10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 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 registrant as specified in its charter)

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

(614) 764-3100

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

Yes ☐ No ☒

There were 230,603,094 shares of The Wendy’s Company common stock outstanding as of July 31, 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 June 30, 2019 and December 30, 2018	4
Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and July 1, 2018	5
Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and July 1, 2018	6
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and July 1, 2018	7
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and July 1, 2018	9
Notes to Condensed Consolidated Financial Statements	11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures about Market Risk	42
Item 4. Controls and Procedures	43
PART II: OTHER INFORMATION	44
Item 1. Legal Proceedings	46
Item 1A. Risk Factors	46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6. Exhibits	48
Signatures	49

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands Except Par Value)

	June 30, 2019			December 30, 2018
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	426,216		$	431,405
Restricted cash	29,494			29,860
Accounts and notes receivable, net	101,083			109,805
Inventories	3,546			3,687
Prepaid expenses and other current assets	18,622			14,452
Advertising funds restricted assets	93,422			76,509
Total current assets	672,383			665,718
Properties	992,302			1,023,267
Finance lease assets	197,691			189,969
Operating lease assets	895,280			—
Goodwill	755,887			747,884
Other intangible assets	1,257,323			1,294,153
Investments	47,920			47,660
Net investment in sales-type and direct financing leases	241,584			226,477
Other assets	103,523			96,907
Total assets	$	5,163,893		$	4,292,035
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	22,750		$	23,250
Current portion of finance lease liabilities	9,917			8,405
Current portion of operating lease liabilities	43,321			—
Accounts payable	17,315			21,741
Accrued expenses and other current liabilities	148,852			150,636
Advertising funds restricted liabilities	99,120			80,153
Total current liabilities	341,275			284,185
Long-term debt	2,274,967			2,305,552
Long-term finance lease liabilities	465,226			447,231
Long-term operating lease liabilities	931,033			—
Deferred income taxes	271,283			269,160
Deferred franchise fees	91,588			92,232
Other liabilities	140,473			245,226
Total liabilities	4,515,845			3,643,586
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized;      470,424 shares issued; 231,092 and 231,233 shares outstanding, respectively	47,042			47,042
Additional paid-in capital	2,883,484			2,884,696
Retained earnings	163,249			146,277
Common stock held in treasury, at cost; 239,332 and 239,191 shares, respectively	(2,393,914		)	(2,367,893		)
Accumulated other comprehensive loss	(51,813		)	(61,673		)
Total stockholders’ equity	648,048			648,449
Total liabilities and stockholders’ equity	$	5,163,893		$	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						Six Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018
	(Unaudited)
Revenues:
Sales	$	181,050		$	167,344		$	348,747		$	320,993
Franchise royalty revenue and fees	109,125			107,559			211,078			205,467
Franchise rental income	58,561			51,529			117,013			101,636
Advertising funds revenue	86,612			84,570			167,093			163,470
	435,348			411,002			843,931			791,566
Costs and expenses:
Cost of sales	151,092			138,154			293,671			270,373
Franchise support and other costs	4,066			7,031			10,084			13,204
Franchise rental expense	28,027			24,306			60,478			47,569
Advertising funds expense	88,667			84,570			169,148			163,470
General and administrative	50,784			49,163			100,097			99,519
Depreciation and amortization	31,484			33,427			64,669			65,579
System optimization (gains) losses, net	(110		)	(92		)	(122		)	478
Reorganization and realignment costs	3,570			3,124			4,368			5,750
Impairment of long-lived assets	198			1,603			1,684			1,809
Other operating income, net	(3,003		)	(1,767		)	(6,985		)	(2,930		)
	354,775			339,519			697,092			664,821
Operating profit	80,573			71,483			146,839			126,745
Interest expense, net	(29,931		)	(30,136		)	(59,013		)	(60,314		)
Loss on early extinguishment of debt	(7,150		)	—			(7,150		)	(11,475		)
Other income, net	2,247			917			4,947			1,661
Income before income taxes	45,739			42,264			85,623			56,617
Provision for income taxes	(13,353		)	(12,388		)	(21,343		)	(6,582		)
Net income	$	32,386		$	29,876		$	64,280		$	50,035
Net income per share
Basic	$	.14		$	.13		$	.28		$	.21
Diluted	$	.14		$	.12		$	.27		$	.20

See accompanying notes to condensed consolidated financial statements.

