in the Wendy’s system have been registered in all of the countries in which we do business or may do business in the future, and some trademarks will never be registered in all of these countries. Some countries’ laws make unregistered trademarks more difficult to enforce, or do not protect them at all, and third parties have filed, orand may in the future file, for “Wendy’s” or similar marks. Accordingly, we may not be able to adequately protect the Wendy’s brand everywhere in the world and use of the Wendy’s brand may result in liability for trademark infringement, trademark dilution or unfair competition. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. We cannot ensure that all of the steps we have taken to protect our intellectual property in the United States and foreign countries will be adequate.

We cannot ensure that third parties will not bring infringement claims against us in the future. Any such claim, whether or not it has merit, could be time-consuming, cause delays in introducing new menu items, require costly modifications to advertising and promotional materials, harm our brand, image, competitive position or ability to expand our operations into other jurisdictions, cause us to incur significant costs related to defense or settlement or require us to enter into royalty or licensing agreements. As a result, any such claim could harm our business and adversely impact our results of operations and financial condition. In addition, third parties may assert that certain of our intellectual property, or our rights therein, are invalid or unenforceable. If our rights in any of our intellectual property were found to infringe third-party rights, or portions thereof were deemed invalid or unenforceable, we may be forced to defend or resolve related claims and incur related expenses. In addition, such loss of rights could permit competing uses of such intellectual property which, in turn, could harm our business and adversely impact our results of operations and financial condition.

Food safety is a top priority for Wendy’s, and we dedicate substantial resources to food safety matters to ensure our customers enjoy safe, quality food products. FoodHowever, even with strong preventative controls, food safety risks cannot be completely eliminated. As such, food safety events, however, including instances of food-borne illness (such as salmonella or E. coli) can and have occurred in the food industry, including at the Company.Wendy’s. The risk of illnesses associated with our food also may increase due to the licensing of our intellectual property to third parties for the sale of Wendy’s branded food products in grocery stores and other retail outlets, as well as our use of third-party delivery services. Food safety events, whether or not involving Wendy’s restaurants or other restaurant companies, could adversely affect the price and availability of certain products and result in negative publicity for Wendy’s or the restaurant industry. This negative publicity may reduce demand for Wendy’s food and could result in a decrease in customer countstraffic to Wendy’s restaurants as consumers shift their preferences to our competitors or to other products or food types. Any report linking our restaurants or suppliers to food-borne illnesses, food tampering, contamination or mislabeling or other food-safety issues could damage the value of our brand immediately and severely hurt sales of our products and possibly lead to regulatory claims, product liability claims, litigation (including class actions) or other damages. The Wendy’s system may also be adversely impacted by consumer or regulatory concerns regarding the nutritional aspects of the products we sell, the ingredients in our products or the cooking processes or packaging used in our restaurants. These or similar concerns could result in less demand for our products and a decline in sales at Company-operated restaurants and in royalties from sales at franchised restaurants.

Our business strategy includes a focus on driving average unit volume, sales and share growth across all of our dayparts through our craveable core menu, impactful innovation and by delivering relevant value to our customers.growth. However, we may be unable to deliver globalaverage unit volume or sales growth or maintain or grow market share across our dayparts due to competitive pressures and other factors, such as consumer tastes and preferences, the effectiveness of our marketing and advertising programs, the successful development and launch of new products, commodity and labor costs, providing fast and accurate customer experiences, further accelerating our digital business and technological enhancements, driving new restaurant development and ensuring the support and engagement of franchisees. Our inability to successfully execute our strategy to drive average unit volume, sales and share growth, or an inability to successfully execute on our strategy for the breakfast daypart and reach targeted levels of sales and profits, could have a material adverse impact on our business, results of operations and financial condition.

As of December 29,28, 2024,2025, approximately 95% of restaurants in the Wendy’s system were operated by franchisees. Wendy’s franchisees are contractually obligated to operate their restaurants in accordance with the standards set forth in our franchise and other agreements with them. Wendy’s also provides training and support to franchisees. However, franchisees are independent third parties that we do not control, and franchisees own, operate and oversee the daily operations of their restaurants. Specifically, franchisees are solely responsible for developing and utilizing their own policies and procedures, making their own hiring, firing and disciplinary decisions, scheduling hours and establishing wages and managing their day-to-day employment processes and procedures in accordance with applicable laws, rules and regulations, all of which is done independent of Wendy’s. Further, franchisees have discretion as to the prices charged to customers. As a result, the ultimate success and quality of any franchise restaurant rests with the franchisee. If franchisees do not successfully operate their restaurants in a manner consistent with required standards, the royalty and other payments they make to us could be adversely affected and our brand’s image and reputation could be harmed, which in turn, could hurt our business and results of operations. In addition, the failure of franchisees to adequately engage in capital planning and/or succession planning may adversely affect their restaurant operations and development of new Wendy’s restaurants, which in turn could hurt our business and results of operations.

Wendy’s franchisees are an integral part of our business, growth and brand strategies, and difficulties in identifying, attracting and retaining franchisees who meet our criteria could harm our business and brand. Our business and results of operations could be adversely affected if a significant number of franchisees do not participate in brand strategies, such as new restaurant development, restaurant remodeling initiatives, marketing and menu programs and digital commerce platforms and other restaurant technologies, which in turn may harm our business and financial condition.technologies. In addition, Wendy’s current franchise model, and the way our brand strategies are executed across the system, may make it difficult for our brand to respond and adapt to the speed of changes in technology, consumer preferences or other factors as quickly as may be required to maintain and grow market share and remain competitive. Certain of our competitors that have a significantly higher percentage of company-operated restaurants than we do may have greater influence over their respective restaurant systems and greater ability to implement operational initiatives and business strategies.

