10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2019

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 registrants 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)

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 [x] 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 [x] 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 [x]	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 [x]

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

There were 230,724,058 shares of The Wendy’s Company common stock outstanding as of May 1, 2019.

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 March 31, 2019 and December 30, 2018	4
Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and April 1, 2018	5
Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and April 1, 2018	6
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2019 and April 1, 2018	7
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and April 1, 2018	8
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures about Market Risk	38
Item 4. Controls and Procedures	39
PART II: OTHER INFORMATION	40
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 6. Exhibits	44
Signatures	45

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands Except Par Value)

	March 31, 2019			December 30, 2018
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	414,168		$	431,405
Restricted cash	29,671			29,860
Accounts and notes receivable, net	110,567			109,805
Inventories	3,550			3,687
Prepaid expenses and other current assets	19,762			14,452
Advertising funds restricted assets	86,046			76,509
Total current assets	663,764			665,718
Properties	1,003,231			1,023,267
Finance lease assets	195,368			189,969
Operating lease assets	919,283			—
Goodwill	755,355			747,884
Other intangible assets	1,264,238			1,294,153
Investments	48,411			47,660
Net investment in sales-type and direct financing leases	236,426			226,477
Other assets	99,585			96,907
Total assets	$	5,185,661		$	4,292,035
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	23,250		$	23,250
Current portion of finance lease liabilities	9,380			8,405
Current portion of operating lease liabilities	43,657			—
Accounts payable	16,356			21,741
Accrued expenses and other current liabilities	141,093			150,636
Advertising funds restricted liabilities	89,901			80,153
Total current liabilities	323,637			284,185
Long-term debt	2,301,563			2,305,552
Long-term finance lease liabilities	458,595			447,231
Long-term operating lease liabilities	957,739			—
Deferred income taxes	268,225			269,160
Deferred franchise fees	92,327			92,232
Other liabilities	142,881			245,226
Total liabilities	4,544,967			3,643,586
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized;      470,424 shares issued; 230,944 and 231,233 shares outstanding, respectively	47,042			47,042
Additional paid-in capital	2,880,663			2,884,696
Retained earnings	153,991			146,277
Common stock held in treasury, at cost; 239,480 and 239,191 shares, respectively	(2,385,354		)	(2,367,893		)
Accumulated other comprehensive loss	(55,648		)	(61,673		)
Total stockholders’ equity	640,694			648,449
Total liabilities and stockholders’ equity	$	5,185,661		$	4,292,035

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
	March 31, 2019			April 1, 2018
	(Unaudited)
Revenues:
Sales	$	167,697		$	153,649
Franchise royalty revenue and fees	101,953			97,908
Franchise rental income	58,452			50,107
Advertising funds revenue	80,481			78,900
	408,583			380,564
Costs and expenses:
Cost of sales	142,579			132,219
Franchise support and other costs	6,018			6,173
Franchise rental expense	32,451			23,263
Advertising funds expense	80,481			78,900
General and administrative	49,313			50,356
Depreciation and amortization	33,185			32,152
System optimization (gains) losses, net	(12		)	570
Reorganization and realignment costs	798			2,626
Impairment of long-lived assets	1,486			206
Other operating income, net	(3,982		)	(1,163		)
	342,317			325,302
Operating profit	66,266			55,262
Interest expense, net	(29,082		)	(30,178		)
Loss on early extinguishment of debt	—			(11,475		)
Other income, net	2,700			744
Income before income taxes	39,884			14,353
(Provision for) benefit from income taxes	(7,990		)	5,806
Net income	$	31,894		$	20,159
Basic and diluted net income per share	$	.14		$	.08

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
	March 31, 2019		April 1, 2018
	(Unaudited)
Net income	$	31,894	$	20,159
Other comprehensive income (loss), net:
Foreign currency translation adjustment	6,025		(6,044		)
Change in unrecognized pension loss:
Unrealized gains arising during the period	—		156
Income tax provision	—		(39		)
	—		117
Other comprehensive income (loss), net	6,025		(5,927		)
Comprehensive income	$	37,919	$	14,232

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 (Accumulated Deficit)			Common Stock Held in Treasury			Accumulated Other Comprehensive Loss			Total
	(Unaudited)
Balance at December 31, 2017	$	47,042	$	2,885,955		$	(163,289	)	$	(2,150,307	)	$	(46,198	)	$	573,203
Net income	—		—			20,159			—			—			20,159
Other comprehensive loss, net	—		—			—			—			(5,927		)	(5,927		)
Cash dividends	—		—			(20,355		)	—			—			(20,355		)
Repurchases of common stock	—		—			—			(39,407		)	—			(39,407		)
Share-based compensation	—		4,458			—			—			—			4,458
Common stock issued upon exercises of stock options	—		(7,460		)	—			11,038			—			3,578
Common stock issued upon vesting of restricted shares	—		(4,170		)	—			1,620			—			(2,550		)
Cumulative effect of change in accounting principle	—		—			(70,210		)	—			—			(70,210		)
Other	—		21			(5		)	32			—			48
Balance at April 1, 2018	$	47,042	$	2,878,804		$	(233,700	)	$	(2,177,024	)	$	(52,125	)	$	462,997
Balance at December 30, 2018	$	47,042	$	2,884,696		$	146,277		$	(2,367,893	)	$	(61,673	)	$	648,449
Net income	—		—			31,894			—			—			31,894
Other comprehensive income, net	—		—			—			—			6,025			6,025
Cash dividends	—		—			(23,069		)	—			—			(23,069		)
Repurchases of common stock	—		—			—			(29,370		)	—			(29,370		)
Share-based compensation	—		5,022			—			—			—			5,022
Common stock issued upon exercises of stock options	—		(205		)	—			9,053			—			8,848
Common stock issued upon vesting of restricted shares	—		(8,874		)	—			2,819			—			(6,055		)
Cumulative effect of change in accounting principle	—		—			(1,105		)	—			—			(1,105		)
Other	—		24			(6		)	37			—			55
Balance at March 31, 2019	$	47,042	$	2,880,663		$	153,991		$	(2,385,354	)	$	(55,648	)	$	640,694

See accompanying notes to condensed consolidated financial statements.

7

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	Three Months Ended
	March 31, 2019			April 1, 2018
	(Unaudited)
Cash flows from operating activities:
Net income	$	31,894		$	20,159
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,185			32,152
Share-based compensation	5,022			4,458
Impairment of long-lived assets	1,486			206
Deferred income tax	842			(9,799		)
Non-cash rental expense (income), net	7,818			(3,239		)
Change in operating lease liabilities	(10,496		)	—
Net receipt of deferred vendor incentives	8,033			7,340
System optimization (gains) losses, net	(12		)	570
Distributions received from joint ventures, net of equity in earnings	415			1,083
Long-term debt-related activities, net	1,823			13,215
Changes in operating assets and liabilities and other, net	(17,989		)	2,566
Net cash provided by operating activities	62,021			68,711
Cash flows from investing activities:
Capital expenditures	(11,215		)	(10,569		)
Acquisitions	(5,052		)	—
Dispositions	—			351
Proceeds from sale of investments	130			—
Notes receivable, net	248			(872		)
Payments for investments	—			(12		)
Net cash used in investing activities	(15,889		)	(11,102		)
Cash flows from financing activities:
Proceeds from long-term debt	—			928,167
Repayments of long-term debt	(5,813		)	(870,394		)
Repayments of finance lease liabilities	(1,881		)	(1,353		)
Deferred financing costs	—			(17,340		)
Repurchases of common stock	(30,929		)	(39,372		)
Dividends	(23,069		)	(20,355		)
Proceeds from stock option exercises	5,196			9,385
Payments related to tax withholding for share-based compensation	(6,055		)	(8,321		)
Contingent consideration payment	—			(6,100		)
Net cash used in financing activities	(62,551		)	(25,683		)
Net cash (used in) provided by operations before effect of exchange rate changes on cash	(16,419		)	31,926
Effect of exchange rate changes on cash	1,884			(2,482		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(14,535		)	29,444
Cash, cash equivalents and restricted cash at beginning of period	486,512			212,824
Cash, cash equivalents and restricted cash at end of period	$	471,977		$	242,268

8

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—CONTINUED

(In Thousands)

	Three Months Ended
	March 31, 2019		April 1, 2018
	(Unaudited)
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	$	5,125	$	6,466
Finance leases	13,810		1,101
	March 31, 2019		December 30, 2018
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	414,168	$	431,405
Restricted cash	29,671		29,860
Restricted cash, included in Advertising funds restricted assets	28,138		25,247
Total cash, cash equivalents and restricted cash	$	471,977	$	486,512

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 March 31, 2019 and the results of our operations and cash flows for the three months endedMarch 31, 2019 and April 1, 2018. The results of operations for the three months endedMarch 31, 2019 are not necessarily indicative of the results to be expected for the full 2019 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 December 30, 2018 (the “Form 10-K”).

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 geographically. The operation and franchising of Wendy’s^® restaurants in North America (defined as the United States of America (“U.S.”) and Canada) comprises virtually all of our current operations and represents a single reportable segment. The revenues and operating results of Wendy’s restaurants outside of North America are not material.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three-month periods presented herein contain 13 weeks. All references to years and quarters 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.

Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. See Note 2 for further information.

(2) New Accounting Standards

New Accounting Standards Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for implementation costs of a cloud computing arrangement that is a service contract. The new guidance aligns the accounting for such implementation costs of a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

In June 2018, the FASB issued new guidance on nonemployee share-based payment arrangements. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

Leases

In February 2016, the FASB issued new guidance on leases, which outlines principles for the recognition, measurement, presentation and disclosure of leases applicable to both lessors and lessees. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases. The Company adopted the new guidance during the first quarter of 2019 using the effective date as the date of initial application; therefore, the comparative period has not been adjusted and continues to be reported under the previous lease guidance.

10

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. For those leases that fall under the definition of a short-term lease, the Company elected the short-term lease recognition exemption. Under this practical expedient, for those leases that qualify, we did not recognize right-of-use (“ROU”) assets or liabilities, which included not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient for lessees to account for lease components and nonlease components as a single lease component for all underlying classes of assets. In addition, the Company elected the practical expedient for lessors to account for lease components and nonlease components as a single lease component in instances where the lease component is predominant, the timing and pattern of transfer for the lease component and nonlease component are the same and the lease component, if accounted for separately, would be classified as an operating lease. The Company did not elect the use-of-hindsight practical expedient.

The standard had a material impact on our condensed consolidated balance sheets and related disclosures. Upon adoption at the beginning of 2019, we recognized operating lease liabilities of $1,011,000 based on the present value of the remaining minimum rental payments, with corresponding ROU assets of $934,000. The measurement of the operating lease ROU assets included, among other items, favorable lease amounts of $23,000 and unfavorable lease amounts of $30,000, which were previously included in “Other intangible assets” and “Other liabilities,” respectively, as well as the excess of rent expense recognized on a straight-line basis over the minimum rents paid of $67,000, which was previously included in “Other liabilities.” In addition, the standard requires lessors to recognize lessees’ payments to the Company for executory costs on a gross basis as revenue with a corresponding expense, which we expect will result in an increase of approximately $40,000 to our 2019 franchise rental income and expense. The Company also recognized a decrease to retained earnings of $1,105 as a result of impairing newly recognized ROU assets upon transition to the new guidance. The adoption of the guidance did not have a material impact on our condensed consolidated statement of cash flows.

In connection with the adoption of the standard, the Company has reclassified finance lease ROU assets to “Finance lease assets,” which were previously recorded to “Properties.” The Company also reclassified the current and long-term finance lease liabilities to “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” which were previously recorded to “Current portion of long-term debt” and “Long-term debt,” respectively. The prior period reflects the reclassifications of these assets and liabilities to conform to the current year presentation.

The following table illustrates the reclassifications made to the condensed consolidated balance sheet as of December 30, 2018:

	As Previously Reported		Reclassifications			As Currently Reported
Properties	$	1,213,236	$	(189,969	)	$	1,023,267
Finance lease assets	—		189,969			189,969
Current portion of long-term debt	31,655		(8,405		)	23,250
Current portion of finance lease liabilities	—		8,405			8,405
Long-term debt	2,752,783		(447,231		)	2,305,552
Long-term finance lease liabilities	—		447,231			447,231
	$	1,429,490	$	—		$	1,429,490

11

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(3) Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by primary geographical market and source:

Three Months Ended March 31, 2019	U.S.		Canada		Other International		Total
Sales at Company-operated restaurants	$	167,697	$	—	$	—	$	167,697
Franchise royalty revenue	84,378		5,508		4,957		94,843
Franchise fees	6,009		412		689		7,110
Franchise rental income	50,665		7,787		—		58,452
Advertising funds revenue	75,981		4,500		—		80,481
Total revenues	$	384,730	$	18,207	$	5,646	$	408,583
Three Months Ended April 1, 2018
Sales at Company-operated restaurants	$	153,649	$	—	$	—	$	153,649
Franchise royalty revenue	80,222		5,363		4,358		89,943
Franchise fees	7,085		646		234		7,965
Franchise rental income	44,265		5,842		—		50,107
Advertising funds revenue	74,414		4,486		—		78,900
Total revenues	$	359,635	$	16,337	$	4,592	$	380,564

Contract Balances

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

	March 31, 2019 (a)		December 30, 2018 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	44,765	$	40,300
Receivables, which are included in “Advertising funds restricted assets”	47,056		47,332
Deferred franchise fees (c)	101,469		102,205

_______________

(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 statement 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 $9,142 and $92,327 as of March 31, 2019, respectively, and $9,973 and $92,232 as of December 30, 2018, respectively.

12

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:

	Three Months Ended
	March 31, 2019			April 1, 2018
Deferred franchise fees at beginning of period	$	102,205		$	102,492
Revenue recognized during the period	(2,772		)	(2,688		)
New deferrals due to cash received and other	2,036			2,957
Deferred franchise fees at end of period	$	101,469		$	102,761

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:
2019 (a)	$	6,307
2020	6,482
2021	5,939
2022	5,725
2023	5,500
Thereafter	71,516
	$	101,469

_______________

(a) Represents franchise fees expected to be recognized for the remainder of 2019, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

13

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(4) Acquisitions

During the three months endedMarch 31, 2019, the Company acquired five restaurants from franchisees for total net cash consideration of $5,052. The Company did not incur any material acquisition-related costs associated with the acquisitions and such transactions were not significant to our condensed consolidated financial statements. The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from the franchisees:

	Three Months Ended
	March 31, 2019
Restaurants acquired from franchisees	5
Total consideration paid, net of cash received	$	5,052
Identifiable assets acquired and liabilities assumed:
Properties	666
Acquired franchise rights	1,354
Finance lease assets	5,350
Finance lease liabilities	(4,084		)
Other	(2,316		)
Total identifiable net assets	970
Goodwill	$	4,082

During 2018, the Company acquired 16 restaurants from a franchisee for total net cash consideration of $21,401. The fair values of the identifiable intangible assets related to the acquisition were provisional amounts as of December 30, 2018, pending final purchase accounting adjustments. The Company finalized the purchase price allocation during the three months endedMarch 31, 2019, which resulted in a decrease in the fair value of acquired franchise rights of $2,989 and an increase in deferred tax assets of $140.

(5) System Optimization (Gains) Losses, Net

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

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

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

	Three Months Ended
	March 31, 2019			April 1, 2018
Post-closing adjustments on sales of restaurants (a)	$	(8	)	$	(212	)
Gain (loss) on sales of other assets, net (b)	20			(358		)
System optimization gains (losses), net	$	12		$	(570	)

_______________

14

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

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

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

Assets Held for Sale

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

(6) Reorganization and Realignment Costs

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

	Three Months Ended
	March 31, 2019		April 1, 2018
G&A realignment	$	782	$	2,626
System optimization initiative	16		—
Reorganization and realignment costs	$	798	$	2,626

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses. The Company expects to incur total costs aggregating approximately $32,000 to $35,000 related to the plan. The Company recognized costs totaling $782 and $2,626 during the three months endedMarch 31, 2019 and April 1, 2018, respectively, which primarily included severance and related employee costs. The Company expects to incur additional costs associated with our G&A realignment plan aggregating approximately $3,500, comprised of (1) severance and related employee costs of approximately $500, (2) recruitment and relocation costs of approximately $1,500, (3) third-party and other costs of approximately $500 and (4) share-based compensation of approximately $1,000. The Company expects to recognize the majority of the remaining costs associated with the plan during the remainder of 2019.

In May 2019, the Company announced changes to its leadership structure that includes the creation of two new positions, a President, U.S and Chief Commercial Officer and a President, International and Chief Development Officer. The Company expects to incur incremental reorganization and realignment costs associated with these leadership changes of approximately $2,500, of which approximately $1,500 will be severance and related employee costs and approximately $1,000 will be share-based compensation. This will increase total reorganization and realignment costs to approximately $34,500 to $37,500. Also as a result of these changes, the Company’s chief operating decision maker is currently evaluating the Company’s management and operating structure and anticipates this evaluation will result in a change to its existing operating segment structure by the end of 2019.

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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 G&A realignment plan:

	Three Months Ended				Total Incurred Since Inception
	March 31, 2019		April 1, 2018
Severance and related employee costs	$	472	$	2,059	$	19,225
Recruitment and relocation costs	114		148		1,680
Third-party and other costs	16		328		2,126
	602		2,535		23,031
Share-based compensation (a)	180		91		6,864
Termination of defined benefit plans	—		—		1,335
Total G&A realignment	$	782	$	2,626	$	31,230

_______________

(a) 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.

The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,730 and $765 as of March 31, 2019, respectively, and $8,781 and $2,731 as of April 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan.