We receive revenues in the form of royalties and national advertising funds contributions (both of which are generally based on a percentage of sales at franchised restaurants), as well as rent and fees from franchisees. Accordingly, a substantial portion of our financial results is to a large extent dependentdepends upon the operational and financial success of our franchisees. If sales trends or economic conditions worsen for franchisees, or if the overall business or financial health of franchisees deteriorates, their results of operations or financial condition may worsen, which has in the past and could again in the future result in, among other things, increased restaurant closures, decreased restaurant openings, required financial supportopenings or franchisee bankruptcies or insolvency leading to restructuring activities, all of which could reduce our royalty, national advertising funds, rent and other fee revenues. From time to time, we may work with our franchisees who are experiencing financial difficulties to assess and address their financial health and their ability to satisfy their financial obligations to us and any third parties. In certain of these situations, we have and may in the future provide cash flow or other financial and operational support to franchisees by providing royalty, advertising, rent or other relief, offering deferrals, waivers, setoffs or other modifications of certain franchisee obligations, extending loans or guarantees and/or advancing cash payments. These actions have and may in the future adversely affect our cash flow and financial results, which may be material, and there is no guarantee that any such support to franchisees will be successful in improving their results of operations or financial condition or preventing franchisee bankruptcies, insolvency or restructuring actions. There is also no guarantee that we will receive all or any of the amounts due to us under our franchise agreements, notes receivable and other agreements. Prolonged periods of declining sales and profitability for franchisees can exacerbate these risks. If franchisees are unable to obtain financing at commercially reasonable rates, or at all, they may be unwilling or unable to invest in their existing restaurants or the development of new restaurants,restaurant development, and our future growth and results of operations could be adversely affected. Furthermore, an insolvency event or bankruptcy proceeding involving a franchisee could prevent or delay us from collecting payments or exercising any of our other rights under the franchise or other related agreement with such franchisee. Additionally, when Company-operated restaurants with leased real estate are sold to franchisees, we are often required to remain responsible for lease payments for these restaurants in the event the purchasing franchisees default on their leases.

Additionally, when Company-operated restaurants with leased real estate are sold to franchisees, we are often required to remain responsible for lease payments for these restaurants in the event the purchasing franchisees default on their leases. Similarly, when we lease or sublease properties to franchisees, we remain responsible for certain expenses related to the properties, such as lease payments and maintenance charges. If franchisees fail to renew their franchise agreements or fail to perform under or extend their leases or subleases with us, or if we are unable to identify, attract and retain new franchisees who meet our criteria and can successfully implement development agreements and expansion plans, then our royalty and rental revenues may decrease and our future growth could be adversely affected.

The growth of our business is dependentdependent, in part, on new restaurant openings, which could be affected by factors beyond our control.

Our business derives earnings from sales at Company-operated restaurants as well as royalties and other fees received from franchised restaurants. Growth in our revenues and earnings is dependentdependent, in part, on new restaurant openings. Numerous factors beyond our control may adversely affect new restaurant openings, which in turn could hurt our business and results of operations. These factors include, among others: (i) our ability to attract new franchisees; (ii) the level of participation in, and success of, our build to suit development fund and other developmentassistance programs; (iii) the attractiveness of our development incentive initiatives to new and existing franchisees; (iv) the availability of site locations for new restaurants; (v) the abilityfinancial health of restaurantour ownersfranchisees and their ability to obtain financing; (vi) the ability of restaurant owners to attract, train and retain qualified operating personnel; (vii) constructiondevelopment costs and developmentthe costscost and availability of construction materials; (viii) the ability of restaurant owners to secure required governmental approvals and permits in a timely manner, or at all; (ix) the ability of us and our franchises to execute our development strategy for non-traditional restaurants, such as those located in fuel and transportation centers, food courts and other retail locations, delivery kitchens and military bases; (x) the profitability of existing and new restaurants; (xi) consumer acceptance of any restaurant remodels or rebranding; and (xixii) adverse weather conditions. Our inability to identify suitable locations, achieve consumer acceptance or otherwise execute our development strategy could have an adverse impact on our future growth, results of operations and financial condition. In addition, the growth of our business could be adversely impacted by anticipated and unanticipated restaurant closures, including closures related to underperformance, market conditions, macroeconomic or demographic trends, expiration or loss of leases, franchisee health or other factors beyond our control.

We may be unable to manage effectively the acquisition and disposition of restaurants,restaurants or successfully implementand other strategicrestaurant initiatives,activity, which could adversely affect our business, results of operations and financial results.condition.

We continue to optimize the Wendy’s system through our system optimization initiative, which includes facilitating the transfer of restaurants between and among franchisees, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees,franchisees and, at times, the closure of certain underperforming restaurants to further strengthen the franchisee basebase, support franchisee economics and drive new restaurant development. The success of this initiative is dependent upon many factors, such as the availability of sellers and buyers, the availability of financing, the ability to negotiate and consummate transactions on terms deemed acceptable and the ability to successfully transition and integrate restaurant operations. Acquisitions of franchised restaurants pose various risks to our operations, including (i) diversion of management’s attention away from day-to-day operations to the integration of acquired restaurant operations; (ii) increased operating expenses and the inability to achieve expected cost savings and operating efficiencies; and (iii) the assumption of long-term, non-cancelable leases. Our system optimization initiative also places demands on our operational and financial management resources and may require us to expand these resources. If we are unable to execute our system optimization initiative or effectively manage the acquisition and disposition of restaurants, our business and financial results and the health of our franchise system could be adversely affected.

We have significant real estate operations in connection with our restaurant business and are subject to the normal risks associated with owning, leasing and subleasing real estate. Our real estate values and the costs associated with our real estate operations are impacted by a variety of factors, including changes in the investment climate for real estate, macroeconomic trends, governmental regulations, infrastructure, zoning, condemnationregulations or eminent domain, insurance, demographic trends, supply chain management, supply and demand for the ownership and operation of restaurants,actions, franchisee commitments, franchisee payments and restaurant performance and environmental matters. A significant decrease in real estate values or increase in real estate costs could adversely affect our results of operationsbusiness and financial condition.