	Balance December 30, 2018		Charges		Payments			Balance March 31, 2019
Severance and related employee costs	$	7,241	$	472	$	(2,218	)	$	5,495
Recruitment and relocation costs	83		114		(197		)	—
Third-party and other costs	—		16		(16		)	—
	$	7,324	$	602	$	(2,431	)	$	5,495

	Balance December 31, 2017		Charges		Payments			Balance April 1, 2018
Severance and related employee costs	$	12,093	$	2,059	$	(2,844	)	$	11,308
Recruitment and relocation costs	177		148		(121		)	204
Third-party and other costs	—		328		(328		)	—
	$	12,270	$	2,535	$	(3,293	)	$	11,512

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,208 under the initiative since inception and expects to incur additional costs of approximately $500 during the remainder of 2019, which are primarily comprised of professional fees.

(7) 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 Hortonsis 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.”

16

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

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

	Three Months Ended
	March 31, 2019			April 1, 2018
Balance at beginning of period	$	47,021		$	55,363
Investment	—			12
Equity in earnings for the period	2,397			2,420
Amortization of purchase price adjustments (a)	(566		)	(596		)
	1,831			1,824
Distributions received	(2,246		)	(2,907		)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	1,166			(1,262		)
Balance at end of period	$	47,772		$	53,030

_______________

(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.

(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.

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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:

	March 31, 2019				December 30, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	205,393	$	205,393	$	222,228	$	222,228	Level 1
Other investments in equity securities (a)	639		2,179		639		2,181		Level 3
Financial liabilities
Series 2018-1 Class A-2-I Notes (b)	444,375		439,656		445,500		424,026		Level 2
Series 2018-1 Class A-2-II Notes (b)	469,063		461,952		470,250		439,353		Level 2
Series 2015-1 Class A-2-II Notes (b)	868,500		876,065		870,750		865,342		Level 2
Series 2015-1 Class A-2-III Notes (b)	482,500		495,711		483,750		482,522		Level 2
7% debentures, due in 2025 (b)	91,086		99,000		90,769		102,750		Level 2
Guarantees of franchisee loan obligations (c)	12		12		17		17		Level 3

_______________

(a) The fair values of our investments are not significant and are based on our review of information provided by the investment managers or investees which was based on (1) valuations performed by the investment managers or investees, (2) quoted market or broker/dealer prices for similar investments and (3) quoted market or broker/dealer prices adjusted by the investment managers for legal or contractual restrictions, risk of nonperformance or lack of marketability, depending upon the underlying investments.

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

(c) Wendy’s has provided loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage.

The carrying amounts of cash, accounts payable and accrued expenses approximated 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) approximated fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents and guarantees are the only financial assets and liabilities 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 and favorable lease 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 represents 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.

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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, which primarily include surplus properties. The fair values of long-lived assets held for sale presented in the tables below represents 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
	March 31, 2019		Level 1		Level 2		Level 3
Held and used	$	—	$	—	$	—	$	—
Held for sale	2,516		—		—		2,516
Total	$	2,516	$	—	$	—	$	2,516

			Fair Value Measurements
	December 30, 2018		Level 1		Level 2		Level 3
Held and used	$	462	$	—	$	—	$	462
Held for sale	1,031		—		—		1,031
Total	$	1,493	$	—	$	—	$	1,493

(9) Impairment of Long-Lived Assets

During the three months endedMarch 31, 2019 and April 1, 2018, the Company recorded impairment charges on long-lived assets as a result of closing Company-operated restaurants and classifying such surplus properties as held for sale.

During the three months endedMarch 31, 2019, the Company recorded impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants. Additionally, during the three months endedApril 1, 2018, the Company recorded impairment charges as a result of 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.

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
	March 31, 2019		April 1, 2018
Surplus properties	$	1,285	$	41
Company-operated restaurants	201		—
Restaurants leased or subleased to franchisees	—		165
	$	1,486	$	206

(10) Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2019 and April 1, 2018 was 20.0% and (40.5)% respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to (1) net excess tax benefits related to share-based payments, which resulted in a benefit of $2,036 in the first quarter of 2019 and a benefit of $6,093 for the first quarter of 2018, (2) the impact of the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) and (3) state income tax provision in 2019, including non-recurring changes to state deferred taxes net of federal benefits.

On December 22, 2017, the U.S. government enacted the Tax Act. In our continued analysis of the impact of the Tax Act in the first quarter of 2018 under Staff Accounting Bulletin 118, we adjusted our provisional amounts for a discrete net tax benefit of $3,623. This net benefit included $5,578 for the tax benefit of foreign tax credits, partially offset by a net expense of $1,955 related to the impact of the corporate rate reduction on our net deferred tax liabilities.

19

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three months ended March 31, 2019. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $7,764 due to the lapse of statutes of limitations and expected settlements with taxing authorities.

The current portion of refundable income taxes was $9,560 and $14,475 as of March 31, 2019 and December 30, 2018, respectively, and is included in “Accounts and notes receivable, net” in the condensed consolidated balance sheets. There were no long-term refundable income taxes as of March 31, 2019 and December 30, 2018.

(11) Net Income Per Share

Basic net income per share was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding.

The weighted average number of shares used to calculate basic and diluted net income per share were as follows:

	Three Months Ended
	March 31, 2019	April 1, 2018
Common stock:
Weighted average basic shares outstanding	230,584	239,928
Dilutive effect of stock options and restricted shares	5,310	8,491
Weighted average diluted shares outstanding	235,894	248,419

Diluted net income per share for the three months endedMarch 31, 2019 and April 1, 2018 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 2,158 and 2,711 for the three months endedMarch 31, 2019 and April 1, 2018, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(12) Stockholders’ Equity

Dividends

During the first quarter of 2019 and 2018, the Company paid dividends per share of $.10 and $.085, respectively.

Repurchases of Common Stock

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 warrant and to the extent legally permissible. In connection with the February 2019 authorization, the Company’s previous November 2018 repurchase authorization for up to $220,000 of our common stock was canceled. During the three months ended March 31, 2019, the Company repurchased 1,744 shares with an aggregate purchase price of $29,345, of which $268 was accrued at March 31, 2019, and excluding commissions of $25, under the November 2018 and February 2019 authorizations. As of March 31, 2019, the Company had $217,112 of availability remaining under its February 2019 authorization. Subsequent to March 31, 2019 through May 1, 2019, the Company repurchased 308 shares under the February 2019 authorization with an aggregate purchase price of $5,654, excluding commissions of $4.

In February 2018, our Board of Directors authorized a repurchase program for up to $175,000 of our common stock through March 3, 2019, when and if market conditions warranted and to the extent legally permissible. During the three months ended April 1, 2018, the Company repurchased 989 shares with an aggregate purchase price of $16,741, of which $1,294 was accrued at April 1, 2018, and excluding commissions of $14. Additionally, during the three months ended April 1, 2018, the Company completed its previous February 2017 repurchase authorization for up to $150,000 of our common stock with the repurchase of 1,385 shares with an aggregate purchase price of $22,633, and excluding commissions of $19.

20

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Accumulated Other Comprehensive Loss

The following table provides a rollforward of the components of accumulated other comprehensive loss, net of tax as applicable:

	Foreign Currency Translation			Pension			Total
Balance at December 30, 2018	$	(61,673	)	$	—		$	(61,673	)
Current-period other comprehensive income	6,025			—			6,025
Balance at March 31, 2019	$	(55,648	)	$	—		$	(55,648	)
Balance at December 31, 2017	$	(45,149	)	$	(1,049	)	$	(46,198	)
Current-period other comprehensive (loss) income	(6,044		)	117			(5,927		)
Balance at April 1, 2018	$	(51,193	)	$	(932	)	$	(52,125	)

(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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

21

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

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THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended
	March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,117
Interest on finance lease liabilities	6,753
	9,870
Operating lease cost	24,643
Variable lease cost (a)	14,104
Short-term lease cost	1,126
Total operating lease cost (b)	39,873
Total lease cost	$	49,743

_______________

(a) Includes expenses for executory costs of $9,524, for which the Company is reimbursed by sublessees.

(b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 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:

	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	9,708
Operating cash flows from operating leases	23,312
Financing cash flows from finance leases	1,881
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	13,810
Operating lease liabilities	3,255

23

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:

	March 31, 2019
Weighted-average remaining lease term (years):
Finance leases	17.8
Operating leases	15.9
Weighted average discount rate:
Finance leases	10.19	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

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THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

Company as Lessor

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

25

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

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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:

	March 31, 2019
Land	$	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
	594,603
Accumulated depreciation and amortization	(145,812		)
	$	448,791

(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 for the operation of Wendy’s/Tim Hortons combo units in Canada. During the three months ended March 31, 2019 and April 1, 2018, Wendy’s paid TimWen $3,855 and $2,872, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $52 and $54 during the three months ended March 31, 2019 and April 1, 2018, respectively, which has been included as a reduction to “General and administrative.”

(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 $69,753 as of March 31, 2019. These leases extend through 2056. We have not received any notice of default related to these leases as of March 31, 2019. In the event of default by a franchise owner, Wendy’s generally retains the right to acquire possession of the related restaurant locations.

Letters of Credit

As of March 31, 2019, the Company had outstanding letters of credit with various parties totaling $27,089. The outstanding letters of credit include amounts outstanding against the Series 2018-1 Class A-1 Notes. We do not expect any material loss to result from these letters of credit.

27

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Purchase and Capital Commitments

Beverage Agreement

The Company has an agreement with a beverage vendor, which provides fountain beverage products and certain marketing support funding to the Company and its franchisees. This agreement requires minimum purchases of certain fountain beverages (“Fountain Beverages”) by the Company and its franchisees at certain agreed upon prices until the total contractual gallon volume usage is reached. This agreement also provides for an annual advance to be paid to the Company based on the vendor’s expectation of the Company’s annual Fountain Beverages usage, which is amortized over actual usage during the year. In January 2019, the Company amended its contract with the beverage vendor, which now expires at the later of reaching a threshold usage requirement or December 31, 2025. Beverage purchases made by the Company under this agreement during the three months ended March 31, 2019 were $2,414. As of March 31, 2019, the Company estimates future purchases to be approximately $7,500 for the remainder of 2019, $10,600 in 2020, $11,100 in 2021, $11,900 in 2022 and $12,500 in 2023 based on current pricing and the expected ratio of usage at Company-operated restaurants to usage at franchised restaurants.

(16) Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our current and prior businesses. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have adequate accruals for continuing operations for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss 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. There were no material developments in those legal proceedings during the three months ended March 31, 2019.

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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 December 30, 2018 (the “Form 10-K”). There have been no material changes as of March 31, 2019 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 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 franchises and operates Wendy’s^® quick-service restaurants specializing in hamburger sandwiches throughout North America (defined as the United States of America (“U.S.”) and Canada). Wendy’s also has franchised restaurants in 29 foreign countries and U.S. territories.

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, the restaurants sell a variety of promotional products on a limited time basis. Wendy’s also offers breakfast in some restaurants in the United States.

The Company manages and internally reports its business geographically. The operation and franchising of Wendy’s restaurants in North America comprises virtually all of our current operations and represents a single reportable segment. The revenues and operating results of Wendy’s restaurants outside of North America are not material. The results of operations discussed below may not necessarily be indicative of future results.

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

We adopted the new accounting guidance for leases effective December 31, 2018, which had a material impact on our condensed consolidated financial statements. Beginning with the first quarter of 2019, our financial condition and results of operations reflect adoption of the guidance; however, prior period results were not restated. See Note 2 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information.

Executive Overview

Our Business

As of March 31, 2019, the Wendy’s restaurant system was comprised of 6,710 restaurants, of which 358 were owned and operated by the Company. All of our Company-operated restaurants are located in the United States.

Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and decreased consumer spending levels, general economic and market trends and weather.

Wendy’s long-term growth opportunities include (1) systemwide same-restaurant sales growth through continuing core menu improvement, product innovation, customer count growth and strategic price increases on our menu items, (2) system investment in our Image Activation program, which includes innovative exterior and interior restaurant designs for our new and reimaged restaurants and focused execution of operational excellence, (3) growth in new restaurants, including global growth, (4) increased focus on consumer-facing digital platforms and technologies, (5) increased restaurant utilization in various dayparts, (6)

29

strengthening our operations through our system optimization initiative and (7) building stockholder value through financial management strategies.

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. 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 believes systemwide sales data is useful in assessing consumer demand for the Company’s products, the overall success of the Wendy’s brand and, ultimately, the performance of the Company. The Company’s royalty 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 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.

Same-restaurant sales and systemwide sales exclude sales from Venezuela and, beginning in the third quarter of 2018, exclude sales from Argentina 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 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.

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses. The Company expects to realize a total G&A expense reduction through the plan of approximately $35.0 million. The Company expects to incur total costs aggregating approximately $32.0 million to $35.0 million, of which $23.0 million to $27.0 million will be cash expenditures, related to such savings. Costs related to the plan are recorded to “Reorganization and realignment costs.” The Company recognized costs totaling $0.8 million and $2.6 million during the first quarter of 2019 and 2018, respectively, which primarily included severance and related employee costs. The Company expects to incur additional costs associated with our G&A realignment plan aggregating approximately $3.5 million, comprised of (1) severance and related employee costs of approximately $0.5 million, (2) recruitment and relocation costs of approximately $1.5 million, (3) third-party and other costs of approximately $0.5 million and (4) share-based compensation of approximately $1.0 million. The Company expects to recognize the majority of the remaining costs associated with the plan during the remainder of 2019.

In May 2019, the Company announced changes to its leadership structure that includes the creation of two new positions, a President, U.S and Chief Commercial Officer and a President, International and Chief Development Officer. The Company expects to incur incremental reorganization and realignment costs associated with these leadership changes of approximately $2.5 million, of which approximately $1.5 million will be severance and related employee costs and approximately $1.0 million will be share-based compensation. This will increase total reorganization and realignment costs to approximately $34.5 million to $37.5 million. Also as a result of these changes, the Company’s chief operating decision maker is currently evaluating the Company’s management

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and operating structure and anticipates this evaluation will result in a change to its existing operating segment structure by the end of 2019.

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 first quarter of 2019 and 2018.

	First Quarter
	2019			2018			Change
Revenues:
Sales	$	167.7		$	153.7		$	14.0
Franchise royalty revenue and fees	102.0			97.9			4.1
Franchise rental income	58.4			50.1			8.3
Advertising funds revenue	80.5			78.9			1.6
	408.6			380.6			28.0
Costs and expenses:
Cost of sales	142.6			132.2			10.4
Franchise support and other costs	6.0			6.2			(0.2		)
Franchise rental expense	32.4			23.3			9.1
Advertising funds expense	80.5			78.9			1.6
General and administrative	49.3			50.4			(1.1		)
Depreciation and amortization	33.2			32.1			1.1
System optimization (gains) losses, net	—			0.6			(0.6		)
Reorganization and realignment costs	0.8			2.6			(1.8		)
Impairment of long-lived assets	1.5			0.2			1.3
Other operating income, net	(4.0		)	(1.2		)	(2.8		)
	342.3			325.3			17.0
Operating profit	66.3			55.3			11.0
Interest expense, net	(29.1		)	(30.2		)	1.1
Loss on early extinguishment of debt	—			(11.5		)	11.5
Other income, net	2.7			0.8			1.9
Income before income taxes	39.9			14.4			25.5
(Provision for) benefit from income taxes	(8.0		)	5.8			(13.8		)
Net income	$	31.9		$	20.2		$	11.7

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	First Quarter
	2019		% of Total Revenues		2018		% of Total Revenues
Revenues:
Sales	$	167.7	41.0	%	$	153.7	40.4	%
Franchise royalty revenue and fees:
Royalty revenue	94.9		23.2	%	89.9		23.6	%
Franchise fees	7.1		1.8	%	8.0		2.1	%
Total franchise royalty revenue and fees	102.0		25.0	%	97.9		25.7	%
Franchise rental income	58.4		14.3	%	50.1		13.2	%
Advertising funds revenue	80.5		19.7	%	78.9		20.7	%
Total revenues	$	408.6	100.0	%	$	380.6	100.0	%
	First Quarter
	2019		% of  Sales		2018		% of  Sales
Cost of sales:
Food and paper	$	52.2	31.1	%	$	48.9	31.8	%
Restaurant labor	51.7		30.8	%	46.8		30.5	%
Occupancy, advertising and other operating costs	38.7		23.1	%	36.5		23.8	%
Total cost of sales	$	142.6	85.0	%	$	132.2	86.1	%

	First Quarter
	2019		% of Sales		2018		% of Sales
Restaurant margin	$	25.1	15.0	%	$	21.5	13.9	%

The tables below present key business measures which are defined and further discussed in the “Executive Overview” section included herein.

	First Quarter
	2019		2018
Key business measures:
North America same-restaurant sales growth:
Company-operated	2.1	%	0.8	%
Franchised	1.3	%	1.7	%
Systemwide	1.3	%	1.6	%
Global same-restaurant sales growth:
Company-operated	2.1	%	0.8	%
Franchised (a)	1.3	%	1.8	%
Systemwide (a)	1.4	%	1.8	%

________________

(a) Includes international franchised same-restaurant sales (excluding Venezuela, and excluding Argentina in 2019, due to the impact of the highly inflationary economies of those countries).

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	First Quarter
	2019		2018
Key business measures (continued):
Systemwide sales: (a)
Company-operated	$	167.7	$	153.7
North America franchised	2,290.7		2,250.7
North America systemwide	2,458.4		2,404.4
International franchised (b)	132.9		127.2
Global systemwide	$	2,591.3	$	2,531.6

________________

(a) During the first quarter of 2019 and 2018, North America systemwide sales increased 3.0% and 2.8%, respectively, international franchised sales increased 10.1% and 13.7%, respectively, and global systemwide sales increased 3.3% and 3.3%, respectively, on a constant currency basis.

(b) Excludes Venezuela, and excludes Argentina in 2019, due to the impact of the highly inflationary economies of those countries.