We are subject to federal, state and local environmental, health and safety laws and regulations concerning the discharge, storage, handling, release and disposal of hazardous or toxic substances. Third parties may also make claims against owners, operators or occupants of properties for personal injuries and property damage associated with releases of or exposure to such substances. While we employ environmental review standards and practices in the current development of our real estate, we have not conducted a comprehensive environmental review of all of our properties and we may not have identified all of the potential environmental liabilities at our leased and owned properties, and any such liabilities identified in the future could cause us to incur significant unknown costs, including costs associated with litigation, fines or clean-up responsibilities.responsibilities, Weas cannotwell predictas thean amount of future expenditures that may be required in orderimpact to complyour withreal anyestate environmental laws or regulations or to satisfy any such claims.values.

We generally secure long-term real estate interests for our leased restaurants and have limited flexibility to quickly alter our real estate portfolio. Many leases provide that the base rent will increase over the term of the lease and any renewals of the term. Most leases require us to pay the costs of insurance, taxes, maintenance, utilities and capital repairs and replacements, which base rent amounts and additional costs are generally passed along to franchisees via sublease where and when such sites are operated by franchisees. We generally cannot cancel these leases prior to the expiration of their term. If an existing or future restaurant is not profitable, and we decide to close it (or, with respect to a franchise-operated and subleased restaurant, we permit the franchisee to close the restaurant or suffer an involuntary closure of the restaurant), we may nonetheless be committedrequired to continue to perform our monetary and non-monetary obligations under the applicable lease including, among other things, paying rent, taxes and maintenance costs for the balance of the lease term.term, subject to our efforts to mitigate our losses and seek an early termination of the lease, which may include an accelerated payment to a landlord. In such instances, we may incur negative lease write-offs and there is no guarantee we will be able to collect reimbursement from the franchisee and/or subtenant. In addition, as our leases expire, we may fail to negotiate additional renewals or renewal options, either on commercially acceptable terms or at all, which could cause us to close restaurants in desirable locations, negatively impacting our results of operations.

In addition to many of the factors described in this risk factors section, our business outside of the United States is subject to a number of additional risks and uncertainties, including international economic and politicalgeopolitical conditions,conditions or conflicts, risk of corruption and violations of the U.S. Foreign Corrupt Practices Act or similar anti-corruption and anti-bribery laws of other countries, the inability to adapt to differing cultures or consumer preferences, inadequate brand infrastructure to support our international activities, inability to obtain adequate supplies meeting our quality standards and product specifications or interruptions in obtaining such supplies, challenges and risks associated with managing and monitoring suppliers, restrictions on our ability to move cash out of certain foreign countries, currency regulations and fluctuations,fluctuations in exchange rates, tariffs and trade barriers or foreign policy changes, diverse government regulations and tax systems, uncertain or differing interpretations of rights and obligations in connection with international franchise agreements, the collection of royalties and other fees from international franchisees, the inability to protect technology, data or intellectual property rights, compliance with international privacy and information security laws and regulations, the availability and cost of land, construction costs, other legal, financial or regulatory impediments to the development or operation of restaurants, thechanging inabilitylabor to identify, attractconditions and retaindifficulties experiencedin management,staffing and managing our foreign operations and identifying qualified franchisees and joint venture partners. Adverse conditions or unforeseen events in countries that contain a high concentration of Wendy’s restaurants (including Canada, our largest international market), could have a material adverse impact on our international growth strategy and results of operations. In addition, to the extent we invest in international Company-operated restaurants or joint ventures, we would also have the risk of operating losses related to those restaurants, which could adversely affect our results of operations and financial condition. There can be no assurance that our international growth strategy will be successful or that our international operations will be profitable.

ForThere example,can Wendy’sbe enteredno theassurance Unitedthat Kingdom in 2021 and intends to accelerate restaurant development in other new and existingour international marketsgrowth utilizingstrategy awill franchisebe model.successful or that our international operations will be profitable. New and emerging markets may have heightened risks regarding the interpretation, application, and enforceability of laws, regulations, contract rights and intellectual property rights, lower brand awareness as well as competitive conditions, consumer tastes and preferences, discretionary spending patterns and social and cultural differences that are more difficult to predict or satisfy than our existing markets. We may need to make greater investments than we originally planned in advertising and promotional activity to build brand awareness, which could negatively impact the profitability of our operations. In addition, we and our franchisees may be unable to obtain desirable locations for new restaurants at reasonable prices, or at all, and restaurants may have higher construction, occupancy, food and labor costs than we currently anticipate. Furthermore, if the results of the Wendy’s business in certain key markets, including the U.S., Canada and the U.K., do not meet our expectations, our ability to attract new franchisees and enter into new international markets could be negatively impacted. Any of these risks and uncertainties, and other factors we cannot anticipate, could have a material adverse impact on our business, results of operations and financial condition.

Our profitability depends in part on our ability to anticipate and react to changes in commodity costs (including beef, chicken, pork, dairy and grains), supplies, fuel, utilities, distribution and other operating costs, including labor costs. Increases in commodity costs have adversely impacted and could continue to adversely impact our results of operations. Our business is susceptible to increases in commodity and other operating costs as a result of various factors beyond our control, such as general economic conditions, inflation, industry demand, commodity supply and the availability of alternative suppliers, energy costs, food safety concerns, animal disease outbreaks, product recalls and government regulations. Increasing weather volatility or other long-term changes in weather patterns, including related to climate change, could have a significant impact on the price or availability of some of our ingredients. In addition, our supply chain is subject to increased costs arising from actual or perceived effects of climate change, greenhouse gas emissions and scarcity of energy and water resources. The ongoing and long-term costs of these impacts could have a material adverse effect on our business if not properly mitigated. We could also be adversely impacted by the cost of products raised or grown in accordance with our responsible sourcing criteria, including those related to environmental sustainability and animal welfare, as the availability of products that can be assured to meet those criteria are generally smaller and more concentrated, and may be more costly, than the markets for conventionally raised or grown products that are not assured to meet those criteria. We cannot predict whether we will be able to anticipate and react to changing commodity costs by adjusting our purchasing practices and menu prices, and a failure to do so could adversely affect our results of operations. For example, historically, in order to partially offset inflation and other increases in commodity and other operating costs, we have gradually increased menu prices. There can be no assurance that future cost increases, including as a result of inflation, can be offset by increased menu prices or that our current or future menu prices will be fully absorbed by our customers without any resulting change to their demand for our products, which in turn could adversely affect our results of operations.

Wendy’s and our franchisees are dependent on frequent deliveries of perishable food products that meet brand specifications. Shortages or interruptions in the supply of perishable food products caused by unanticipated demand, problems in production or distribution, labor shortages,disruptions, technology-related problems, financial distress or insolvency of suppliers or distributors, disease or food-borne illnesses, political unrest, health epidemics or pandemics, inclement weather or other calamities or conditions could adversely affect the availability, quality and cost of ingredients, which could lower revenues, increase operating costs, damage brand reputation and otherwise harm our business and the businesses of our franchisees. Certain products sold in our restaurants, such as beef and chicken, are sourced from a limited number of suppliers, which may increase our reliance on those suppliers. In addition, our system relies on a limited number of suppliers and in-line distributors to deliver certain food, packaging and beverage products to our restaurants. If a disruption of service from any of our key suppliers or distributors was to occur, including as a result of a failure to meet our quality or safety standards, we could experience short-term increases in our costs while supply and distribution channels were adjusted, and we may be unable to identify or negotiate with new suppliers or distributors on terms that are commercially reasonable to us.

Labor is a primary component in the cost of operating our restaurants. We devote significant resources to recruiting and training our restaurant personnel, including managers and hourly employees. Increased labor costs due to competition, labor shortages (including due to changes in immigration laws and enforcement), inflationary pressures, increased wages or employee benefits costs (including various federal, state and local actions to increase minimum wages and enhance workplace conditions), health epidemics or pandemics (such as the COVID-19 pandemic) or other factors have adversely impacted and could continue to adversely impact our cost of sales and operating expenses. In addition, Wendy’s success depends on our ability to attract, motivate and retain qualified employees, including restaurant managers and staff as well as employees and key personnel at our restaurant support center,center. We have experienced, and may continue to experience, challenges attracting, motivating and retaining restaurant employees, and our inability to do so in the future could cause us to experience increased labor costs and could adversely affect our business and results of operations. Our business, results of operations and brand perception could also be adversely impacted by unionization efforts or other campaigns by labor organizations affecting our employees or the employees of our franchisees or by our responses to any such efforts or campaigns.

Much of our future success depends on the continued availability, efforts and abilities of our senior leadership team and other key personnel. The loss of, or failure to engage in adequate succession planning for, members of our senior leadership team or other key personnel could adversely affect our ability to achieve our growth strategy and other business initiatives. In addition, changes to our leadership and organizational structure, including changes to the Company’s senior leadership team in 2024,recent years, can be inherently difficult to manage, and if we are unable to implement such changes effectively, our business, results of operations and financial results could be adversely affected.

Advances in technologies, including advances in digital food ordering and delivery technologies, and changes in consumer behavior driven by such advances could have a negative effect on our business. Technology and consumer offerings continue to develop and evolve, and we expect that new and enhanced technologies and consumer offerings will be available in the future, including those with a focus on restaurant modernization, restaurant technology, digital engagement and integration, AI, online ordering and delivery. Our inability to predict consumerconsumer, employee or franchisee acceptance of new technology or our failure to adequately invest in and implement new technology or adapt to technological developments, industry trends and evolving ethical, legal and regulatory requirements could result in a loss of customers and related market share. In addition, our competitors, some of whom have greater resources than we do, may be better able to benefit from changes in technologies or consumerconsumer, employee or franchisee acceptance of such changes, which could harm our competitive position and brand.

An increasing amount of our sales and revenues is derived from digital orders, including online ordering and delivery. We have implemented and will continue to implement technology investments and targeted advertising and promotions to support the growth of our digital business. If we are unable to continue to grow our digital business, it may be difficult for us to achieve our planned sales growth. If our digital commerce platforms and strategies, including our planned investments to support digital growth through enhancements to the Wendy’s mobile app, loyalty program and personalized marketing capabilities and the continued rollout and implementation of digital menu boards, kiosks and AI integrated in our restaurants, do not meet customers’ expectations in terms of security, privacy, speed, attractiveness or ease of use, customers may be less inclined to return to those platforms, which could negatively impact our business, results of operations and financial condition. Our business could also be negatively impacted if we are unable to successfully implement or execute other consumer-facing digital initiatives as quickly and efficiently as our competitors. We rely on third-party delivery services to fulfill delivery orders, and errors or failures by those providers to make timely deliveries could cause customers to stop ordering from us. The third-party restaurant delivery business is intensely competitive, with a number of companies competing for capital, market share, online traffic and delivery drivers. If the third-party delivery services that we utilize cease or curtail their operations, increase their fees or provide greater priority or promotions on their platforms to our competitors, our delivery business and our sales may be negatively impacted. In addition, the delivery business continues to rapidly evolve, including through consolidation, which may give third-party delivery companies more leverage in negotiating the terms and pricing of contracts, which could in turn negatively impact our profits from this channel.

We and our franchisees are heavily dependent on computer systems and information technology and any material failure, interruption or degradation of our systems or technology or issuesthose withof our key technology providers could adversely affect our business, results of operations and financial condition.

We and our franchisees are heavily dependent on our computer systems and information technology, including those controlled by third-party providers, to conduct our business, including point-of-sale processing in our restaurants, technologies that support our digital and delivery solutions, management of our supply chain, collection of cash, payment of obligations and various other processes and procedures. Our ability to efficiently manage our business depends significantly on the reliability and performance of these systems and technology. The failure of these systems and technology to operate effectively, or an interruption or degradation in these systems or technology could be harmful and cause delays in customer service, result in the loss of digital sales or data, reduce efficiency or cause delays in operations.operations and have an adverse impact on our business, results of operations and financial condition. Significant capital investments might be required to remediate any such problems or to maintain or upgrade our systems and technology or transition to replacement systems or technology.