	First Quarter
	Company-operated	North America Franchised		International Franchised		Systemwide
Restaurant count:
Restaurant count at December 30, 2018	353	5,825		533		6,711
Opened	—	29		14		43
Closed	—	(24	)	(20	)	(44	)
Net purchased from (sold by) franchisees	5	(5	)	—		—
Restaurant count at March 31, 2019	358	5,825		527		6,710

Sales	First Quarter
	2019		2018		Change
Sales	$	167.7	$	153.7	$	14.0

The increase in sales for the first quarter of 2019 was primarily due to a net increase in the number of Company-operated restaurants in operation during 2019 compared to 2018, as well as a 2.1% increase in Company-operated same-restaurant sales. Company-operated same-restaurant sales improved due to an increase in our average per customer check amount, reflecting benefits from strategic price increases on our menu items and changes in product mix. These benefits were partially offset by a decrease in customer count.

Franchise Royalty Revenue and Fees	First Quarter
	2019		2018		Change
Royalty revenue	$	94.9	$	89.9	$	5.0
Franchise fees	7.1		8.0		(0.9		)
	$	102.0	$	97.9	$	4.1

The increase in franchise royalty revenue during the first quarter of 2019 was primarily due to a 1.3% increase in franchise same-restaurant sales. Royalty revenue was also positively impacted by a net increase in the number of franchise restaurants in operation. The decrease in franchise fees during the first quarter of 2019 was primarily due to lower other miscellaneous franchise fees, partially offset by higher fees for providing information technology services to franchisees.

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Franchise Rental Income	First Quarter
	2019		2018		Change
Franchise rental income	$	58.4	$	50.1	$	8.3

The increase in franchise rental income during the first quarter of 2019 was primarily due to the adoption of new accounting guidance for leases. Under the new guidance, lessees’ payments to the Company for executory costs are recorded on a gross basis as revenue with a corresponding expense. See “Franchise Rental Expense” below.

Advertising Funds Revenue	First Quarter
	2019		2018		Change
Advertising funds revenue	$	80.5	$	78.9	$	1.6

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 first quarter of 2019 was primarily due to a 1.3% increase in North America franchise same-restaurant sales, as well as a net increase in the number of North America franchise restaurants in operation. These increases were partially offset by reductions in advertising receipts under the Company’s new restaurant development incentive program.

Cost of Sales, as a Percent of Sales	First Quarter
	2019		2018		Change
Food and paper	31.1	%	31.8	%	(0.7	)%
Restaurant labor	30.8	%	30.5	%	0.3	%
Occupancy, advertising and other operating costs	23.1	%	23.8	%	(0.7	)%
	85.0	%	86.1	%	(1.1	)%

The decrease in cost of sales, as a percent of sales, during the first quarter of 2019 was primarily due to the benefit of strategic price increases on our menu items and changes in product mix. These benefits were partially offset by an increase in restaurant labor rates and a decrease in customer count.

Franchise Support and Other Costs	First Quarter
	2019		2018		Change
Franchise support and other costs	$	6.0	$	6.2	$	(0.2	)

Franchise support and other costs are primarily comprised of costs incurred to provide information technology and other services to our franchisees.

Franchise Rental Expense	First Quarter
	2019		2018		Change
Franchise rental expense	$	32.4	$	23.3	$	9.1

The increase in franchise rental expense during the first quarter of 2019 was primarily due to the adoption of new accounting guidance for leases. Under the new guidance, lessees’ payments to the Company for executory costs are recorded on a gross basis as revenue with a corresponding expense. See “Franchise Rental Income” above.

Advertising Funds Expense	First Quarter
	2019		2018		Change
Advertising funds expense	$	80.5	$	78.9	$	1.6

The increase in advertising funds expense during the first quarter of 2019 was due to the same factors as described above for advertising funds revenue. On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue.

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General and Administrative	First Quarter
	2019		2018		Change
Employee compensation and related expenses	$	41.0	$	41.5	$	(0.5	)
Other, net	8.3		8.9		(0.6		)
	$	49.3	$	50.4	$	(1.1	)

The decrease in general and administrative expenses during the first quarter of 2019 was primarily due to lower employee compensation and related expenses, reflecting changes in staffing driven by our G&A realignment plan, partially offset by additional expenditures to support our digital experience and international organizations.

Depreciation and Amortization	First Quarter
	2019		2018		Change
Restaurants	$	21.9	$	20.7	$	1.2
Corporate and other	11.3		11.4		(0.1		)
	$	33.2	$	32.1	$	1.1

The increase in restaurant depreciation and amortization during the first quarter of 2019 was primarily due to an increase in accelerated depreciation on existing assets that are being replaced as part of our Image Activation program.

System Optimization (Gains) Losses, Net	First Quarter
	2019		2018		Change
System optimization (gains) losses, net	$	—	$	0.6	$	(0.6	)

System optimization (gains) losses, net for the first quarter 2018 were comprised of losses on the sale of surplus properties and post-closing adjustments on previous sales of restaurants.

Reorganization and Realignment Costs	First Quarter
	2019		2018		Change
G&A realignment	$	0.8	$	2.6	$	(1.8	)

In May 2017, the Company initiated a G&A realignment plan to further reduce its G&A expenses. During the first quarter of 2019, the Company recognized costs associated with the plan totaling $0.8 million, which primarily included (1) severance and related employee costs of $0.5 million, (2) share-based compensation of $0.2 million and (3) recruitment and relocation costs of $0.1 million. During the first quarter of 2018, the Company recognized costs associated with the plan totaling $2.6 million, which primarily included (1) severance and related employee costs of $2.1 million, (2) third-party and other costs of $0.3 million and (3) share-based compensation of $0.1 million.

Impairment of Long-Lived Assets	First Quarter
	2019		2018		Change
Impairment of long-lived assets	$	1.5	$	0.2	$	1.3

The change in impairment charges during the first quarter of 2019 was primarily driven by variations in losses resulting from closing Company-operated restaurants and classifying such surplus properties as held for sale.

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Other Operating Income, Net	First Quarter
	2019			2018			Change
Gains on sales-type leases	$	(1.9	)	$	—		$	(1.9	)
Lease buyout	(0.2		)	0.6			(0.8		)
Other, net	(1.9		)	(1.8		)	(0.1		)
	$	(4.0	)	$	(1.2	)	$	(2.8	)

The change in other operating income, net during the first quarter of 2019 was primarily due to (1) gains on new and modified sales-type leases as a result of the new accounting guidance for leases and (2) lease buyout activity.

Interest Expense, Net	First Quarter
	2019		2018		Change
Interest expense, net	$	29.1	$	30.2	$	(1.1	)

Interest expense, net decreased during the first quarter of 2019 primarily due to the timing of interest expense on the Company’s finance lease obligations.

Loss on Early Extinguishment of Debt	First Quarter
	2019		2018		Change
Loss on early extinguishment of debt	$	—	$	11.5	$	(11.5	)

During the first quarter of 2018, the Company incurred a loss on the early extinguishment of debt as a result of redeeming the outstanding Series 2015-1 Class A-2-I Notes with the proceeds from the sale of the Series 2018-1 Class A-2 Notes in connection with the refinancing of a portion of our securitized financing facility. The loss on the early extinguishment of debt of $11.5 million was comprised of the write-off of certain deferred financing costs and a specified make-whole payment.

Other Income, Net	First Quarter
	2019		2018		Change
Other income, net	$	2.7	$	0.8	$	1.9

Other income, net increased during the first quarter of 2019 primarily due to higher interest income earned on our cash equivalents.

(Provision for) Benefit from Income Taxes	First Quarter
	2019			2018			Change
Income before income taxes	$	39.9		$	14.4		$	25.5
(Provision for) benefit from income taxes	(8.0		)	5.8			(13.8		)
Effective tax rate on income	20.0		%	(40.5		)%	60.5		%

Our effective tax rates in the first quarter of 2019 and 2018 were impacted by variations in income before income taxes, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items. Discrete items, which may occur in any given year but are not consistent from year to year, include the following: (1) net excess tax benefits related to share-based payments, which resulted in a benefit of $2.0 million in the first quarter of 2019 and a benefit of $6.1 million for the first quarter of 2018, (2) a change to our provisional amount, recorded in the first quarter of 2018, for the impact of the Tax Cuts and Jobs Act (the “Tax Act”), which resulted in a benefit of $3.6 million, and (3) state income taxes.

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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. 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 2019, exclusive of operating cash flow requirements, consist principally of:

• capital expenditures of approximately $64.0 million to $69.0 million, resulting in total anticipated cash capital expenditures for the year of approximately $75.0 million to $80.0 million;

• cash dividends aggregating up to approximately $69.2 million as discussed below in “Dividends;” and

• potential stock repurchases of up to $217.1 million, of which $5.7 million was repurchased subsequent to March 31, 2019 through May 1, 2019, 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.

The table below summarizes our cash flows from operating, investing and financing activities for the first three months of 2019 and 2018:

	First Quarter
	2019			2018			Change
Net cash provided by (used in):
Operating activities	$	62.0		$	68.7		$	(6.7	)
Investing activities	(15.9		)	(11.1		)	(4.8		)
Financing activities	(62.5		)	(25.7		)	(36.8		)
Effect of exchange rate changes on cash	1.9			(2.5		)	4.4
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(14.5	)	$	29.4		$	(43.9	)

Operating Activities

Cash provided by operating activities was $62.0 million and $68.7 million in the first quarter of 2019 and 2018, respectively. 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 decreased $6.7 million during the first quarter of 2019 as compared to the first quarter of 2018, primarily due to (1) the timing of collections of royalty receivables and (2) the timing of payments for marketing expenses of the national advertising funds. These unfavorable changes were partially offset by (1) higher net income, adjusted for non-cash expenses, and (2) a decrease in payments for incentive compensation.

Investing Activities

Cash used in investing activities increased $4.8 million during the first quarter of 2019 as compared to the first quarter of 2018, primarily due to an increase in cash used for the Company’s acquisition of restaurants from franchisees of $5.1 million and an increase in capital expenditures of $0.6 million. These changes were partially offset by an increase in proceeds received from notes receivable due from franchisees of $1.1 million.

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Financing Activities

Cash used in financing activities increased$36.8 million during the first quarter of 2019 as compared to the first quarter of 2018, primarily due to (1) a net decrease in cash provided by long-term debt activities of $46.2 million, reflecting the completion of a refinancing transaction during the first quarter of 2018, (2) an increase in dividends of $2.7 million and (3) a decrease in proceeds from stock option exercises, net of payments related to tax withholding for share-based compensation, of $1.9 million. These changes were partially offset by (1) a decrease in repurchases of common stock of $8.4 million and (2) the settlement of a supplemental purchase price liability associated with the acquisition of 140 Wendy’s restaurants from DavCo Restaurants, LLC of $6.1 million during the first quarter of 2018.

Dividends

On March 15, 2019 the Company paid quarterly cash dividends of $0.10 per share on its common stock, aggregating $23.1 million. On May 8, 2019, the Company declared a dividend of $0.10 per share to be paid on June 17, 2019 to stockholders of record as of June 3, 2019. If the Company pays regular quarterly cash dividends for the remainder of 2019 at the same rate as declared in the second quarter of 2019, the Company’s total cash requirement for dividends for the remainder of 2019 would be approximately $69.2 million based on the number of shares of its common stock outstanding at May 1, 2019. 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 2019, our Board of Directors authorized a repurchase program for up to $225.0 million of our common stock through March 1, 2020, when and if market conditions warrant and to the extent legally permissible. In connection with the February 2019 authorization, the Company’s previous November 2018 repurchase authorization for up to $220.0 million of our common stock was canceled. During the three months ended March 31, 2019, the Company repurchased 1.7 million shares with an aggregate purchase price of $29.3 million, of which $0.3 million was accrued at March 31, 2019, and excluding commissions, under the November 2018 and February 2019 authorizations. As of March 31, 2019, the Company had $217.1 million of availability remaining under its February 2019 authorization. Subsequent to March 31, 2019 through May 1, 2019, the Company repurchased 0.3 million shares under the February 2019 authorization with an aggregate purchase price of $5.7 million, excluding commissions.

In February 2018, our Board of Directors authorized a repurchase program for up to $175.0 million of our common stock through March 3, 2019, when and if market conditions warranted and to the extent legally permissible. During the three months ended April 1, 2018, the Company repurchased 1.0 million shares with an aggregate purchase price of $16.7 million, of which $1.3 million was accrued at April 1, 2018, and excluding commissions. Additionally, during the three months ended April 1, 2018, the Company completed its previous February 2017 repurchase authorization for up to $150.0 million of our common stock with the repurchase of 1.4 million shares with an aggregate purchase price of $22.6 million, excluding commissions.

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 the 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.

As of March 31, 2019, there were no material changes from the information contained in the Company’s Form 10-K for the fiscal year ended December 30, 2018.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The management of the Company, under the supervision and with the participation of its 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 March 31, 2019. Based on such evaluations, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2019, 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

The Company completed implementation of a new lease accounting system for its adoption of the new lease accounting standard in the first quarter of 2019. Internal controls and processes have been designed to address changes in the business applications and financial processes as a result of this implementation. There were no other changes in the internal control over financial reporting of the Company during the first quarter of 2019 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 errors 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 not historical facts, including, most importantly, information concerning possible or assumed future results of operations of the Company. Those statements, as well as statements preceded by, followed by, or that include the words “may,” “believes,” “plans,” “expects,” “anticipates,” or the negation thereof, or similar expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). All statements that address future operating, financial or business performance; strategies, initiatives or expectations; future synergies, efficiencies or overhead savings; anticipated costs or charges; future capitalization; and anticipated financial impacts of recent or pending transactions are forward-looking statements within the meaning of the Reform Act. The 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. Our actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by our forward-looking statements. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Many important factors could affect our future results and could cause those results to differ materially from those expressed in or implied by the forward-looking statements contained herein. Such factors, all of which are difficult or impossible to predict accurately, and many of which are beyond our control, include, but are not limited to, the following:

• competition, including pricing pressures, couponing, aggressive marketing and the potential impact of competitors’ new unit openings on sales of Wendy’s restaurants;

• consumers’ perceptions of the relative quality, variety, affordability and value of the food products we offer, and changes in consumer tastes and preferences;

• food safety events, including instances of food-borne illness (such as salmonella or E. coli) involving Wendy’s or its supply chain;

• consumer concerns over nutritional aspects of beef, chicken, french fries or other products we sell, the ingredients in our products and/or the cooking processes used in our restaurants;

• conditions beyond our control, such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies, or acts of war or terrorism;

• the effects of negative publicity that can occur from increased use of social media;

• success of operating and marketing initiatives, including advertising and promotional efforts and new product and concept development by us and our competitors;

• prevailing economic, market and business conditions affecting us, including competition from other food service providers, unemployment and decreased consumer spending levels, particularly in geographic regions that contain a high concentration of Wendy’s restaurants;

• changes in the quick-service restaurant industry, spending patterns and demographic trends, such as consumer trends toward value-oriented products and promotions or toward consuming fewer meals away from home;

• certain factors affecting our franchisees, including the business and financial viability of franchisees, the timely payment of franchisees’ obligations due to us or to national or local advertising organizations, and the ability of franchisees to open new restaurants and reimage existing restaurants in accordance with their development and franchise commitments, including their ability to finance restaurant development and reimages;

• increased labor costs due to competition or increased minimum wage or employee benefit costs;     

• changes in commodity costs (including beef, chicken, pork, cheese and grains), labor, supplies, fuel, utilities, distribution and other operating costs;

• the availability of suitable locations and terms for restaurant development by us and our franchisees;

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• development costs, including real estate and construction costs;

• delays in opening new restaurants or completing reimages of existing restaurants, including risks associated with our Image Activation program;

• the ability to effectively manage the acquisition and disposition of restaurants or successfully implement other strategic initiatives;

• anticipated or unanticipated restaurant closures by us and our franchisees;

• our ability to identify, attract and retain franchisees with sufficient experience and financial resources to develop and operate Wendy’s restaurants successfully;

• availability of qualified restaurant personnel to us and our franchisees, and the ability to retain such personnel;

• our ability, if necessary, to secure alternative distribution of supplies of food, equipment and other products to Wendy’s restaurants at competitive rates and in adequate amounts, and the potential financial impact of any interruptions in such distribution;

• availability and cost of insurance;

• availability, terms (including changes in interest rates) and deployment of capital, and changes in debt, equity and securities markets;

• changes in, and our ability to comply with, legal, regulatory or similar requirements, including franchising laws, payment card industry rules, overtime rules, minimum wage rates, wage and hour laws, tax legislation, federal ethanol policy and accounting standards, policies and practices (including the changes to lease accounting standards that are effective for fiscal year 2019);

• the costs, uncertainties and other effects of legal, environmental and administrative proceedings;

• the effects of charges for impairment of goodwill or for the impairment of other long-lived assets;

• risks associated with failures, interruptions or security breaches of our computer systems or technology, or the occurrence of cyber incidents or a deficiency in cybersecurity that impacts us or our franchisees, including the cybersecurity incident described in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2019 (the “Form 10-K”);

• the difficulty in predicting the ultimate costs that will be incurred in connection with our plan to reduce general and administrative expense, and the future impact on our earnings;

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

• risks associated with the amount and timing of share repurchases under share repurchase programs approved by our Board of Directors;

• risks associated with the proposed settlement of the Financial Institutions case described in the Form 10-K, including the timing and amount of payments;

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

• risks associated with our evolving organizational and leadership structure; and

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• other risks and uncertainties affecting us and our subsidiaries referred to in the Form 10-K (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 Securities and Exchange Commission.

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 in this section. 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. In addition, 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 current and prior businesses. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. The Company believes it has adequate accruals for continuing operations for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss 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.

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 set forth below or as may otherwise be described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K.

Our success depends in part upon the continued succession and retention of certain key personnel and the effectiveness of our leadership structure.

We believe that over time our success has been dependent to a significant extent upon the efforts and abilities of our senior management team.  Our failure to retain members of our senior management team in the future could adversely affect our ability to build on the efforts we have undertaken to increase the efficiency and profitability of our business.  In addition, changes to our leadership and organizational structure can be inherently difficult to manage and if the Company is unable to implement any such changes effectively, our business and financial results could be adversely affected.

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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 first quarter of 2019:

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)
December 31, 2018 through February 3, 2019	952,531		$16.52	944,894		$131,809,733
February 4, 2019 through March 3, 2019	783,530		$17.43	441,040		$223,112,505
March 4, 2019 through March 31, 2019	359,293		$16.77	358,137		$217,111,625
Total	2,095,354		$16.91	1,744,071		$217,111,625

(1) Includes 351,283 shares reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective awards. The shares were valued at the average of the high and low trading prices of our common stock on the vesting or exercise date of such awards.

(2) In February 2019, our Board of Directors authorized a repurchase program for up to $225.0 million of our common stock through March 1, 2020, when and if market conditions warrant and to the extent legally permissible. In connection with the February 2019 authorization, the Company’s previous November 2018 repurchase authorization for up to $220.0 million of our common stock was canceled.

Subsequent to March 31, 2019 through May 1, 2019, the Company repurchased 0.3 million shares under the February 2019 authorization with an aggregate purchase price of $5.7 million, excluding commissions.

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Item 6. Exhibits.

EXHIBIT NO.	DESCRIPTION
10.1	Form of Long-Term Performance Unit Award Agreement for 2019 under The Wendy’s Company 2010 Omnibus Award Plan.* **
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.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

____________________

*	Filed herewith.
**	Identifies a management contract or compensatory plan or arrangement.

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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: May 8, 2019	By: /s/ Gunther Plosch
	Gunther Plosch
	Chief Financial Officer
	(On behalf of the registrant)
Date: May 8, 2019	By: /s/ Leigh A. Burnside
	Leigh A. Burnside
	Senior Vice President, Finance and Chief Accounting Officer
	(Principal Accounting Officer)

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EX-10.1

THE WENDY’S COMPANY

LONG-TERM PERFORMANCE UNIT AWARD AGREEMENT

(this “Agreement”)

The Wendy’s Company (the “Company”), pursuant to the provisions of The Wendy’s Company 2010 Omnibus Award Plan (the “Plan”), hereby irrevocably grants to the Participant stated below an Award (the “Award”) of Performance Units (the “Units”), on _____________, 20___ (the “Award Date”), as specified below:

Participant:	______________________
Performance Period:	December 31, 2018 to January 2, 2022
Target Free Cash Flow Units:	____________ (the “Free Cash Flow Units”)
Target TSR Units:	____________ (the “TSR Units”)

Each Unit represents the right to receive one (1) share of Common Stock provided that the applicable performance goal as described in this Agreement is achieved. Capitalized terms used and not otherwise defined in this Agreement shall have the respective meanings assigned to them under the Plan.

1.    Free Cash Flow.

(a)Earning of Award. The extent to which the Participant will earn the Free Cash Flow Units is based on the Company’s cumulative Free Cash Flow (as defined below) for the Performance Period compared to the cumulative Free Cash Flow Target established by the Committee for the Performance Period as shown in the chart below (with the Threshold, Above Threshold, Target, Above Target and Maximum cumulative Free Cash Flow amounts to be set forth on a separate exhibit which will be provided to the Participant).

Company Cumulative Free Cash Flow	Percentage of Free Cash Flow Units Earned
Maximum	200.0%
Above Target	150.0%
Target	100.0%
Above Threshold	75.0%
Threshold	37.5%
Below Threshold	0.0%

Linear interpolation shall be used to determine the percentage of Free Cash Flow Units earned in the event the Company’s cumulative Free Cash Flow falls between the (i) Threshold and Above Threshold, (ii) Above Threshold and Target, (iii) Target and Above Target or (iv) Above Target and Maximum performance levels shown in the chart above. The Company’s cumulative Free Cash Flow will be determined as set forth in Section 1(b) below.

385813

(b)Calculation of Free Cash Flow. The Company’s “cumulative Free Cash Flow” means the sum of the Company’s Free Cash Flow (as defined below) for each fiscal year of the Performance Period.

“Free Cash Flow” means cash flows from operations minus (i) capital expenditures and (ii) the net change in the restricted operating assets and liabilities of the advertising funds and any excess/deficit of advertising funds revenue over advertising funds expenses included in net income, each as prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reported in the Company’s fiscal 2019, 2020 and 2021 Consolidated Statements of Cash Flows, as adjusted (A) due to changes in applicable accounting standards or principles, (B) to exclude the impact of the proposed settlement of the financial institutions class action lawsuits related to the 2015 and 2016 criminal cyberattacks and (C) to exclude the impact of any other unusual or nonrecurring events as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable fiscal year. Any such adjustment made pursuant to the preceding sentence must be approved by the Committee.

2.Relative TSR Performance.

(a)Earning of Award. The extent to which the Participant will earn the TSR Units is based on the Company TSR Percentile Ranking (as defined below) for the Performance Period based on the following chart:

Company TSR Percentile Ranking	Percentage of TSR Units Earned
≥ 90th	200.0% (Maximum)
75th	150.0% (Above Target)
50th	100.0% (Target)
37.5th	75.0% (Above Threshold)
25th	37.5% (Threshold)
< 25th	0.0% (Below Threshold)

Linear interpolation shall be used to determine the percentage of TSR Units earned in the event the Company TSR Percentile Ranking falls between the (i) 25th and 37.5th percentiles, (ii) the 37.5th and 50th percentiles, (iii) the 50th and 75th percentiles or (iv) the 75th and 90th percentiles listed in the above chart. The Company TSR Percentile Ranking will be determined as set forth in Section 2(c) below.

(b)Calculation of TSR. “TSR” means total stockholder return, which shall be calculated as follows:

“TSR” = Change in Stock Price + Dividends PaidBeginning Stock Price

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(i) Beginning Stock Price shall mean the average of the Closing Prices for each of the twenty (20) trading days immediately prior to the first trading day of the Performance Period;

(ii) Ending Stock Price shall mean the average of the Closing Prices for each of the last twenty (20) trading days of the Performance Period;

(iii) Change in Stock Price shall equal the Ending Stock Price minus the Beginning Stock Price;

(iv) Dividends Paid shall mean the total of all dividends paid on one (1) share of Common Stock during the Performance Period, provided that dividends shall be treated as though they are reinvested;

(v) Closing Price shall mean the last reported sale price on the applicable stock exchange or market of one (1) share of Common Stock for a particular trading day; and

(vi) In all events, TSR shall be adjusted to give effect to any stock dividends, stock splits, reverse stock splits and similar transactions.

(c)Calculation of Company TSR Percentile Ranking. The Company shall determine (i) the Company’s TSR for the Performance Period and (ii) the TSR for the Performance Period of each company that was included in the S&P MidCap 400 Index as of the last day of the Performance Period. The Company TSR Percentile Ranking shall mean the percentage of TSRs of the companies included the S&P MidCap 400 Index as of the last day of the Performance Period that are lower than the Company’s TSR.

3.Form and Timing of Payments Under Award.

(a)Following the end of the Performance Period, the Committee shall determine whether and the extent to which the Company’s cumulative Free Cash Flow and the Company TSR Percentile Ranking (the “Performance Goals”) have been achieved for the Performance Period and shall determine the number of shares of Common Stock, if any, issuable to the Participant with respect to the level of achievement of the Performance Goals; provided that with respect to any Award to a “covered employee” within the meaning of Section 162(m) of the Code, the Committee shall have certified the achievement of the Performance Goals. The Committee’s determination with respect to the achievement of the Performance Goals shall be based on the Company’s financial statements and other relevant information, subject to any adjustments made by the Committee in accordance with this Section 3.

(b)Notwithstanding satisfaction, achievement or completion of the Performance Goals (or any adjustments thereto as provided below), the number of shares of Common Stock issuable hereunder may be reduced or eliminated by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine. The Committee shall have the right to adjust or modify the calculation of the Performance Goals as permitted under the Plan.

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(c)To the extent the Committee has determined that this Award is a Performance Compensation Award and is intended to comply with the performance-based exception to Section 162(m) of the Code, and the Participant is a “covered employee” within the meaning of Section 162(m) of the Code, all actions taken hereunder (including without limitation any adjustments of the Performance Goals) shall be made in a manner intended to comply with Section 162(m) of the Code, subject to Section 11(a) of the Plan.

(d)The Units earned pursuant to this Award shall be paid out to the Participant in shares of Common Stock as soon as reasonably practicable following the Committee’s determination, but in no event later than March 15, 2022. For the avoidance of doubt, fractional shares of Common Stock shall be rounded down to the nearest whole number without any payment therefor.

4.Change in Control.

(a)In the event a Change in Control occurs during the Performance Period, then immediately before such Change in Control, any unvested outstanding Units shall be converted (without proration for the percentage of the Performance Period that has elapsed) into time-based restricted stock units (vesting on the last day of the Performance Period); provided, that the number of Units that shall be converted into time-based restricted stock units shall be based on (i) actual performance through the date of the Change of Control as determined by the Committee or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of Target performance as determined by the Committee. If, to the extent applicable, such time-based restricted stock units are not assumed or replaced by the acquirer/continuing entity in connection with such Change in Control on terms deemed by the Committee to be substantially equivalent, then all such time-based restricted stock units shall vest (and the restrictions thereon shall lapse) on the date of the Change in Control and shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, but in no event later than seventy-four (74) days following the last day of the calendar year in which the Change in Control occurred. Any such determination(s) by the Committee shall be final and binding on all parties, absent manifest error.

(b)In the event the Participant’s employment or service to the Company and its Subsidiaries is terminated prior to the end of the Performance Period by the Company or its Subsidiaries other than for Cause (and other than due to death or Disability), or by the Participant for Good Reason, in each case following a Change in Control, then the Participant shall become vested in the time-based restricted stock units received pursuant to Section 4(a) above and the restrictions thereon shall immediately lapse as of the date of such termination of employment or service; provided, in each case, that the number of restricted stock units that shall become fully vested and free from such restrictions shall be prorated based on the time elapsed from the Award Date to the date of termination of employment or service. The restricted stock units earned in accordance with the foregoing shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, but in no event later than seventy-four (74) days following the last day of the calendar year in which the termination of employment occurred.

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5.Termination of Employment or Service.

(a)If the Participant ceases employment or service to the Company and its Subsidiaries for any reason prior to the end of the Performance Period (except following a Change in Control as described in Section 4(b) above), the Units shall be immediately canceled and the Participant shall thereupon cease to have any right or entitlement to receive any shares of Common Stock under the Award.

(b)Notwithstanding Sections 3(d) and 5(a) above, in the event the Participant’s employment or service to the Company and its Subsidiaries is terminated by the Company or its Subsidiaries due to death or Disability, outstanding Units granted to the Participant shall become vested and the restrictions thereon shall immediately lapse as of the date of such termination of employment or service; provided, that the portion of any such Units that shall become fully vested and free from such restrictions shall be based on (i) actual performance through the date of termination as determined by the Committee or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of Target performance as determined by the Committee, in each case prorated based on the time elapsed from the Award Date to the date of termination of employment or service. The Units earned in accordance with the foregoing shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, but in no event later than seventy-four (74) days following the last day of the calendar year in which the termination of employment occurred.

(c)In addition, notwithstanding Section 5(a) above, in the event the Participant’s employment or service to the Company and its Subsidiaries is terminated by the Company or its Subsidiaries prior to the end of the Performance Period other than for Cause (and other than (i) due to death or Disability as described in Section 5(b) above or (ii) by the Company other than for Cause or by the Participant for Good Reason following a Change in Control as described in Section 4(b) above), the Units shall become vested and the restrictions thereon shall immediately lapse as of the date of such termination of employment or service; provided, that the portion of any such Units that shall become fully vested and free from such restrictions shall be based on actual performance through the end of the Performance Period as determined by the Committee in accordance with Section 3 above, prorated based on the time elapsed from the Award Date to the date of termination of employment or service. The Units earned in accordance with the foregoing shall be paid out to the Participant in shares of Common Stock as soon as practicable following the Committee’s determination, subject to and in accordance with Section 3 above.

6.Dividend Equivalent Rights. Each Unit shall also have a dividend equivalent right

(a “Dividend Equivalent Right”). Each Dividend Equivalent Right represents the right to receive all of the ordinary cash dividends that are or would be payable with respect to the Units. With respect to each Dividend Equivalent Right, any such cash dividends shall be converted into additional Units based on the Fair Market Value of a share of Common Stock on the date such dividend is paid.

5

Such additional Units shall be subject to the same terms and conditions applicable to the Unit to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in this Agreement. In the event that a Unit is forfeited as provided in Sections 3 and 5 above, then the related Dividend Equivalent Right shall also be forfeited.

7.Withholding Taxes. The Participant shall be required to pay to the Company, and the Company shall have the right and is hereby authorized to withhold, from any cash, shares of Common Stock, other securities or other property deliverable in respect of the Units or from any compensation or other amounts owing to the Participant, the amount (in cash, Common Stock, other securities or other property) of any required withholding taxes in respect of the Units, and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such withholding and taxes. In addition, the Committee may, in its sole discretion, permit the Participant to satisfy, in whole or in part, the foregoing withholding liability (but no more than the minimum required statutory withholding liability) by (a) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) owned by the Participant having a Fair Market Value equal to such withholding liability or (b) having the Company withhold from the number of shares of Common Stock otherwise issuable or deliverable upon settlement of the Units a number of shares with a Fair Market Value equal to such withholding liability. The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

8.Securities Laws. The Participant agrees that the obligation of the Company to issue shares of Common Stock upon the achievement of the Performance Goal shall also be subject, as conditions precedent, to compliance with applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, state securities or corporation laws, rules and regulations under any of the foregoing and applicable requirements of any securities exchange upon which the Company’s securities shall be listed.

9.Bound by Plan. The Units have been granted subject to the terms and conditions of the Plan, a copy of which has been provided to the Participant and which the Participant acknowledges having received and reviewed. Any conflict between this Agreement and the Plan shall be decided in favor of the provisions of the Plan. Any conflict between this Agreement and the terms of a written employment agreement for the Participant that has been approved, ratified or confirmed by the Board of Directors of the Company or the Committee shall be decided in favor of the provisions of such employment agreement. This Agreement may not be amended, altered, suspended, discontinued, cancelled or terminated in any manner that would materially and adversely affect the rights of the Participant except by a written agreement executed by the Participant and the Company.

10.Clawback. Notwithstanding anything to the contrary contained herein, in the event of a material restatement of the Company’s issued financial statements, the Committee shall review the facts and circumstances underlying the restatement (including, without limitation, any potential wrongdoing by the Participant and whether the restatement was the result of negligence or intentional or gross misconduct) and may, in the Committee’s sole discretion, direct the Company to recover

6

all or a portion of the Units or any gain realized on the settlement of the Units or the subsequent sale of Common Stock acquired upon settlement of the Units with respect to any fiscal year in which the Company’s financial results are negatively impacted by such restatement. If the Committee directs the Company to recover any such amount from the Participant, then the Participant agrees to and shall be required to repay any such amount to the Company within thirty (30) days after the Company demands repayment. In addition, if the Company is required by law to include an additional “clawback” or “forfeiture” provision to outstanding awards, then such clawback or forfeiture provision shall also apply to this Award as if such additional provision had been included on the date of grant and the Company shall promptly notify the Participant of such additional provision. In addition, if a court determines that the Participant has engaged or is engaged in Detrimental Activities during the Participant’s employment or service with the Company or its Subsidiaries or after the Participant’s employment or service with the Company or its Subsidiaries has ceased, then the Participant, within thirty (30) days after written demand by the Company, shall return the Units or any gain realized on the settlement of the Units or the subsequent sale of Common Stock acquired upon settlement of the Units.

11.Electronic Delivery. By accepting the Award of Units evidenced by this Agreement, the Participant hereby consents to the electronic delivery of prospectuses, annual reports and other information required to be delivered by Securities and Exchange Commission rules. This consent may be revoked in writing by the Participant at any time upon three (3) business days’ notice to the Company, in which case subsequent prospectuses, annual reports and other information will be delivered in hard copy to the Participant.

12.Notices. Notices and communications under this Agreement must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to The Wendy’s Company, One Dave Thomas Boulevard, Dublin, Ohio 43017, Attention: Corporate Secretary, or any other address designated by the Company in a written notice to the Participant. Notices to the Participant will be directed to the address of the Participant then currently on file with the Company, or at any other address given by the Participant in a written notice to the Company.

13.No Right to Employment. This grant does not constitute an employment contract. Nothing in this Agreement or the Plan shall confer upon the Participant the right to continue to serve as a director or officer to, or to continue as an employee or service provider of, the Company or its Affiliates during all or any portion of the Performance Period.

14.Section 409A of the Code. If any provision of this Agreement could cause the application of an accelerated or additional tax under Section 409A of the Code upon the vesting or settlement of the Units (or any portion thereof), such provision shall be restructured, to the minimum extent possible, in a manner determined by the Company (and reasonably acceptable to the Participant) that does not cause such an accelerated or additional tax. It is intended that this Agreement shall not be subject to Section 409A of the Code by reason of the short-term deferral rule under Treasury Regulation Section 1.409A-1(b)(4), and this Agreement shall be interpreted accordingly.

7

15.Governing Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof.

16.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Furthermore, delivery of a copy of a counterpart signature by facsimile or electronic transmission shall constitute a valid and binding execution and delivery of this Agreement, and such copy shall constitute an enforceable original document.