We are dependent to a significant extent on our ongoing relationship with key technology providers, including their personnel, resources, technological expertise, systems and technology and their ability to help execute our digital, restaurant technology and enterprise technology initiatives and support our technology innovation and growth initiatives. TheAny implementationfailure andor useinterruption or degradation of AItheir technologies, which we are incorporating into certain aspects of our restaurant operations and may become more important in our operations over time, present various risks and uncertainties, and the deficienciessystems or other failures of AI systemstechnology could subject us to competitive harm, regulatory action, legal liability and brand or reputational harm. The inability of us or our providers to successfully execute our technology growth initiatives while maintaining our brand value and perception couldsimilarly have an adverse impact on our business, results of operations and financial condition.

The occurrence of cybercybersecurity incidents, or a deficiency in cybersecurity, could negatively impact our brand, business, results of operations and financial condition.

Cybersecurity incidents or breaches have, from time to time, occurred and may in the future occur involving our systems, the systems of our franchisees or the systems of our third-party service providers. Such cybersecurity incidents and breaches may include, without limitation, unauthorized access, fraud, phishing attacks, account takeovers, denial of service, computer viruses, introduction of malware or ransomware and other disruptive problems caused by malicious actors. The rapid evolution and increased adoption of AI technologies may intensify our cybersecurity risks. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those managed by third parties. Our business involves the collection and retentionprocessing of sensitive customer data, including, in some instances, credit and debit card numbers and other personally identifiable information, in various information systems that we and our franchisees maintain and in those maintained by third parties with whom we and our franchisees contract to provide credit card processing, digital ordering and related services. We also maintain important internal data, such as personally identifiable information about our employees and franchisees and information relating to our operations. Our use and retentionprocessing of personally identifiable information is regulated by international, federal and state laws, as well as by certain third-party agreements. As privacy and information security laws and regulations change, including comprehensive privacy and data protection laws adopted by states or foreign countries, we will likely incur additional costs to ensure that we remain in compliance with those laws and regulations. If our security and information systems are compromised or if our employees or franchiseesfranchisees, or third-party service providers fail to comply with, or fail to successfully implement processes related to, these laws, regulations or contract terms, and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation, disrupt our operations, damage our relationship with customers, franchisees or employees and result in costly litigation, judgments, or penalties resulting from violation of applicable laws and payment card industry regulations. A cybercybersecurity incident could also require us to notify customers, employees or other groups, result in adverse publicity or a loss in consumer confidence, sales and profits, increase fees payable to third parties or cause us to incur penalties or remediation and other costs that could adversely affect our business, results of operations and financial condition. We have devoted considerable resources to secure our systems and technology against security breaches and have implemented various processes, procedures and controls to help mitigate the risk of a cybercybersecurity incident. However, the techniques and sophistication used to conduct cyber-attackscybersecurity-attacks change frequently and the measures we have taken do not guarantee that a cybercybersecurity incident or security breach could not occur or that our business, reputation and financial condition will not be adversely affected. We also currently maintain insurance coverage to address cybersecurity incidents. Applicable insurance policies contain customary limitations, conditions and exclusions, and there can be no assurance that our cybersecurity or other insurance policies will cover substantially all of the costs and expenses related to any previous or future incidents. In addition, our future insurance premiums may increase, and we may be unable to obtain similar levels of insurance on reasonable terms, or at all, due to challenging conditions in the insurance industry.

The Company and certain of our subsidiaries are subject to various restrictions, and substantially all of the assets of certain subsidiaries are pledged as security, under the terms of a securitized financing facility.

The Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Senior Notes, provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments under certain circumstances, certain indemnification payments in the event, among other things, that the assets pledged as collateral for the Senior Notes are in stated ways defective or ineffective and covenants relating to recordkeeping, access to information and similar matters. The Senior Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the sum of global gross sales for specified restaurants being below certain levels on certain measurement dates, certain manager termination events, the occurrence of an event of default and the failure to repay or refinance the Senior Notes on the applicable scheduled maturitypayment date.dates. The Senior Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Senior Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, the trustee under the Indenture ceasing to have valid and perfected security interests in certain collateral and certain judgments. In the event that a rapid amortization event occurs under the Indenture (including, without limitation, upon an event of default under the Indenture or the failure to repay the securitized debt at the end ofon the applicable termscheduled payment dates), the funds available to the Company would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business. In addition, if amounts owed under the securitized financing facility are accelerated because of a default under the securitized financing facility and we are unable to pay such amounts, the holders of the Senior Notes, or a representative of the holders, may have the right to sell and/or appoint a third party to assume control of substantially all of the securitized assets.

In addition, the Indenture and the related management agreement contain various covenants that limit the Company and its subsidiaries’ ability to engage in specified types of transactions, subject to certain exceptions, including, for example, to incur or guarantee additional indebtedness, sell certain assets, create or incur liens on certain assets to secure indebtedness or consolidate, merge, sell or otherwise dispose of all or substantially all of their assets. As a result of these restrictions, the Company may not have adequate resources or flexibility to continue to manage the business and provide for growth of the Wendy’s system, which could have a material adverse effect on the Company’s future growth prospects, results of operations, financial condition and liquidity.

As of December 29,28, 2024,2025, the Company had approximately $2.7$2.8 billion of outstanding debt on its balance sheet. Additionally, a subsidiary of the Company has issued variable funding notes, which allowsallow for the borrowing of up to $300.0 million from time to time on a revolving basis. This level of debt could have significant consequences on the Company’s future operations, including: (i) making it more difficult to meet payment and other obligations under outstanding debt; (ii) resulting in an event of default if the Company’s subsidiaries fail to comply with the financial and other restrictive covenants contained in debt agreements, which event of default could result in all of the Company’s subsidiaries’ debt becoming immediately due and payable; (iii) reducing the availability of the Company’s cash flow to fund working capital, capital expenditures, equity and debt repurchases, dividends, acquisitions and other general corporate purposes, and limiting the Company’s ability to obtain additional financing for these purposes; (iv) subjecting the Company to the risk of increased sensitivity to interest rate increases on indebtedness with variable interest rates; (v) limiting the Company’s flexibility in planning for or reacting to, and increasing its vulnerability to, changes in the Company’s business or industry or the general economy; and (vi) placing the Company at a competitive disadvantage compared to its competitors that are less leveraged.