17.Electronic Signature. This Agreement may be executed and exchanged by facsimile or electronic mail transmission, and the facsimile or electronically transmitted copies of each party’s respective signature will be binding as if the same were an original signature. This Agreement may also be executed through the use of electronic signature, which the Company and Participant acknowledge is a lawful means of obtaining signatures in the United States. Each party agrees that its electronic signature is the legal equivalent of such party’s manually written signature on this Agreement and therefore shall be the same, and shall have the same force and effect, as such party’s manually written signature. Each party further agrees that its use of a key pad, mouse or other device to select an item, button or icon, or to perform any other similar act/action, regarding any agreement, acknowledgement, consent terms, disclosures or conditions constitutes such party’s signature, acceptance and agreement as if actually signed by such party in writing. Furthermore, to the extent applicable, all references to signatures in this Agreement may be satisfied by procedures that the Company or a third-party designated by the Company has established or may establish for an electronic signature system.

18.Validity of Agreement. This Agreement shall be valid, binding and effective upon the Company on the Award Date. However, the Units evidenced by this Agreement shall be forfeited by the Participant and this Agreement shall have no force and effect if this Agreement is duly rejected. The Participant may reject this Agreement and forfeit the Units by notifying the Company or its designee in the manner prescribed by the Company and communicated to the Participant; provided that such rejection must be received by the Company or its designee no later than the earlier of (a) ______________, 20___ and (b) the date the Units first vest pursuant to the terms hereof. If this Agreement is rejected on or prior to such date, the Units evidenced by this Agreement shall be forfeited, and neither the Participant nor the Participant’s heirs, executors, administrators and successors shall have any rights with respect thereto.

[Remainder of page intentionally left blank.]

8

IN WITNESS WHEREOF, the Company, by a duly authorized officer thereof, has caused this Long-Term Performance Unit Award Agreement to be executed as of the Award Date stated above.

THE WENDY’S COMPANY

By:

Name:

Title:

9

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: May 8, 2019

/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: May 8, 2019

/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 March 31, 2019 (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: May 8, 2019

/s/ Todd A. Penegor             

Todd A. Penegor

President and Chief Executive Officer

Date: May 8, 2019

/s/ Gunther Plosch               

Gunther Plosch

Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 01, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	WENDY'S CO
Entity Central Index Key	0000030697
Current Fiscal Year End Date	--12-29
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		230,724,058

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Current assets:
Cash and cash equivalents	$ 414,168	$ 431,405
Restricted cash	29,671	29,860
Accounts and notes receivable, net	110,567	109,805
Inventories	3,550	3,687
Prepaid expenses and other current assets	19,762	14,452
Advertising funds restricted assets	86,046	76,509
Total current assets	663,764	665,718
Properties	1,003,231	1,023,267
Finance lease assets	195,368	189,969
Operating lease assets	919,283	0
Goodwill	755,355	747,884
Other intangible assets	1,264,238	1,294,153
Investments	48,411	47,660
Net investment in sales-type and direct financing leases	236,426	226,477
Other assets	99,585	96,907
Total assets	5,185,661	4,292,035
Current liabilities:
Current portion of long-term debt	23,250	23,250
Current portion of finance lease liabilities	9,380	8,405
Current portion of operating lease liabilities	43,657	0
Accounts payable	16,356	21,741
Accrued expenses and other current liabilities	141,093	150,636
Advertising funds restricted liabilities	89,901	80,153
Total current liabilities	323,637	284,185
Long-term debt	2,301,563	2,305,552
Long-term finance lease liabilities	458,595	447,231
Long-term operating lease liabilities	957,739	0
Deferred income taxes	268,225	269,160
Deferred franchise fees	92,327	92,232
Other liabilities	142,881	245,226
Total liabilities	4,544,967	3,643,586
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 230,944 and 231,233 shares outstanding, respectively	47,042	47,042
Additional paid-in capital	2,880,663	2,884,696
Retained earnings	153,991	146,277
Common stock held in treasury, at cost; 239,480 and 239,191 shares, respectively	(2,385,354)	(2,367,893)
Accumulated other comprehensive loss	(55,648)	(61,673)
Total stockholders’ equity	640,694	648,449
Total liabilities and stockholders’ equity	$ 5,185,661	$ 4,292,035

XML

Condensed Consolidated Balance Sheets Balance Sheet Parentheticals - $ / shares shares in Thousands	Mar. 31, 2019	Dec. 30, 2018
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	230,944	231,233
Treasury Stock, Shares	239,480	239,191

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Revenues
Franchise rental income	$ 58,452	$ 50,107
Revenues	408,583	380,564
Costs and expenses:
Cost of sales	142,579	132,219
Franchise support and other costs	6,018	6,173
Franchise rental expense	32,451	23,263
Advertising funds expense	80,481	78,900
General and administrative	49,313	50,356
Depreciation and amortization	33,185	32,152
System optimization (gains) losses, net	(12)	570
Reorganization and realignment costs	798	2,626
Impairment of long-lived assets	1,486	206
Other operating income, net	(3,982)	(1,163)
Costs and expenses	342,317	325,302
Operating profit	66,266	55,262
Interest expense, net	(29,082)	(30,178)
Loss on early extinguishment of debt	0	(11,475)
Other income, net	2,700	744
Income before income taxes	39,884	14,353
(Provision for) benefit from income taxes	(7,990)	5,806
Net income	$ 31,894	$ 20,159
Earnings per share
Earnings Per Share, Basic and Diluted	$ 0.14	$ 0.08
Sales
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 167,697	$ 153,649
Franchise royalty revenue and fees
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	101,953	97,908
Advertising funds revenue
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 80,481	$ 78,900

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Net income	$ 31,894	$ 20,159
Other comprehensive income (loss), net:
Foreign currency translation adjustment	6,025	(6,044)
Change in unrecognized pension loss; Unrealized gains arising during the period	0	156
Change in unrecognized pension loss; Income tax provision	0	(39)
Change in unrecognized pension loss; Unrealized gains arising during the period, net of tax	0	117
Other comprehensive income (loss), net	6,025	(5,927)
Comprehensive income	$ 37,919	$ 14,232

XML

Consolidated Statements of Stockholders' Equity Statement - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Common Stock Held in Treasury	Accumulated Other Comprehensive Loss
Stockholders' Equity, beginning of period at Dec. 31, 2017	$ 573,203	$ 47,042	$ 2,885,955	$ (163,289)	$ (2,150,307)	$ (46,198)
Increase (Decrease) in Stockholders' Equity
Net income	20,159	0	0	20,159	0	0
Other comprehensive (loss) income, net	(5,927)	0	0	0	0	(5,927)
Cash Dividends	(20,355)	0	0	(20,355)	0	0
Repurchases of common stock	(39,407)	0	0	0	(39,407)	0
Share-based compensation	4,458	0	4,458	0	0	0
Common stock issued upon exercises of stock options	3,578	0	(7,460)	0	11,038	0
Common stock issued upon vesting of restricted shares	(2,550)	0	(4,170)	0	1,620	0
Other	48	0	21	(5)	32	0
Stockholders' Equity, end of period at Apr. 01, 2018	462,997	47,042	2,878,804	(233,700)	(2,177,024)	(52,125)
Increase (Decrease) in Stockholders' Equity
Cumulative effect of change in accounting principle	(70,210)	0	0	(70,210)	0	0
Stockholders' Equity, beginning of period at Dec. 30, 2018	648,449	47,042	2,884,696	146,277	(2,367,893)	(61,673)
Increase (Decrease) in Stockholders' Equity
Net income	31,894	0	0	31,894	0	0
Other comprehensive (loss) income, net	6,025	0	0	0	0	6,025
Cash Dividends	(23,069)	0	0	(23,069)	0	0
Repurchases of common stock	(29,370)	0	0	0	(29,370)	0
Share-based compensation	5,022	0	5,022	0	0	0
Common stock issued upon exercises of stock options	8,848	0	(205)	0	9,053	0
Common stock issued upon vesting of restricted shares	(6,055)	0	(8,874)	0	2,819	0
Other	55	0	24	(6)	37	0
Stockholders' Equity, end of period at Mar. 31, 2019	640,694	47,042	2,880,663	153,991	(2,385,354)	(55,648)
Increase (Decrease) in Stockholders' Equity
Cumulative effect of change in accounting principle	$ (1,105)	$ 0	$ 0	$ (1,105)	$ 0	$ 0

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Cash flows from operating activities:
Net income	$ 31,894	$ 20,159
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,185	32,152
Share-based compensation	5,022	4,458
Impairment of long-lived assets	1,486	206
Deferred income tax	842	(9,799)
Non-cash rental expense (income), net	7,818	(3,239)
Change in operating lease liabilities	(10,496)	0
Net receipt of deferred vendor incentives	8,033	7,340
System optimization (gains) losses, net	(12)	570
Distributions received from joint ventures, net of equity in earnings	415	1,083
Long-term debt-related activities, net	1,823	13,215
Changes in operating assets and liabilities and other, net	(17,989)	2,566
Net cash provided by operating activities	62,021	68,711
Cash flows from investing activities:
Capital expenditures	(11,215)	(10,569)
Acquisitions	(5,052)	0
Dispositions	0	351
Proceeds from sale of investments	130	0
Notes receivable, net	248	(872)
Payments for investments	0	(12)
Net cash used in investing activities	(15,889)	(11,102)
Cash flows from financing activities:
Proceeds from long-term debt	0	928,167
Repayments of long-term debt	(5,813)	(870,394)
Repayments of finance lease liabilities	(1,881)	(1,353)
Deferred financing costs	0	(17,340)
Repurchases of common stock	(30,929)	(39,372)
Dividends	(23,069)	(20,355)
Proceeds from stock option exercises	5,196	9,385
Payments related to tax withholding for share-based compensation	(6,055)	(8,321)
Contingent consideration payment	0	(6,100)
Net cash used in financing activities	(62,551)	(25,683)
Net cash (used in) provided by operations before effect of exchange rate changes on cash	(16,419)	31,926
Effect of exchange rate changes on cash	1,884	(2,482)
Net (decrease) increase in cash, cash equivalents and restricted cash	(14,535)	29,444
Cash, cash equivalents and restricted cash at beginning of period	486,512	212,824
Cash, cash equivalents and restricted cash at end of period	471,977	242,268
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	5,125	6,466
Finance leases	13,810	1,101
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Total cash, cash equivalents and restricted cash	$ 486,512	$ 212,824

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2019

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 March 31, 2019 and the results of our operations and cash flows for the three months endedMarch 31, 2019 and April 1, 2018. The results of operations for the three months endedMarch 31, 2019 are not necessarily indicative of the results to be expected for the full 2019 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 December 30, 2018 (the “Form 10-K”).

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 geographically. The operation and franchising of Wendy’s^® restaurants in North America (defined as the United States of America (“U.S.”) and Canada) comprises virtually all of our current operations and represents a single reportable segment. The revenues and operating results of Wendy’s restaurants outside of North America are not material.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three-month periods presented herein contain 13 weeks. All references to years and quarters 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.

Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. See Note 2 for further information.

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New Accounting Standards

3 Months Ended

Mar. 31, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Standards

New Accounting Standards

New Accounting Standards Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for implementation costs of a cloud computing arrangement that is a service contract. The new guidance aligns the accounting for such implementation costs of a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

In June 2018, the FASB issued new guidance on nonemployee share-based payment arrangements. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

Leases

In February 2016, the FASB issued new guidance on leases, which outlines principles for the recognition, measurement, presentation and disclosure of leases applicable to both lessors and lessees. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases. The Company adopted the new guidance during the first quarter of 2019 using the effective date as the date of initial application; therefore, the comparative period has not been adjusted and continues to be reported under the previous lease guidance.

The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. For those leases that fall under the definition of a short-term lease, the Company elected the short-term lease recognition exemption. Under this practical expedient, for those leases that qualify, we did not recognize right-of-use (“ROU”) assets or liabilities, which included not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient for lessees to account for lease components and nonlease components as a single lease component for all underlying classes of assets. In addition, the Company elected the practical expedient for lessors to account for lease components and nonlease components as a single lease component in instances where the lease component is predominant, the timing and pattern of transfer for the lease component and nonlease component are the same and the lease component, if accounted for separately, would be classified as an operating lease. The Company did not elect the use-of-hindsight practical expedient.

The standard had a material impact on our condensed consolidated balance sheets and related disclosures. Upon adoption at the beginning of 2019, we recognized operating lease liabilities of $1,011,000 based on the present value of the remaining minimum rental payments, with corresponding ROU assets of $934,000. The measurement of the operating lease ROU assets included, among other items, favorable lease amounts of $23,000 and unfavorable lease amounts of $30,000, which were previously included in “Other intangible assets” and “Other liabilities,” respectively, as well as the excess of rent expense recognized on a straight-line basis over the minimum rents paid of $67,000, which was previously included in “Other liabilities.” In addition, the standard requires lessors to recognize lessees’ payments to the Company for executory costs on a gross basis as revenue with a corresponding expense, which we expect will result in an increase of approximately $40,000 to our 2019 franchise rental income and expense. The Company also recognized a decrease to retained earnings of $1,105 as a result of impairing newly recognized ROU assets upon transition to the new guidance. The adoption of the guidance did not have a material impact on our condensed consolidated statement of cash flows.

In connection with the adoption of the standard, the Company has reclassified finance lease ROU assets to “Finance lease assets,” which were previously recorded to “Properties.” The Company also reclassified the current and long-term finance lease liabilities to “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” which were previously recorded to “Current portion of long-term debt” and “Long-term debt,” respectively. The prior period reflects the reclassifications of these assets and liabilities to conform to the current year presentation.

The following table illustrates the reclassifications made to the condensed consolidated balance sheet as of December 30, 2018:

	As Previously Reported		Reclassifications			As Currently Reported
Properties	$	1,213,236	$	(189,969	)	$	1,023,267
Finance lease assets	—		189,969			189,969
Current portion of long-term debt	31,655		(8,405		)	23,250
Current portion of finance lease liabilities	—		8,405			8,405
Long-term debt	2,752,783		(447,231		)	2,305,552
Long-term finance lease liabilities	—		447,231			447,231
	$	1,429,490	$	—		$	1,429,490

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Revenue (Notes)

3 Months Ended

Mar. 31, 2019

Revenue [Abstract]

Revenue from Contract with Customer

Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by primary geographical market and source:

Three Months Ended March 31, 2019	U.S.		Canada		Other International		Total
Sales at Company-operated restaurants	$	167,697	$	—	$	—	$	167,697
Franchise royalty revenue	84,378		5,508		4,957		94,843
Franchise fees	6,009		412		689		7,110
Franchise rental income	50,665		7,787		—		58,452
Advertising funds revenue	75,981		4,500		—		80,481
Total revenues	$	384,730	$	18,207	$	5,646	$	408,583
Three Months Ended April 1, 2018
Sales at Company-operated restaurants	$	153,649	$	—	$	—	$	153,649
Franchise royalty revenue	80,222		5,363		4,358		89,943
Franchise fees	7,085		646		234		7,965
Franchise rental income	44,265		5,842		—		50,107
Advertising funds revenue	74,414		4,486		—		78,900
Total revenues	$	359,635	$	16,337	$	4,592	$	380,564

Contract Balances

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

	March 31, 2019 (a)		December 30, 2018 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	44,765	$	40,300
Receivables, which are included in “Advertising funds restricted assets”	47,056		47,332
Deferred franchise fees (c)	101,469		102,205

_______________

(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 statement 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 $9,142 and $92,327 as of March 31, 2019, respectively, and $9,973 and $92,232 as of December 30, 2018, respectively.

Significant changes in deferred franchise fees are as follows:

	Three Months Ended
	March 31, 2019			April 1, 2018
Deferred franchise fees at beginning of period	$	102,205		$	102,492
Revenue recognized during the period	(2,772		)	(2,688		)
New deferrals due to cash received and other	2,036			2,957
Deferred franchise fees at end of period	$	101,469		$	102,761

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:
2019 (a)	$	6,307
2020	6,482
2021	5,939
2022	5,725
2023	5,500
Thereafter	71,516
	$	101,469

_______________

(a) Represents franchise fees expected to be recognized for the remainder of 2019, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

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Acquisitions (Notes)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisitions

Acquisitions

During the three months endedMarch 31, 2019, the Company acquired five restaurants from franchisees for total net cash consideration of $5,052. The Company did not incur any material acquisition-related costs associated with the acquisitions and such transactions were not significant to our condensed consolidated financial statements. The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from the franchisees:

	Three Months Ended
	March 31, 2019
Restaurants acquired from franchisees	5
Total consideration paid, net of cash received	$	5,052
Identifiable assets acquired and liabilities assumed:
Properties	666
Acquired franchise rights	1,354
Finance lease assets	5,350
Finance lease liabilities	(4,084		)
Other	(2,316		)
Total identifiable net assets	970
Goodwill	$	4,082

During 2018, the Company acquired 16 restaurants from a franchisee for total net cash consideration of $21,401. The fair values of the identifiable intangible assets related to the acquisition were provisional amounts as of December 30, 2018, pending final purchase accounting adjustments. The Company finalized the purchase price allocation during the three months endedMarch 31, 2019, which resulted in a decrease in the fair value of acquired franchise rights of $2,989 and an increase in deferred tax assets of $140.

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System Optimization (Gains) Losses, Net

3 Months Ended

Mar. 31, 2019

Property, Plant and Equipment [Abstract]

System Optimization (Gains) Losses, Net

System Optimization (Gains) Losses, Net

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

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

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

	Three Months Ended
	March 31, 2019			April 1, 2018
Post-closing adjustments on sales of restaurants (a)	$	(8	)	$	(212	)
Gain (loss) on sales of other assets, net (b)	20			(358		)
System optimization gains (losses), net	$	12		$	(570	)

_______________

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

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

Assets Held for Sale

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

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Reorganization and Realignment Costs

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure

Reorganization and Realignment Costs

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

	Three Months Ended
	March 31, 2019		April 1, 2018
G&A realignment	$	782	$	2,626
System optimization initiative	16		—
Reorganization and realignment costs	$	798	$	2,626

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses. The Company expects to incur total costs aggregating approximately $32,000 to $35,000 related to the plan. The Company recognized costs totaling $782 and $2,626 during the three months endedMarch 31, 2019 and April 1, 2018, respectively, which primarily included severance and related employee costs. The Company expects to incur additional costs associated with our G&A realignment plan aggregating approximately $3,500, comprised of (1) severance and related employee costs of approximately $500, (2) recruitment and relocation costs of approximately $1,500, (3) third-party and other costs of approximately $500 and (4) share-based compensation of approximately $1,000. The Company expects to recognize the majority of the remaining costs associated with the plan during the remainder of 2019.

In May 2019, the Company announced changes to its leadership structure that includes the creation of two new positions, a President, U.S and Chief Commercial Officer and a President, International and Chief Development Officer. The Company expects to incur incremental reorganization and realignment costs associated with these leadership changes of approximately $2,500, of which approximately $1,500 will be severance and related employee costs and approximately $1,000 will be share-based compensation. This will increase total reorganization and realignment costs to approximately $34,500 to $37,500. Also as a result of these changes, the Company’s chief operating decision maker is currently evaluating the Company’s management and operating structure and anticipates this evaluation will result in a change to its existing operating segment structure by the end of 2019.

The following is a summary of the activity recorded as a result of the G&A realignment plan:

	Three Months Ended				Total Incurred Since Inception
	March 31, 2019		April 1, 2018
Severance and related employee costs	$	472	$	2,059	$	19,225
Recruitment and relocation costs	114		148		1,680
Third-party and other costs	16		328		2,126
	602		2,535		23,031
Share-based compensation (a)	180		91		6,864
Termination of defined benefit plans	—		—		1,335
Total G&A realignment	$	782	$	2,626	$	31,230

_______________

(a) 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.

The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,730 and $765 as of March 31, 2019, respectively, and $8,781 and $2,731 as of April 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan.

	Balance December 30, 2018		Charges		Payments			Balance March 31, 2019
Severance and related employee costs	$	7,241	$	472	$	(2,218	)	$	5,495
Recruitment and relocation costs	83		114		(197		)	—
Third-party and other costs	—		16		(16		)	—
	$	7,324	$	602	$	(2,431	)	$	5,495

	Balance December 31, 2017		Charges		Payments			Balance April 1, 2018
Severance and related employee costs	$	12,093	$	2,059	$	(2,844	)	$	11,308
Recruitment and relocation costs	177		148		(121		)	204
Third-party and other costs	—		328		(328		)	—
	$	12,270	$	2,535	$	(3,293	)	$	11,512

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,208 under the initiative since inception and expects to incur additional costs of approximately $500 during the remainder of 2019, which are primarily comprised of professional fees.

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Investments

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments

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 Hortonsis 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:

	Three Months Ended
	March 31, 2019			April 1, 2018
Balance at beginning of period	$	47,021		$	55,363
Investment	—			12
Equity in earnings for the period	2,397			2,420
Amortization of purchase price adjustments (a)	(566		)	(596		)
	1,831			1,824
Distributions received	(2,246		)	(2,907		)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	1,166			(1,262		)
Balance at end of period	$	47,772		$	53,030

_______________

(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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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

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:

	March 31, 2019				December 30, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	205,393	$	205,393	$	222,228	$	222,228	Level 1
Other investments in equity securities (a)	639		2,179		639		2,181		Level 3
Financial liabilities
Series 2018-1 Class A-2-I Notes (b)	444,375		439,656		445,500		424,026		Level 2
Series 2018-1 Class A-2-II Notes (b)	469,063		461,952		470,250		439,353		Level 2
Series 2015-1 Class A-2-II Notes (b)	868,500		876,065		870,750		865,342		Level 2
Series 2015-1 Class A-2-III Notes (b)	482,500		495,711		483,750		482,522		Level 2
7% debentures, due in 2025 (b)	91,086		99,000		90,769		102,750		Level 2
Guarantees of franchisee loan obligations (c)	12		12		17		17		Level 3

_______________

(a) The fair values of our investments are not significant and are based on our review of information provided by the investment managers or investees which was based on (1) valuations performed by the investment managers or investees, (2) quoted market or broker/dealer prices for similar investments and (3) quoted market or broker/dealer prices adjusted by the investment managers for legal or contractual restrictions, risk of nonperformance or lack of marketability, depending upon the underlying investments.

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

(c) Wendy’s has provided loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage.

The carrying amounts of cash, accounts payable and accrued expenses approximated 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) approximated fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents and guarantees are the only financial assets and liabilities 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 and favorable lease 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 represents 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, which primarily include surplus properties. The fair values of long-lived assets held for sale presented in the tables below represents 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
	March 31, 2019		Level 1		Level 2		Level 3
Held and used	$	—	$	—	$	—	$	—
Held for sale	2,516		—		—		2,516
Total	$	2,516	$	—	$	—	$	2,516

			Fair Value Measurements
	December 30, 2018		Level 1		Level 2		Level 3
Held and used	$	462	$	—	$	—	$	462
Held for sale	1,031		—		—		1,031
Total	$	1,493	$	—	$	—	$	1,493

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Impairment of Long-Lived Assets

3 Months Ended

Mar. 31, 2019

Asset Impairment Charges [Abstract]

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

During the three months endedMarch 31, 2019 and April 1, 2018, the Company recorded impairment charges on long-lived assets as a result of closing Company-operated restaurants and classifying such surplus properties as held for sale.

During the three months endedMarch 31, 2019, the Company recorded impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants. Additionally, during the three months endedApril 1, 2018, the Company recorded impairment charges as a result of 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.

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
	March 31, 2019		April 1, 2018
Surplus properties	$	1,285	$	41
Company-operated restaurants	201		—
Restaurants leased or subleased to franchisees	—		165
	$	1,486	$	206

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2019 and April 1, 2018 was 20.0% and (40.5)% respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to (1) net excess tax benefits related to share-based payments, which resulted in a benefit of $2,036 in the first quarter of 2019 and a benefit of $6,093 for the first quarter of 2018, (2) the impact of the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) and (3) state income tax provision in 2019, including non-recurring changes to state deferred taxes net of federal benefits.

On December 22, 2017, the U.S. government enacted the Tax Act. In our continued analysis of the impact of the Tax Act in the first quarter of 2018 under Staff Accounting Bulletin 118, we adjusted our provisional amounts for a discrete net tax benefit of $3,623. This net benefit included $5,578 for the tax benefit of foreign tax credits, partially offset by a net expense of $1,955 related to the impact of the corporate rate reduction on our net deferred tax liabilities.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three months ended March 31, 2019. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $7,764 due to the lapse of statutes of limitations and expected settlements with taxing authorities.

The current portion of refundable income taxes was $9,560 and $14,475 as of March 31, 2019 and December 30, 2018, respectively, and is included in “Accounts and notes receivable, net” in the condensed consolidated balance sheets. There were no long-term refundable income taxes as of March 31, 2019 and December 30, 2018.

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Net Income Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

Basic net income per share was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding.

The weighted average number of shares used to calculate basic and diluted net income per share were as follows:

	Three Months Ended
	March 31, 2019	April 1, 2018
Common stock:
Weighted average basic shares outstanding	230,584	239,928
Dilutive effect of stock options and restricted shares	5,310	8,491
Weighted average diluted shares outstanding	235,894	248,419

Diluted net income per share for the three months endedMarch 31, 2019 and April 1, 2018 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 2,158 and 2,711 for the three months endedMarch 31, 2019 and April 1, 2018, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Dividends

During the first quarter of 2019 and 2018, the Company paid dividends per share of $.10 and $.085, respectively.

Repurchases of Common Stock

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 warrant and to the extent legally permissible. In connection with the February 2019 authorization, the Company’s previous November 2018 repurchase authorization for up to $220,000 of our common stock was canceled. During the three months ended March 31, 2019, the Company repurchased 1,744 shares with an aggregate purchase price of $29,345, of which $268 was accrued at March 31, 2019, and excluding commissions of $25, under the November 2018 and February 2019 authorizations. As of March 31, 2019, the Company had $217,112 of availability remaining under its February 2019 authorization. Subsequent to March 31, 2019 through May 1, 2019, the Company repurchased 308 shares under the February 2019 authorization with an aggregate purchase price of $5,654, excluding commissions of $4.

In February 2018, our Board of Directors authorized a repurchase program for up to $175,000 of our common stock through March 3, 2019, when and if market conditions warranted and to the extent legally permissible. During the three months ended April 1, 2018, the Company repurchased 989 shares with an aggregate purchase price of $16,741, of which $1,294 was accrued at April 1, 2018, and excluding commissions of $14. Additionally, during the three months ended April 1, 2018, the Company completed its previous February 2017 repurchase authorization for up to $150,000 of our common stock with the repurchase of 1,385 shares with an aggregate purchase price of $22,633, and excluding commissions of $19.

Accumulated Other Comprehensive Loss

The following table provides a rollforward of the components of accumulated other comprehensive loss, net of tax as applicable:

	Foreign Currency Translation			Pension			Total
Balance at December 30, 2018	$	(61,673	)	$	—		$	(61,673	)
Current-period other comprehensive income	6,025			—			6,025
Balance at March 31, 2019	$	(55,648	)	$	—		$	(55,648	)
Balance at December 31, 2017	$	(45,149	)	$	(1,049	)	$	(46,198	)
Current-period other comprehensive (loss) income	(6,044		)	117			(5,927		)
Balance at April 1, 2018	$	(51,193	)	$	(932	)	$	(52,125	)

XML

Leases (Notes)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended
	March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,117
Interest on finance lease liabilities	6,753
	9,870
Operating lease cost	24,643
Variable lease cost (a)	14,104
Short-term lease cost	1,126
Total operating lease cost (b)	39,873
Total lease cost	$	49,743

_______________

(a) Includes expenses for executory costs of $9,524, for which the Company is reimbursed by sublessees.

(b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 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:

	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	9,708
Operating cash flows from operating leases	23,312
Financing cash flows from finance leases	1,881
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	13,810
Operating lease liabilities	3,255

The following table includes supplemental information related to leases:

	March 31, 2019
Weighted-average remaining lease term (years):
Finance leases	17.8
Operating leases	15.9
Weighted average discount rate:
Finance leases	10.19	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

Company as Lessor

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

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

	March 31, 2019
Land	$	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
	594,603
Accumulated depreciation and amortization	(145,812		)
	$	448,791

Leases

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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended
	March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,117
Interest on finance lease liabilities	6,753
	9,870
Operating lease cost	24,643
Variable lease cost (a)	14,104
Short-term lease cost	1,126
Total operating lease cost (b)	39,873
Total lease cost	$	49,743

_______________

(a) Includes expenses for executory costs of $9,524, for which the Company is reimbursed by sublessees.

(b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 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:

	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	9,708
Operating cash flows from operating leases	23,312
Financing cash flows from finance leases	1,881
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	13,810
Operating lease liabilities	3,255

The following table includes supplemental information related to leases:

	March 31, 2019
Weighted-average remaining lease term (years):
Finance leases	17.8
Operating leases	15.9
Weighted average discount rate:
Finance leases	10.19	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

Company as Lessor

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

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

	March 31, 2019
Land	$	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
	594,603
Accumulated depreciation and amortization	(145,812		)
	$	448,791

Leases

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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended
	March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,117
Interest on finance lease liabilities	6,753
	9,870
Operating lease cost	24,643
Variable lease cost (a)	14,104
Short-term lease cost	1,126
Total operating lease cost (b)	39,873
Total lease cost	$	49,743

_______________

(a) Includes expenses for executory costs of $9,524, for which the Company is reimbursed by sublessees.

(b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 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:

	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	9,708
Operating cash flows from operating leases	23,312
Financing cash flows from finance leases	1,881
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	13,810
Operating lease liabilities	3,255

The following table includes supplemental information related to leases:

	March 31, 2019
Weighted-average remaining lease term (years):
Finance leases	17.8
Operating leases	15.9
Weighted average discount rate:
Finance leases	10.19	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

Company as Lessor

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

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

	March 31, 2019
Land	$	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
	594,603
Accumulated depreciation and amortization	(145,812		)
	$	448,791

Leases

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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended
	March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,117
Interest on finance lease liabilities	6,753
	9,870
Operating lease cost	24,643
Variable lease cost (a)	14,104
Short-term lease cost	1,126
Total operating lease cost (b)	39,873
Total lease cost	$	49,743

_______________

(a) Includes expenses for executory costs of $9,524, for which the Company is reimbursed by sublessees.

(b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 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:

	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	9,708
Operating cash flows from operating leases	23,312
Financing cash flows from finance leases	1,881
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	13,810
Operating lease liabilities	3,255

The following table includes supplemental information related to leases:

	March 31, 2019
Weighted-average remaining lease term (years):
Finance leases	17.8
Operating leases	15.9
Weighted average discount rate:
Finance leases	10.19	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

Company as Lessor

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

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

	March 31, 2019
Land	$	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
	594,603
Accumulated depreciation and amortization	(145,812		)
	$	448,791

Leases

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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended
	March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,117
Interest on finance lease liabilities	6,753
	9,870
Operating lease cost	24,643
Variable lease cost (a)	14,104
Short-term lease cost	1,126
Total operating lease cost (b)	39,873
Total lease cost	$	49,743

_______________

(a) Includes expenses for executory costs of $9,524, for which the Company is reimbursed by sublessees.

(b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 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:

	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	9,708
Operating cash flows from operating leases	23,312
Financing cash flows from finance leases	1,881
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	13,810
Operating lease liabilities	3,255

The following table includes supplemental information related to leases:

	March 31, 2019
Weighted-average remaining lease term (years):
Finance leases	17.8
Operating leases	15.9
Weighted average discount rate:
Finance leases	10.19	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

Company as Lessor

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

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

	March 31, 2019
Land	$	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
	594,603
Accumulated depreciation and amortization	(145,812		)
	$	448,791

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Transactions with Related Parties

3 Months Ended

Mar. 31, 2019

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 for the operation of Wendy’s/Tim Hortons combo units in Canada. During the three months ended March 31, 2019 and April 1, 2018, Wendy’s paid TimWen $3,855 and $2,872, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $52 and $54 during the three months ended March 31, 2019 and April 1, 2018, respectively, which has been included as a reduction to “General and administrative.”

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Guarantees and Other Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

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 $69,753 as of March 31, 2019. These leases extend through 2056. We have not received any notice of default related to these leases as of March 31, 2019. In the event of default by a franchise owner, Wendy’s generally retains the right to acquire possession of the related restaurant locations.

Letters of Credit

As of March 31, 2019, the Company had outstanding letters of credit with various parties totaling $27,089. The outstanding letters of credit include amounts outstanding against the Series 2018-1 Class A-1 Notes. We do not expect any material loss to result from these letters of credit.

Purchase and Capital Commitments

Beverage Agreement

The Company has an agreement with a beverage vendor, which provides fountain beverage products and certain marketing support funding to the Company and its franchisees. This agreement requires minimum purchases of certain fountain beverages (“Fountain Beverages”) by the Company and its franchisees at certain agreed upon prices until the total contractual gallon volume usage is reached. This agreement also provides for an annual advance to be paid to the Company based on the vendor’s expectation of the Company’s annual Fountain Beverages usage, which is amortized over actual usage during the year. In January 2019, the Company amended its contract with the beverage vendor, which now expires at the later of reaching a threshold usage requirement or December 31, 2025. Beverage purchases made by the Company under this agreement during the three months ended March 31, 2019 were $2,414. As of March 31, 2019, the Company estimates future purchases to be approximately $7,500 for the remainder of 2019, $10,600 in 2020, $11,100 in 2021, $11,900 in 2022 and $12,500 in 2023 based on current pricing and the expected ratio of usage at Company-operated restaurants to usage at franchised restaurants.

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Legal and Environmental Matters

3 Months Ended

Mar. 31, 2019

Loss Contingency [Abstract]

Legal and Environmental Matters

Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our current and prior businesses. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have adequate accruals for continuing operations for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss 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. There were no material developments in those legal proceedings during the three months ended March 31, 2019.

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Leases (Policies)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

Lessor, 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 March 31, 2019, Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Determination of Whether a Contract Contains a Lease

The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

ROU Model and Determination of Lease Term

The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options.

Operating Leases

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned.

Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.”

Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term.

Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Finance Leases

Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.”

Sales-Type and Direct Financing Leases

For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.”

Significant Assumptions and Judgments

Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.

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New Accounting Standards (Tables)

3 Months Ended

Mar. 31, 2019

Prior Period Adjustments Restatement

Schedule of Prior Period Adjustments

The following table illustrates the reclassifications made to the condensed consolidated balance sheet as of December 30, 2018:

	As Previously Reported		Reclassifications			As Currently Reported
Properties	$	1,213,236	$	(189,969	)	$	1,023,267
Finance lease assets	—		189,969			189,969
Current portion of long-term debt	31,655		(8,405		)	23,250
Current portion of finance lease liabilities	—		8,405			8,405
Long-term debt	2,752,783		(447,231		)	2,305,552
Long-term finance lease liabilities	—		447,231			447,231
	$	1,429,490	$	—		$	1,429,490

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Revenue (Tables)

3 Months Ended

Mar. 31, 2019

Revenue [Abstract]

Disaggregation of Revenue

The following tables disaggregate revenue by primary geographical market and source:

Three Months Ended March 31, 2019	U.S.		Canada		Other International		Total
Sales at Company-operated restaurants	$	167,697	$	—	$	—	$	167,697
Franchise royalty revenue	84,378		5,508		4,957		94,843
Franchise fees	6,009		412		689		7,110
Franchise rental income	50,665		7,787		—		58,452
Advertising funds revenue	75,981		4,500		—		80,481
Total revenues	$	384,730	$	18,207	$	5,646	$	408,583
Three Months Ended April 1, 2018
Sales at Company-operated restaurants	$	153,649	$	—	$	—	$	153,649
Franchise royalty revenue	80,222		5,363		4,358		89,943
Franchise fees	7,085		646		234		7,965
Franchise rental income	44,265		5,842		—		50,107
Advertising funds revenue	74,414		4,486		—		78,900
Total revenues	$	359,635	$	16,337	$	4,592	$	380,564

Contract balances, assets and liabilities

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

	March 31, 2019 (a)		December 30, 2018 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	44,765	$	40,300
Receivables, which are included in “Advertising funds restricted assets”	47,056		47,332
Deferred franchise fees (c)	101,469		102,205

_______________

(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 statement 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 $9,142 and $92,327 as of March 31, 2019, respectively, and $9,973 and $92,232 as of December 30, 2018, respectively.