In addition to the Company’s outstanding indebtedness, the Company is subject to risks related to certain commitments, guarantees and other liabilities. These commitments, guarantees and other liabilities include, among others, significant contractual requirements regarding the purchase of beverages, contractual requirements regarding certain marketing and media rights and guarantees and contingent liabilities related to certain franchisee leases for which the Company has been indemnified. These commitments, guarantees and other liabilities could have an adverse effect on the Company’s liquidity and theits ability of its subsidiaries to meet payment obligations. The Company may incur additional indebtedness, guarantees, commitments or other liabilities in the future that could amplify the risks that the Company currently faces.

Nelson Peltz, our former Chairman and Chairman Emeritus, Peter May, our Senior Vice Chairman and Matthew Peltz, our former Vice Chairman, beneficially own shares of our outstanding common stock that collectively constitute approximately 15%16% of the Company’s total voting power as of February 19,16, 2025.2026. These individuals may, from time to time, acquire beneficial ownership of additional shares of common stock.

On December 1,In 2011, the Company entered into an agreement (the “Trian Agreement”) with Messrs. N. Peltz and May and several of their affiliates (the “Covered Persons”). Pursuant to the Trian Agreement, our Board of Directors,Board, including a majority of the independent directors, approved, for purposes of Section 203 of the Delaware General Corporation Law, the Covered Persons becoming the owners (as defined in Section 203(c)(9)) of or acquiring an aggregate of up to (and including), but not more than, 32.5% (subject to certain adjustments set forth in the Trian Agreement) of the outstanding shares of the Company’s common stock, such that no such persons would be subject to the restrictions set forth in Section 203 solely as a result of such ownership. This concentration of ownership gives these individuals significant influence over the outcome of actions requiring stockholder approval, including the election of directors and the approval of mergers, consolidations and the sale of all or substantially all of the Company’s assets. They are also in a position to have significant influence to prevent or cause a change in control of the Company.

Certain provisions in our certificate of incorporation are intended to discourage or delay a hostile takeover of control of the Company. Our certificate of incorporation authorizes the issuance of shares of “blank check” preferred stock, which will have such designations, rights and preferences as may be determined from time to time by our Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power and other rights of the holders of our common stock. The preferred stock could be used to discourage, delay or prevent a change in control of the Company that is determined by the Board of Directors to be undesirable. Our certificate of incorporation prohibits the issuance of preferred stock to affiliates, unless offered ratably to the holders of our common stock, subject to an exception in the event that the Company is in financial distress and the issuance is approved by the Audit Committee of our Board of Directors.Directors, This prohibitionwhich limits our ability to raise capital from affiliates.

The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 28, 2025” or “2025,” (2) “the year ended December 29, 2024” or “2024,” and (23) “the year ended December 31, 2023” or “2023,” and (3) “the year ended January 1, 2023” or “2022,” all of which consisted of 52 weeks. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

As of December 29,28, 2024,2025, the Wendy’s restaurant system was comprised of 7,2407,397 restaurants, with 5,9335,969 Wendy’s restaurants in operation in the U.S. Of the U.S. restaurants, 381423 were operated by the Company and 5,5525,546 were operated by a total of 207203 franchisees. In addition, at December 29,28, 2024,2025, there were 1,3071,428 Wendy’s restaurants in operation in 3138 foreign countries and U.S. territories. Of the international restaurants, 1,2941,417 were operated by 107a total of 117 franchisees and 1311 were operated by the Company in 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 December 29, 2024.

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

•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.

Franchised restaurant average unit volumes is a non-GAAP financial measure, which includes sales by franchised restaurants, which are reported by our franchisees and represent their revenue from sales at franchised Wendy’s restaurants. The Company’s consolidated financial statements do not include sales by franchised restaurants to their customers. We calculate franchised restaurant average unit volumes by summing the average weekly sales of all franchised restaurants which reported sales during the week.

The Company believes its presentation of same-restaurant sales, Company-operated restaurant margin, systemwide sales and average unit volumes, including franchised restaurant average unit volumes, 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 GAAPour consolidated financial measures.statements. 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, systemwide sales and franchised restaurant average unit volumes, 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.

2024 Financial2025 Highlights

•RevenueRevenues increaseddecreased 3.0% to $2.25 billion in 2024 compared3.1% to $2.18 billion in 20232025 compared with $2.25 billion in 2024;

•Global same-restaurant sales increaseddecreased 1.5%,4.7%, U.S. same-restaurant sales increaseddecreased 1.4%5.6% and international same-restaurant sales increased 2.8%1.3% compared to 2023.2024. On a two-year basis, global same-restaurant sales increaseddecreased 5.8%3.2%;

•Global Company-operated restaurant margin was 15.4%13.6% in 2024,2025, ana increasedecrease of 80180 basis points compared to 20232024; and

The tables included throughout this Results of Operations section set forth in millions (except as otherwise indicated) the Company’s consolidated results of operations for the years ended December 28, 2025, December 29, 2024,2024 and December 31, 2023 and January 1, 2023.

(b)During 20242025 and 2023,2024, global systemwide sales increaseddecreased 3.1%3.5% and 6.1%,increased 3.1%, respectively, U.S. systemwide sales increaseddecreased 2.2%5.2% and 5.1%,increased 2.2%, respectively, and international systemwide sales increased 9.0%8.1% and 14.1%,9.0%, respectively, on a constant currency basis.

The decrease in sales during 20242025 was primarily due to (1) net closures of Company-operated restaurants of $3.1 million and (2) a 0.1%2.5% decrease in Company-operated same-restaurant sales of $2.4$22.0 million and (2) the sale of Company-operated restaurants to franchisees of $6.9 million. These impacts were partially offset by (1) the Company’s acquisition of 35 franchise-operated restaurants during the third quarter of 2025 of $20.5 million and (2) net new restaurant development of $1.2 million. Company-operated same-restaurant sales decreased due to a decrease in customer count,traffic, partially offset by higher average check.