Deferred franchise fee rollforward

Significant changes in deferred franchise fees are as follows:

	Three Months Ended
	March 31, 2019			April 1, 2018
Deferred franchise fees at beginning of period	$	102,205		$	102,492
Revenue recognized during the period	(2,772		)	(2,688		)
New deferrals due to cash received and other	2,036			2,957
Deferred franchise fees at end of period	$	101,469		$	102,761

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:
2019 (a)	$	6,307
2020	6,482
2021	5,939
2022	5,725
2023	5,500
Thereafter	71,516
	$	101,469

_______________

(a) Represents franchise fees expected to be recognized for the remainder of 2019, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition

The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from the franchisees:

	Three Months Ended
	March 31, 2019
Restaurants acquired from franchisees	5
Total consideration paid, net of cash received	$	5,052
Identifiable assets acquired and liabilities assumed:
Properties	666
Acquired franchise rights	1,354
Finance lease assets	5,350
Finance lease liabilities	(4,084		)
Other	(2,316		)
Total identifiable net assets	970
Goodwill	$	4,082

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System Optimization (Gains) Losses, Net (Tables)

3 Months Ended

Mar. 31, 2019

System optimization gains (losses), 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
	March 31, 2019			April 1, 2018
Post-closing adjustments on sales of restaurants (a)	$	(8	)	$	(212	)
Gain (loss) on sales of other assets, net (b)	20			(358		)
System optimization gains (losses), net	$	12		$	(570	)

_______________

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

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

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Reorganization and Realignment Costs (Tables)

3 Months Ended

Mar. 31, 2019

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
	March 31, 2019		April 1, 2018
G&A realignment	$	782	$	2,626
System optimization initiative	16		—
Reorganization and realignment costs	$	798	$	2,626

G&A Realignment – May 2017 Plan

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				Total Incurred Since Inception
	March 31, 2019		April 1, 2018
Severance and related employee costs	$	472	$	2,059	$	19,225
Recruitment and relocation costs	114		148		1,680
Third-party and other costs	16		328		2,126
	602		2,535		23,031
Share-based compensation (a)	180		91		6,864
Termination of defined benefit plans	—		—		1,335
Total G&A realignment	$	782	$	2,626	$	31,230

_______________

(a) 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

The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,730 and $765 as of March 31, 2019, respectively, and $8,781 and $2,731 as of April 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan.

	Balance December 30, 2018		Charges		Payments			Balance March 31, 2019
Severance and related employee costs	$	7,241	$	472	$	(2,218	)	$	5,495
Recruitment and relocation costs	83		114		(197		)	—
Third-party and other costs	—		16		(16		)	—
	$	7,324	$	602	$	(2,431	)	$	5,495

	Balance December 31, 2017		Charges		Payments			Balance April 1, 2018
Severance and related employee costs	$	12,093	$	2,059	$	(2,844	)	$	11,308
Recruitment and relocation costs	177		148		(121		)	204
Third-party and other costs	—		328		(328		)	—
	$	12,270	$	2,535	$	(3,293	)	$	11,512

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Investments (Tables)

3 Months Ended

Mar. 31, 2019

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:

	Three Months Ended
	March 31, 2019			April 1, 2018
Balance at beginning of period	$	47,021		$	55,363
Investment	—			12
Equity in earnings for the period	2,397			2,420
Amortization of purchase price adjustments (a)	(566		)	(596		)
	1,831			1,824
Distributions received	(2,246		)	(2,907		)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	1,166			(1,262		)
Balance at end of period	$	47,772		$	53,030

_______________

(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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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

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:

	March 31, 2019				December 30, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	205,393	$	205,393	$	222,228	$	222,228	Level 1
Other investments in equity securities (a)	639		2,179		639		2,181		Level 3
Financial liabilities
Series 2018-1 Class A-2-I Notes (b)	444,375		439,656		445,500		424,026		Level 2
Series 2018-1 Class A-2-II Notes (b)	469,063		461,952		470,250		439,353		Level 2
Series 2015-1 Class A-2-II Notes (b)	868,500		876,065		870,750		865,342		Level 2
Series 2015-1 Class A-2-III Notes (b)	482,500		495,711		483,750		482,522		Level 2
7% debentures, due in 2025 (b)	91,086		99,000		90,769		102,750		Level 2
Guarantees of franchisee loan obligations (c)	12		12		17		17		Level 3

_______________

(a) The fair values of our investments are not significant and are based on our review of information provided by the investment managers or investees which was based on (1) valuations performed by the investment managers or investees, (2) quoted market or broker/dealer prices for similar investments and (3) quoted market or broker/dealer prices adjusted by the investment managers for legal or contractual restrictions, risk of nonperformance or lack of marketability, depending upon the underlying investments.

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

(c) Wendy’s has provided loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage.

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

			Fair Value Measurements
	March 31, 2019		Level 1		Level 2		Level 3
Held and used	$	—	$	—	$	—	$	—
Held for sale	2,516		—		—		2,516
Total	$	2,516	$	—	$	—	$	2,516

			Fair Value Measurements
	December 30, 2018		Level 1		Level 2		Level 3
Held and used	$	462	$	—	$	—	$	462
Held for sale	1,031		—		—		1,031
Total	$	1,493	$	—	$	—	$	1,493

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Impairment of Long-Lived Assets (Tables)

3 Months Ended

Mar. 31, 2019

Asset Impairment Charges [Abstract]

Impairment of Long-Lived Assets by Type

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
	March 31, 2019		April 1, 2018
Surplus properties	$	1,285	$	41
Company-operated restaurants	201		—
Restaurants leased or subleased to franchisees	—		165
	$	1,486	$	206

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Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Weighted average number of shares used to calculate basic and diluted net income per share

The weighted average number of shares used to calculate basic and diluted net income per share were as follows:

	Three Months Ended
	March 31, 2019	April 1, 2018
Common stock:
Weighted average basic shares outstanding	230,584	239,928
Dilutive effect of stock options and restricted shares	5,310	8,491
Weighted average diluted shares outstanding	235,894	248,419

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The following table provides a rollforward of the components of accumulated other comprehensive loss, net of tax as applicable:

	Foreign Currency Translation			Pension			Total
Balance at December 30, 2018	$	(61,673	)	$	—		$	(61,673	)
Current-period other comprehensive income	6,025			—			6,025
Balance at March 31, 2019	$	(55,648	)	$	—		$	(55,648	)
Balance at December 31, 2017	$	(45,149	)	$	(1,049	)	$	(46,198	)
Current-period other comprehensive (loss) income	(6,044		)	117			(5,927		)
Balance at April 1, 2018	$	(51,193	)	$	(932	)	$	(52,125	)

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Lease, Cost

The components of lease cost are as follows:

	Three Months Ended
	March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,117
Interest on finance lease liabilities	6,753
	9,870
Operating lease cost	24,643
Variable lease cost (a)	14,104
Short-term lease cost	1,126
Total operating lease cost (b)	39,873
Total lease cost	$	49,743

_______________

(a) Includes expenses for executory costs of $9,524, for which the Company is reimbursed by sublessees.

(b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 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:

	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	9,708
Operating cash flows from operating leases	23,312
Financing cash flows from finance leases	1,881
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	13,810
Operating lease liabilities	3,255

Schedule of Supplemental Information Related to Leases

The following table includes supplemental information related to leases:

	March 31, 2019
Weighted-average remaining lease term (years):
Finance leases	17.8
Operating leases	15.9
Weighted average discount rate:
Finance leases	10.19	%
Operating leases	5.10	%

Finance Lease, Liability, Maturity

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance 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 March 31, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated			Franchise and Other
2019 (a)	$	1,917		$	34,251		$	15,168		$	54,760
2020	2,577			44,313			20,022			73,121
2021	2,687			45,706			19,764			73,067
2022	2,738			46,724			19,398			73,330
2023	2,690			48,389			19,376			73,407
Thereafter	34,441			688,400			200,962			853,051
Total minimum payments	$	47,050		$	907,783		$	294,690		$	1,200,736
Less interest	(22,400		)	(464,458		)	(93,278		)	(400,752		)
Present value of minimum lease payments (b) (c)	$	24,650		$	443,325		$	201,412		$	799,984

_______________

(a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:

	Finance Leases						Operating Leases
Fiscal Year	Company- Operated			Franchise and Other			Company- Operated		Franchise and Other
2019	$	1,962		$	45,125		$	20,174	$	75,703
2020	1,978			43,969			20,052		73,320
2021	2,082			45,522			19,820		73,167
2022	2,114			46,573			19,530		73,300
2023	2,084			48,109			19,430		73,377
Thereafter	23,558			676,139			203,073		854,964
Total minimum payments	$	33,778		$	905,437		$	302,079	$	1,223,831
Less interest	(16,874		)	(466,705		)
Present value of minimum lease payments (a)	$	16,904		$	438,732

_______________

(a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

Sales-type Lease, Lease Income

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

Direct Financing Lease, Lease Income

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

Operating Lease, Lease Income

The components of lease income are as follows:

	Three Months Ended
	March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	1,934
Interest income	4,733
Operating lease income	$	45,205
Variable lease income	13,247
Franchise rental income (a)	$	58,452

_______________

(a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs.

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 March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

Lessor, Operating Lease, Payments to be Received, Maturity

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	20,182		$	1,543		$	84,371	$	39,451
2020	27,484			2,130			113,275		52,990
2021	28,522			2,162			114,167		54,561
2022	29,159			2,243			115,363		56,034
2023	30,193			2,287			116,342		56,239
Thereafter	466,197			28,031			1,367,503		859,548
Total future minimum receipts	601,737			38,396			$	1,911,021	$	1,118,823
Unearned interest income	(380,607		)	(20,831		)
Net investment in sales-type and direct financing leases (b)	$	221,130		$	17,565

_______________

(a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019.

(b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 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 $233.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019	$	26,239		$	1,937		$	113,180	$	52,527
2020	26,859			2,006			113,578		53,066
2021	27,904			2,043			114,447		54,615
2022	28,563			2,119			115,552		56,092
2023	29,512			2,159			116,463		56,284
Thereafter	448,851			26,404			1,372,646		858,755
Total future minimum receipts	587,928			36,668			$	1,945,866	$	1,131,339
Unearned interest income	(377,046		)	(20,338		)
Net investment in sales-type and direct financing leases (a)	$	210,882		$	16,330

_______________

(a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.

Schedule of Property Subject To Operating Lease

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

	March 31, 2019
Land	$	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
	594,603
Accumulated depreciation and amortization	(145,812		)
	$	448,791

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New Accounting Standards New Accounting Standards Adopted (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 29, 2019	Dec. 30, 2018
New Accounting Pronouncements or Change in Accounting Principle
Operating lease assets	$ 919,283		$ 0
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle
Operating lease liabilities	1,011,000
Operating lease assets	934,000
Favorable leases	23,000
Unfavorable leases	30,000
Straight-line rent In excess of minimum rents paid	67,000
Cumulative effect on retained earnings, net of tax	$ (1,105)
Scenario, Forecast | Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle
Effect on future earnings, amount		$ 40,000

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New Accounting Standards Schedule of Prior Period Adjustments (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Prior Period Adjustments Restatement
Properties	$ 1,003,231	$ 1,023,267
Finance lease assets	195,368	189,969
Current portion of long-term debt	23,250	23,250
Current portion of finance lease liabilities	9,380	8,405
Long-term debt	2,301,563	2,305,552
Long-term finance lease liabilities	$ 458,595	447,231
Total of balance sheet line items affected by prior period reclassifications		1,429,490
Previously Reported
Prior Period Adjustments Restatement
Properties		1,213,236
Finance lease assets		0
Current portion of long-term debt		31,655
Current portion of finance lease liabilities		0
Long-term debt		2,752,783
Long-term finance lease liabilities		0
Total of balance sheet line items affected by prior period reclassifications		1,429,490
Restatement Adjustment
Prior Period Adjustments Restatement
Properties		(189,969)
Finance lease assets		189,969
Current portion of long-term debt		(8,405)
Current portion of finance lease liabilities		8,405
Long-term debt		(447,231)
Long-term finance lease liabilities		447,231
Total of balance sheet line items affected by prior period reclassifications		$ 0

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Revenue Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Disaggregation of Revenue
Franchise rental income	$ 58,452	$ 50,107
Total revenues	408,583	380,564
United States
Disaggregation of Revenue
Franchise rental income	50,665	44,265
Total revenues	384,730	359,635
Canada
Disaggregation of Revenue
Franchise rental income	7,787	5,842
Total revenues	18,207	16,337
Other International
Disaggregation of Revenue
Franchise rental income	0	0
Total revenues	5,646	4,592
Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	167,697	153,649
Sales at Company-operated restaurants | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	167,697	153,649
Sales at Company-operated restaurants | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0
Sales at Company-operated restaurants | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0
Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	94,843	89,943
Franchise royalty revenue | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	84,378	80,222
Franchise royalty revenue | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	5,508	5,363
Franchise royalty revenue | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	4,957	4,358
Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	7,110	7,965
Franchise fees | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	6,009	7,085
Franchise fees | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	412	646
Franchise fees | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	689	234
Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	80,481	78,900
Advertising funds revenue | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	75,981	74,414
Advertising funds revenue | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	4,500	4,486
Advertising funds revenue | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	$ 0	$ 0

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Revenue Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018	Dec. 30, 2018
Contract balances
Receivables, which are included in Accounts and notes receivable, net	$ 44,765		$ 40,300
Receivables, which are included in Advertising funds restricted assets	47,056		47,332
Deferred franchise fees at beginning of period	102,205	$ 102,492
Revenue recognized during the period	(2,772)	(2,688)
New deferrals due to cash received and other	2,036	2,957
Deferred franchise fees at end of period	101,469	$ 102,761
Deferred franchisee fees, current	9,142		9,973
Deferred franchise fees, noncurrent	$ 92,327		$ 92,232

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Revenue Revenue, Remaining Performance Obligation (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Revenue [Abstract]
Anticipated recognition of revenue for the remainder of 2019	$ 6,307
Anticipated recognition of revenue in 2020	6,482
Anticipated recognition of revenue in 2021	5,939
Anticipated recognition of revenue in 2022	5,725
Anticipated recognition of revenue in 2023	5,500
Anticipated recognition of revenue thereafter	71,516
Revenue, Remaining Performance Obligation, Amount	$ 101,469

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Acquisitions (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($) number_of_restaurants	Dec. 30, 2018 USD ($) number_of_restaurants
Business Acquisition
Goodwill	$ 755,355	$ 747,884
Acquisitions
Business Acquisition
Restaurants acquired from franchisees | number_of_restaurants	5	16
Total consideration paid, net of cash received	$ 5,052	$ 21,401
Properties	666
Acquired franchise rights	1,354
Finance lease assets	5,350
Finance lease liabilities	(4,084)
Other	(2,316)
Total identifiable net assets	970
Goodwill	4,082
Business Acquisitions, Purchase Price Allocation, Intangible Assets Other Than Goodwill	(2,989)
Business Acquisitions, Purchase Price Allocation, Deferred Tax Assets	$ 140

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System Optimization (Gains) Losses, Net Summary of Disposition Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018	Jan. 01, 2017
System optimization gains (losses), net
Company-operated restaurant ownership percentage			5.00%
System optimization gains (losses), net	$ 12	$ (570)
Proceeds from sales	0	351
Sale of Company-operated restaurants to franchisees
System optimization gains (losses), net
Post closing adjustments on sales of restaurants	(8)	(212)
Cash proceeds from post closing adjustments, net of payments		6
Sale of Other Assets
System optimization gains (losses), net
System optimization gains (losses), net	$ 20	(358)
Proceeds from sales		$ 345

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System Optimization (Gains) Losses, Net Assets Held for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Property, Plant and Equipment [Abstract]
Assets held for sale	$ 4,470	$ 2,435

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Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 798	$ 2,626
G&A Realignment – May 2017 Plan
Restructuring Cost and Reserve
Reorganization and realignment costs	782	2,626
Restructuring and Related Cost, Expected Cost Remaining	3,500
System Optimization
Restructuring Cost and Reserve
Reorganization and realignment costs	16	$ 0
Restructuring and Related Cost, Expected Cost Remaining	$ 500