FranchiseThe decrease in franchise royalty revenue during 2024 increased $16.3 million, of which (1) $9.3 million2025 was primarily due to a 1.7%4.8% increasedecrease in global franchise same-restaurant sales and (2) $8.3 million was due to net new restaurant development.sales. Franchise same-restaurant sales during 20242025 increaseddecreased due to highera averagedecrease check,in traffic, partially offset by ahigher decreaseaverage in customer count.check.

The increase in franchise fees during 20242025 was primarily due to (1) early termination fees for franchised restaurant closures of $8.2 million, (2) higher fees for providing information technology services to franchisees of $4.7$6.9 million and (32) an increase in other miscellaneous fees of $4.5$1.9 million. These increases were partially offset by early terminations fees for franchised restaurant closures in the prior year of $8.2 million.

The increasedecrease in franchise rental expenseincome during 20242025 was primarily due to (1) the impact of assigning certain existing leases to franchisees.franchisees of $5.6 million. This impact was partially offset by (1) entering into new leases of $2.3 million and (2) amending certain existing leases of $1.8 million.

The increasedecrease in advertising funds expenserevenue during 20242025 was primarily due to (1) thea samedecrease factorsin asfranchise describedsame-restaurant abovesales forof “Advertising$23.0 Funds Revenue”million and (2) promotional activity in the recognitionprior year of the expected Company breakfast advertising spend in excess of advertising funds revenue of $21.9$12.0 million.

The increase in depreciationfranchise support and amortizationother costs during 20242025 was primarily due to (1) depreciationan andincrease amortizationin the provision for technologydoubtful investmentsaccounts and (2) assetan additionsincrease forin newcosts incurred to provide information technology services and remodeledother restaurants.services to franchisees.

The decrease in otherfranchise income,rental netexpense during 20242025 was primarily due to athe decrease in interest income, reflecting lower balancesimpact of cashassigning equivalents.certain existing leases to franchisees.

The increase in the provision for income taxesdepreciation and the effective tax rateamortization during 20242025 was primarily due to a(1) discreterestaurant-related stateasset taxdisposals item.and (2) asset additions for new and remodeled restaurants.

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 December 28, 2025 (the “Form 10-K”). There have been no material changes as of MarchJune 29,28, 2026 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”).

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 one of the second largest quick-service restaurant companycompanies in the hamburger sandwich segment in the U.S. based on traffic and dollar share, and the third largest globally with 7,2517,180 restaurants in the U.S. and 38 foreign countries and U.S. territories as of MarchJune 29,28, 2026.

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

As of MarchJune 29,28, 2026, the Wendy’s restaurant system was comprised of 7,2517,180 restaurants, with 5,8055,724 Wendy’s restaurants in operation in the U.S. Of the U.S. restaurants, 420 were operated by the Company and 5,3855,304 were operated by a total of 205206 franchisees. In addition, at MarchJune 29,28, 2026, there were 1,4461,456 Wendy’s restaurants in operation in 38 foreign countries and U.S. territories. Of the international restaurants, 1,4351,446 were operated by a total of 116 franchisees and 1110 were operated by the Company in the United Kingdom (the “U.K.”).

FirstSecond Quarter Highlights

•Global systemwide sales were $3.22$3.42 billion in the firstsecond quarter of 2026 compared with $3.39$3.66 billion in the firstsecond quarter of 2025, a decrease of 5.5%6.5% on a constant currency basis;

•International systemwide sales were $518.0$546.7 million in the firstsecond quarter of 2026 compared with $473.2$528.9 million in the firstsecond quarter of 2025, an increase of 6.0%3.4% on a constant currency basis;

•Revenues increased 3.3%1.7% to $540.6$570.6 million in the firstsecond quarter of 2026 compared with $523.5$560.9 million in the firstsecond quarter of 2025;

•Global same-restaurant sales decreased 6.8%,6.3%, U.S. same-restaurant sales decreased 7.8%7.0% and international same-restaurant sales decreased 0.4%2.3% compared with the firstsecond quarter of 2025;

•Global Company-operated restaurant margin was 10.8%13.6% in the firstsecond quarter of 2026, a decrease of 350200 basis points compared with the firstsecond quarter of 2025;

•Income before income taxes decreased 37.8%36.0% to $34.2$48.6 million in the firstsecond quarter of 2026 compared with $54.9$75.9 million in the firstsecond quarter of 2025;

•Digital sales increased to approximately 23.6%23.7% of global systemwide sales in the firstsecond quarter of 2026 compared with approximately 20.3%20.5% in the firstsecond quarter of 2025; and

•Systemwide restaurant count decreased by 14671 net restaurants in the firstsecond quarter of 2026.

The tables included throughout this Results of Operations section set forth in millions the Company’s condensed consolidated results of operations for the second quarter and the first quartersix months of 2026 and 2025.

(b)During the firstsecond quarter of 2026 and 2025, global systemwide sales decreased 5.5%6.5% and 1.1%,1.8%, respectively, U.S. systemwide sales decreased 7.3%8.2% and 2.6%,3.3%, respectively, and international systemwide sales increased 6.0%3.4% and 8.9%,8.7%, respectively, on a constant currency basis. During the first six months of 2026 and 2025, global systemwide sales decreased 6.0% and 1.4%, respectively, U.S. systemwide sales decreased 7.7% and 3.0%, respectively, and international systemwide sales increased 4.6% and 8.8%, respectively, on a constant currency basis.

The increase in sales during the second quarter and the first quartersix months of 2026 was primarily due to (1) the impact of the Company’s acquisition of franchise-operated restaurants during the third quarter of 2025 of $13.6$15.8 million and $29.4 million, respectively, and (2) net new restaurant development of $3.1$2.9 million.million Theseand $5.9 million, respectively. During the second quarter and the first six months of 2026, these impacts were partially offset by (1) a 4.8%4.3% and 4.5% decrease in global Company-operated same-restaurant sales of $9.4$9.2 million and $18.6 million, respectively, and (2) the impact of the sale of Company-operated restaurants to franchisees of $2.1$3.2 million.million and $5.2 million, respectively. Company-operated same-restaurant sales during the second quarter and the first quartersix months of 2026 decreased due to a decrease in traffic, partially offset by higher average check.