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Reorganization and Realignment Costs G&A Realignment - May 2017 Plan (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018	May 01, 2019
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 798	$ 2,626
G&A Realignment – May 2017 Plan
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	3,500
Restructuring and Related Cost, Incurred Cost	602	2,535
Restructuring and Related Cost, Cost Incurred to Date	23,031
Reorganization and realignment costs	782	2,626
Restructuring Charges, Cost Incurred to Date	31,230
G&A Realignment – May 2017 Plan | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	500
Restructuring and Related Cost, Incurred Cost	472	2,059
Restructuring and Related Cost, Cost Incurred to Date	19,225
G&A Realignment – May 2017 Plan | Recruitment and relocation costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	1,500
Restructuring and Related Cost, Incurred Cost	114	148
Restructuring and Related Cost, Cost Incurred to Date	1,680
G&A Realignment – May 2017 Plan | Third-party and other costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	500
Restructuring and Related Cost, Incurred Cost	16	328
Restructuring and Related Cost, Cost Incurred to Date	2,126
G&A Realignment – May 2017 Plan | Share based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	1,000
Restructuring and Related Cost, Incurred Cost	180	91
Restructuring and Related Cost, Cost Incurred to Date	6,864
G&A Realignment – May 2017 Plan | Termination of defined benefit plans
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	$ 0
Restructuring and Related Cost, Cost Incurred to Date	1,335
G&A Realignment – May 2017 Plan | Minimum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost	32,000
G&A Realignment – May 2017 Plan | Maximum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost	$ 35,000
Subsequent Event | G&A Realignment – May 2017 Plan
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining			$ 2,500
Subsequent Event | G&A Realignment – May 2017 Plan | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining			1,500
Subsequent Event | G&A Realignment – May 2017 Plan | Share based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining			1,000
Subsequent Event | G&A Realignment – May 2017 Plan | Minimum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost			34,500
Subsequent Event | G&A Realignment – May 2017 Plan | Maximum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost			$ 37,500

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Reorganization and Realignment Costs G&A Realignment - May 2017 Plan Accrual Rollforward (Details) - G&A Realignment – May 2017 Plan - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Restructuring Cost and Reserve
Beginning balance	$ 7,324	$ 12,270
Charges	602	2,535
Payments for Restructuring	(2,431)	(3,293)
Ending balance	5,495	11,512
Severance and related employee costs
Restructuring Cost and Reserve
Beginning balance	7,241	12,093
Charges	472	2,059
Payments for Restructuring	(2,218)	(2,844)
Ending balance	5,495	11,308
Recruitment and relocation
Restructuring Cost and Reserve
Beginning balance	83	177
Charges	114	148
Payments for Restructuring	(197)	(121)
Ending balance	0	204
Other Restructuring
Restructuring Cost and Reserve
Beginning balance	0	0
Charges	16	328
Payments for Restructuring	(16)	(328)
Ending balance	0	0
Accrued expenses and other current liabilities
Restructuring Cost and Reserve
Ending balance	4,730	8,781
Other Liabilities
Restructuring Cost and Reserve
Ending balance	$ 765	$ 2,731

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Reorganization and Realignment Costs System Optimization Costs (Details) - System Optimization $ in Thousands	Mar. 31, 2019 USD ($)
Restructuring Cost and Reserve
Restructuring and Related Cost, Cost Incurred to Date	$ 72,208
Restructuring and Related Cost, Expected Cost Remaining	$ 500

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Investments Equity Investment Summary (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) years	Apr. 01, 2018 USD ($) years
Schedule of Equity Method Investments
Investment	$ 0	$ 12
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	$ 6,025	$ (6,044)
TimWen
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	50.00%
Equity Method Investment, Purchase Price Adjustment, Amortization Period | years	21	21
Brazil JV
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	20.00%
TimWen and Brazil JV
Schedule of Equity Method Investments
Balance at beginning of period	$ 47,021	$ 55,363
Investment	0	12
Equity in earnings for the period	2,397	2,420
Amortization of Purchase Price Adjustment	(566)	(596)
Equity in earnings for the period, net of amortization of purchase price adjustments	1,831	1,824
Distributions received	(2,246)	(2,907)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	1,166	(1,262)
Balance at end of period	$ 47,772	$ 53,030

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Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	$ 205,393	$ 222,228
Other investments in equity securities	639	639
Guarantees of franchisee loan obligations	12	17
Reported Value Measurement | Series 2018-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	444,375	445,500
Reported Value Measurement | Series 2018-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	469,063	470,250
Reported Value Measurement | Series 2015-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	868,500	870,750
Reported Value Measurement | Series 2015-1 Class A-2-III Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	482,500	483,750
Reported Value Measurement | 7% Debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	91,086	90,769
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	205,393	222,228
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Other investments in equity securities	2,179	2,181
Guarantees of franchisee loan obligations	12	17
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	439,656	424,026
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	461,952	439,353
Estimate of Fair Value Measurement | Series 2015-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	876,065	865,342
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	495,711	482,522
Estimate of Fair Value Measurement | 7% Debentures | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	$ 99,000	$ 102,750

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Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and Used, Long Lived, Fair Value Disclosure	$ 0	$ 462
Assets Held-for-sale, Long Lived, Fair Value Disclosure	2,516	1,031
Total	2,516	1,493
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	0	462
Assets Held-for-sale, Long Lived, Fair Value Disclosure	2,516	1,031
Total	$ 2,516	$ 1,493

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Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	$ 1,486	$ 206
Surplus Properties
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	1,285	41
Company-operated restaurants
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	201	0
Restaurants leased or subleased to franchisees
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	$ 0	$ 165

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018	Dec. 30, 2018
Effective Income Tax Rate	20.00%	(40.50%)
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options	$ 2,036	$ 6,093
(Provision for) benefit from income taxes	(7,990)	5,806
Decrease in Unrecognized Tax Benefits is Reasonably Possible	7,764
Income Taxes Receivable	9,560		$ 14,475
Income Taxes Receivable, Noncurrent	$ 0		$ 0
Tax Act
(Provision for) benefit from income taxes		3,623
Effective Income Tax Rate Reconciliation, Tax Credit, Foreign, Amount		5,578
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount		$ (1,955)

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Net Income Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Common Stock:
Weighted average basic shares outstanding	230,584	239,928
Dilutive effect of stock options and restricted shares	5,310	8,491
Weighted average diluted shares outstanding	235,894	248,419
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,158	2,711

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Stockholders' Equity Dividends (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Dividend Paid
Common Stock, Dividends, Per Share, Cash Paid	$ 0.10	$ 0.085

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Stockholders' Equity Repurchases of Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands	1 Months Ended	3 Months Ended
	May 01, 2019	Mar. 31, 2019	Apr. 01, 2018	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Feb. 28, 2017
Subsequent Event
Equity, Class of Treasury Stock
Treasury Stock, Shares, Acquired	308
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions	$ 5,654
Stock Repurchase Program, Cost Incurred	$ 4
February 2019 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount				$ 225,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 217,112
November 2018 and February 2019 Share Repurchase Programs
Equity, Class of Treasury Stock
Treasury Stock, Shares, Acquired		1,744
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions		$ 29,345
Stock Repurchase Program, Repurchase Accrual		268
Stock Repurchase Program, Cost Incurred		$ 25
February 2018 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount						$ 175,000
Treasury Stock, Shares, Acquired			989
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions			$ 16,741
Stock Repurchase Program, Repurchase Accrual			1,294
Stock Repurchase Program, Cost Incurred			$ 14
November 2018 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount					$ 220,000
February 2017 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount							$ 150,000
Treasury Stock, Shares, Acquired			1,385
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions			$ 22,633
Stock Repurchase Program, Cost Incurred			$ 19

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Stockholders' Equity Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Accumulated Other Comprehensive Loss, Net of Tax
Balance, beginning of year	$ (61,673)	$ (46,198)
Current-period other comprehensive income (loss)	6,025	(5,927)
Balance, end of the period	(55,648)	(52,125)
Foreign Currency Translation
Accumulated Other Comprehensive Loss, Net of Tax
Balance, beginning of year	(61,673)	(45,149)
Current-period other comprehensive income (loss)	6,025	(6,044)
Balance, end of the period	(55,648)	(51,193)
Pension
Accumulated Other Comprehensive Loss, Net of Tax
Balance, beginning of year	0	(1,049)
Current-period other comprehensive income (loss)	0	117
Balance, end of the period	$ 0	$ (932)

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Leases Lessee Lease Narrative (Details)	Mar. 31, 2019 number_of_restaurants
Lessee, Lease, Description
Number of restaurants	6,710
Minimum
Lessee, Lease, Description
Lessee, operating lease, term of contract	15 years
Maximum
Lessee, Lease, Description
Lessee, operating lease, term of contract	20 years
Entity Operated Units
Lessee, Lease, Description
Number of restaurants	358
Land And Building - Company Owned | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	144
Building - Company Owned; Land - Leased | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	144
Land And Building - Leased | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	70

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Leases Lessor Lease Narrative (Details)	Mar. 31, 2019 number_of_restaurants
Lessor, Lease, Description
Number of restaurants	6,710
Land And Building - Company Owned | Franchised Units
Lessor, Lease, Description
Number of restaurants	513
Land And Building - Leased | Franchised Units
Lessor, Lease, Description
Number of restaurants	1,275

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Leases Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Finance Lease, Cost
Amortization of finance lease assets	$ 3,117
Interest on finance lease liabilities	6,753
Total finance lease cost	9,870
Operating lease cost	24,643
Variable lease cost	14,104
Short-term lease cost	1,126
Total operating lease cost	39,873
Franchise rental expense	32,451	$ 23,263
Total lease cost	49,743
Cost of sales
Finance Lease, Cost
Total operating lease cost	6,593
Executory costs paid by lessee
Finance Lease, Cost
Variable lease cost	$ 9,524

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Leases Supplemental Cash Flow and Non-cash Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Cash Flow, Operating Activities, Lessee
Operating cash flows from finance leases	$ 9,708
Operating cash flows from operating leases	23,312
Cash Flow, Financing Activities, Lessee
Financing cash flows from finance leases	1,881	$ 1,353
Lessee, Lease, Description
Right-of-use assets obtained in exchange for finance lease liabilities	13,810	$ 1,101
Right-of-use asset obtained in exchange for operating lease liabilities	$ 3,255

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Leases Supplemental Information (Details)	Mar. 31, 2019
Lessee, Lease, Description
Weighted-average remaining lease term (years): Finance leases	17 years 10 months
Weighted-average remaining lease term (years): Operating leases	15 years 11 months
Weighted-average discount rate: Finance leases	10.19%
Weighted-average discount rate: Operating leases	5.10%

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Leases Future Minimum Rental Payments for Non-cancelable Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Entity Operated Units
Finance Lease Liabilities, Payments, Due
Future minimum finance lease payments, remainder of fiscal year	$ 1,917
Future minimum finance lease payments, due next twelve months		$ 1,962
Future minimum finance lease payments, due year two	2,577	1,978
Future minimum finance lease payments, due year three	2,687	2,082
Future minimum finance lease payments, due year four	2,738	2,114
Future minimum finance lease payments, due year five	2,690	2,084
Future minimum finance lease payments, due after year five	34,441	23,558
Total minimum finance lease payments	47,050	33,778
Interest incurred on total minimum finance lease payments	(22,400)	(16,874)
Present value of minimum finance lease payments	24,650	16,904
Operating Lease Liabilities, Payments Due
Future minimum operating lease payments, remainder of fiscal year	15,168
Future minimum operating lease payments, due next twelve months		20,174
Future minimum operating lease payments, due year two	20,022	20,052
Future minimum operating lease payments, due year three	19,764	19,820
Future minimum operating lease payments, due year four	19,398	19,530
Future minimum operating lease payments, due year five	19,376	19,430
Future minimum operating lease payments, due after year five	200,962	203,073
Total minimum operating lease payments	294,690	302,079
Interest incurred on total minimum operating lease payments	(93,278)
Present value of minimum operating lease payments	201,412
Franchised Units
Finance Lease Liabilities, Payments, Due
Future minimum finance lease payments, remainder of fiscal year	34,251
Future minimum finance lease payments, due next twelve months		45,125
Future minimum finance lease payments, due year two	44,313	43,969
Future minimum finance lease payments, due year three	45,706	45,522
Future minimum finance lease payments, due year four	46,724	46,573
Future minimum finance lease payments, due year five	48,389	48,109
Future minimum finance lease payments, due after year five	688,400	676,139
Total minimum finance lease payments	907,783	905,437
Interest incurred on total minimum finance lease payments	(464,458)	(466,705)
Present value of minimum finance lease payments	443,325	438,732
Operating Lease Liabilities, Payments Due
Future minimum operating lease payments, remainder of fiscal year	54,760
Future minimum operating lease payments, due next twelve months		75,703
Future minimum operating lease payments, due year two	73,121	73,320
Future minimum operating lease payments, due year three	73,067	73,167
Future minimum operating lease payments, due year four	73,330	73,300
Future minimum operating lease payments, due year five	73,407	73,377
Future minimum operating lease payments, due after year five	853,051	854,964
Total minimum operating lease payments	1,200,736	1,223,831
Interest incurred on total minimum operating lease payments	(400,752)
Present value of minimum operating lease payments	799,984
Current portion of finance lease liabilities
Finance Lease Liabilities, Payments, Due
Present value of minimum finance lease payments	9,380	8,405
Long-term finance lease liabilities
Finance Lease Liabilities, Payments, Due
Present value of minimum finance lease payments	458,595	$ 447,231
Current portion of operating lease liabilities
Operating Lease Liabilities, Payments Due
Present value of minimum operating lease payments	43,657
Long-term operating lease liabilities
Operating Lease Liabilities, Payments Due
Present value of minimum operating lease payments	$ 957,739

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Leases Components of Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Lessor Lease Income
Sales-type and direct-financing leases, selling profit	$ 1,934
Sales-type and direct-financing leases, interest income	4,733
Operating lease rental income	45,205
Variable lease income	13,247
Franchise rental income	58,452	$ 50,107
Sublease income	43,021
Executory costs paid to lessor
Lessor Lease Income
Variable lease income	$ 9,432

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Leases Future Minimum Rental Receipts for Non-cancelable Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Direct Financing Lease, Net Investment in Leases
Net investment in unguaranteed residual assets	$ 233
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	20,182
Future minimum sales-type and direct financing lease receipts, next twelve months		$ 26,239
Future minimum sales-type and direct financing lease receipts, due year two	27,484	26,859
Future minimum sales-type and direct financing lease receipts, due year three	28,522	27,904
Future minimum sales-type and direct financing lease receipts, due year four	29,159	28,563
Future minimum sales-type and direct financing lease receipts, due year five	30,193	29,512
Future minimum sales-type and direct financing lease receipts, due after year five	466,197	448,851
Total future minimum sales-type and direct financing lease receipts	601,737	587,928
Unearned interest on total minimum sales-type and direct financing lease receipts	(380,607)	(377,046)
Present value of minimum sales-type and direct financing lease receipts	221,130	210,882
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	1,543
Future minimum sales-type and direct financing lease receipts, next twelve months		1,937
Future minimum sales-type and direct financing lease receipts, due year two	2,130	2,006
Future minimum sales-type and direct financing lease receipts, due year three	2,162	2,043
Future minimum sales-type and direct financing lease receipts, due year four	2,243	2,119
Future minimum sales-type and direct financing lease receipts, due year five	2,287	2,159
Future minimum sales-type and direct financing lease receipts, due after year five	28,031	26,404
Total future minimum sales-type and direct financing lease receipts	38,396	36,668
Unearned interest on total minimum sales-type and direct financing lease receipts	(20,831)	(20,338)
Present value of minimum sales-type and direct financing lease receipts	17,565	16,330
Subleases, operating
Lessor, Operating Lease, Payments, Fiscal Year Maturity
Future minimum operating lease receipts, remainder of fiscal year	84,371
Future minimum operating lease receipts, next twelve months		113,180
Future minimum operating lease receipts, due year two	113,275	113,578
Future minimum operating lease receipts, due year three	114,167	114,447
Future minimum operating lease receipts, due year four	115,363	115,552
Future minimum operating lease receipts, due year five	116,342	116,463
Future minimum operating lease receipts, due after year five	1,367,503	1,372,646
Total future minimum operating lease receipts	1,911,021	1,945,866
Owned properties, operating
Lessor, Operating Lease, Payments, Fiscal Year Maturity
Future minimum operating lease receipts, remainder of fiscal year	39,451
Future minimum operating lease receipts, next twelve months		52,527
Future minimum operating lease receipts, due year two	52,990	53,066
Future minimum operating lease receipts, due year three	54,561	54,615
Future minimum operating lease receipts, due year four	56,034	56,092
Future minimum operating lease receipts, due year five	56,239	56,284
Future minimum operating lease receipts, due after year five	859,548	858,755
Total future minimum operating lease receipts	1,118,823	1,131,339
Accounts and notes receivable, net
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity
Present value of minimum sales-type and direct financing lease receipts	2,269	735
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	$ 236,426	$ 226,477

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Leases Properties Leased to Third Parties (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 30, 2018
Property, Plant and Equipment
Properties	$ 1,003,231	$ 1,023,267
Assets Leased to Others
Property, Plant and Equipment
Land	281,571
Buildings and improvements	310,912
Restaurant equipment	2,120
Property, plant and equipment leased to others, gross	594,603
Accumulated depreciation and amortization	(145,812)
Properties	$ 448,791

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Transactions with Related Parties (Details) - TimWen - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Apr. 01, 2018
Related Party Transaction
TimWen lease expense	$ 3,855	$ 2,872
General and administrative
Related Party Transaction
Related Party Transaction, Other Revenues from Transactions with Related Party	$ 52	$ 54

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Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Property Lease Guarantee
Guarantor Obligations
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 69,753

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Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Guarantor Obligations
Letters of Credit Outstanding, Amount	$ 27,089

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Guarantees and Other Commitments and Contingencies Beverage Agreements (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Long-term Purchase Commitment
Purchase Obligation, Purchases During Period	$ 2,414
Purchase Obligation, Due in Next Twelve Months	7,500
Purchase Obligation, Due in Second Year	10,600
Purchase Obligation, Due in Third Year	11,100
Purchase Obligation, Due in Fourth Year	11,900
Purchase Obligation, Due in Fifth Year	$ 12,500

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Label	Element	Value
Restricted cash included in advertising funds restricted assets	wen_Restrictedcashincludedinadvertisingfundsrestrictedassets	$ 25,247,000
Restricted cash included in advertising funds restricted assets	wen_Restrictedcashincludedinadvertisingfundsrestrictedassets	$ 28,138,000