Franchise royalty revenue during the second quarter and the first quartersix months of 2026 decreased primarily due to a 7.0%6.4% and 6.7% decrease in global franchise same-restaurant salessales, of $8.1 million, partially offset by net new restaurant development of $0.7 million.respectively. Franchise same-restaurant sales during the second quarter and the first quartersix months of 2026 decreased due to a decrease in traffic, partially offset by higher average check.

The increase in franchise fees during the second quarter and the first quartersix months of 2026 was primarily due to the impact of system optimization related to restaurant closures and hours of operation flexibility and restaurant closures.flexibility.

The increase in advertising funds revenue during the second quarter and the first quartersix months of 2026 was primarily due to (1) local and regional advertising funds being reallocated to U.S. national advertising of approximately $15.0$16.0 million and $30.0 million, respectively, and (2) non-recurring incentives earned from a vendor during the second quarter of 2026 of $11.5 million. During the second quarter and the first six months of 2026, these increases were partially offset by a decrease in franchise same-restaurant sales of $7.1approximately million.$9.0 million and $16.0 million, respectively.

The increase in cost of sales, as a percent of sales, during the second quarter and the first quartersix months of 2026 was primarily due to (1) a decrease in traffic, (2) higher commodity costs and (3) an increase in restaurant labor rates. These changes were partially offset by (1) higher average check and (2) labor efficiencies.

The increase in franchise support and other costs during the second quarter and the first quartersix months of 2026 was primarily due to an increase in the provision for doubtful accounts.

The decrease in franchise rental expense during the second quarter and the first quartersix months of 2026 was primarily due to (1) the impact of assigning certain leases to franchisees, (2) amending certain existing leases.leases and (3) lease terminations.

On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue. The increase in advertising funds expense during the second quarter and the first quartersix months of 2026 was primarily due to the same factors as described above for “Advertising Funds Revenue.”

The increase in general and administrative expenses during the second quarter and the first quartersix months of 2026 was primarily due to investments in (1) higherprofessional services and (2) employee compensation and benefits and (2) an increase in professional fees.benefits.

The increase in depreciation and amortization during the second quarter and the first quartersix months of 2026 was primarily due to (1) depreciation and amortization on restaurant assets acquired from a franchisee during the third quarter of 2025,2025 and (2) asset additions for new and remodeled restaurants and (3) restaurant-related asset disposals.restaurants.

The increase in amortization of cloud computing arrangements during the second quarter and the first quartersix months of 2026 was primarily due to amortization of assets associated with the Company’s digital investments.

System optimization (gains) losses,gains, net during the second quarter and the first quartersix months of 2026 were primarily comprised of gains on the sale of surplus and other properties. See Note 10 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further discussion.

During the first quartersix months of 2026 and 2025, the Company recognized costs under the Organizational Redesign Plan of $(0.2) million and $(1.00.8) million, respectively, which primarily included reversals of severance accruals resulting from changes in estimates. See Note 11 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the Organizational Redesign Plan.

The increase in impairment of long-lived assets during the second quarter was primarily due to higher impairment charges resulting from the deterioration in operating performance of certain Company-operated restaurants. The increase in impairment of long-lived assets during the first quartersix months of 2026 was primarily due to (1) losses from the remeasurement to fair value of assets leased and/or subleased to franchisees in connection with the closure of franchise-operated restaurants and (2) higher impairment charges resulting from the deterioration in operating performance of certain Company-operated restaurants.

The increase in interest expense, net during the second quarter and the first quartersix months of 2026 was primarily due to the impact of completing the refinancing of a portion of the Company’s securitized financing facility in the fourth quarter of 2025.

During the first quartersix months of 2025, the Company recorded a loss of $1.7 million due to impairment charges for the difference between the estimated fair value and the carrying value of an investment in equity securities.

The decreaseincrease in otherthe income,effective nettax duringrate for the second quarter and the first quartersix months of 2026 was primarily due to athe decreasetax in interest income, reflecting lower balanceseffects of cashour equivalentsforeign operations and lower interestincome rates.before income taxes.

The increase in Wendy’s U.S. revenues during the second quarter and the first quartersix months of 2026 was primarily due to (1) higher advertising fund revenue, (2) the impact of the Company’s acquisition of 35 franchise-operated restaurants in the third quarter of 2025, and (23) an increase in franchise fees, (3) higher advertising fund revenue and (4) net new restaurant development.fees. These impacts were partially offset by a decrease in same-restaurant sales. Same-restaurant sales decreased during the second quarter and the first quartersix months of 2026 primarily due to a decrease in traffic, partially offset by higher average check.

The decrease in Wendy’s U.S. segment profit during the second quarter and the first quartersix months of 2026 was primarily due to (1) higher advertising fund expenses, (2) higher cost of sales, as a percent of salessales, for Company-operated restaurants, driven by the same factors as described above for “Cost of Sales, as a Percent of Sales,” and (23) higher franchise support and other costs. These changes were partially offset by higher revenues.

The increasedecrease in Wendy’s International segment profit during the second quarter and the first quartersix months of 2026 was primarily due to higher(1) revenues,an partiallyincrease offsetin byfranchise support and other costs and (2) higher general and administrative expenses. These impacts were partially offset by (1) higher revenues and (2) lower cost of sales, as a percent of sales, for Company-operated restaurants.

The increasedecrease in Global Real Estate & Development revenues during the second quarter and the first quartersix months of 2026 was primarily due to ana increasedecrease in franchise rental income, driven by the same factors as described above for “Franchise Rental Income.”

As of MarchJune 29,28, 2026, cash, cash equivalents and restricted cash totaled $362.0$394.8 million. In addition, the Company maintains a revolving financing facility, which allows for the drawing of up to $300.0 million. 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.