5

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

	Three Months Ended					Six Months Ended
	June 30, 2019		July 1, 2018			June 30, 2019		July 1, 2018
	(Unaudited)
Net income	$	32,386	$	29,876		$	64,280	$	50,035
Other comprehensive income (loss), net:
Foreign currency translation adjustment	3,835		(4,325		)	9,860		(10,369		)
Change in unrecognized pension loss:
Unrealized gains arising during the period	—		—			—		156
Income tax provision	—		—			—		(39		)
	—		—			—		117
Other comprehensive income (loss), net	3,835		(4,325		)	9,860		(10,252		)
Comprehensive income	$	36,221	$	25,551		$	74,140	$	39,783

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 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
Net income	—		—			32,386			—			—			32,386
Other comprehensive income, net	—		—			—			—			3,835			3,835
Cash dividends	—		—			(23,124		)	—			—			(23,124		)
Repurchases of common stock	—		—			—			(20,391		)	—			(20,391		)
Share-based compensation	—		4,986			—			—			—			4,986
Common stock issued upon exercises of stock options	—		(339		)	—			10,830			—			10,491
Common stock issued upon vesting of restricted shares	—		(1,852		)	—			964			—			(888		)
Other	—		26			(4		)	37			—			59
Balance at June 30, 2019	$	47,042	$	2,883,484		$	163,249		$	(2,393,914	)	$	(51,813	)	$	648,048

See accompanying notes to condensed consolidated financial statements.

7

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED

(In Thousands)

	Common Stock		Additional Paid-In Capital			Retained Earnings (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
Net income	—		—			29,876			—			—			29,876
Other comprehensive loss, net	—		—			—			—			(4,325		)	(4,325		)
Cash dividends	—		—			(20,290		)	—			—			(20,290		)
Repurchases of common stock	—		—			—			(45,787		)	—			(45,787		)
Share-based compensation	—		5,133			—			—			—			5,133
Common stock issued upon exercises of stock options	—		396			—			2,840			—			3,236
Common stock issued upon vesting of restricted shares	—		(1,199		)	—			828			—			(371		)
Other	—		33			(6		)	43			—			70
Balance at July 1, 2018	$	47,042	$	2,883,167		$	(224,120	)	$	(2,219,100	)	$	(56,450	)	$	430,539

See accompanying notes to condensed consolidated financial statements.

8

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	Six Months Ended
	June 30, 2019			July 1, 2018
	(Unaudited)
Cash flows from operating activities:
Net income	$	64,280		$	50,035
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	64,669			65,579
Share-based compensation	10,008			9,591
Impairment of long-lived assets	1,684			1,809
Deferred income tax	3,422			(2,508		)
Non-cash rental expense (income), net	11,519			(6,239		)
Change in operating lease liabilities	(20,983		)	—
Net receipt of deferred vendor incentives	5,312			4,904
System optimization (gains) losses, net	(122		)	478
Distributions received from joint ventures, net of equity in earnings	2,099			2,108
Long-term debt-related activities, net	10,799			15,036
Changes in operating assets and liabilities and other, net	1,373			7,628
Net cash provided by operating activities	154,060			148,421
Cash flows from investing activities:
Capital expenditures	(25,484		)	(23,898		)
Acquisitions	(5,052		)	—
Dispositions	1,240			1,814
Proceeds from sale of investments	130			—
Notes receivable, net	(750		)	(538		)
Payments for investments	—			(13		)
Net cash used in investing activities	(29,916		)	(22,635		)
Cash flows from financing activities:
Proceeds from long-term debt	850,000			930,809
Repayments of long-term debt	(877,876		)	(878,849		)
Repayments of finance lease liabilities	(3,521		)	(2,784		)
Deferred financing costs	(14,008		)	(17,340		)
Repurchases of common stock	(50,781		)	(84,307		)
Dividends	(46,193		)	(40,645		)
Proceeds from stock option exercises	19,160			13,197
Payments related to tax withholding for share-based compensation	(6,957		)	(9,269		)
Contingent consideration payment	—			(6,100		)
Net cash used in financing activities	(130,176		)	(95,288		)
Net cash (used in) provided by operations before effect of exchange rate changes on cash	(6,032		)	30,498
Effect of exchange rate changes on cash	3,866			(4,401		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(2,166		)	26,097
Cash, cash equivalents and restricted cash at beginning of period	486,512			212,824
Cash, cash equivalents and restricted cash at end of period	$	484,346		$	238,921

9

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—CONTINUED

(In Thousands)

	Six Months Ended
	June 30, 2019		July 1, 2018
	(Unaudited)
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	$	5,398	$	7,463
Finance leases	23,534		1,904
	June 30, 2019		December 30, 2018
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	426,216	$	431,405
Restricted cash	29,494		29,860
Restricted cash, included in Advertising funds restricted assets	28,636		25,247
Total cash, cash equivalents and restricted cash	$	484,346	$	486,512

See accompanying notes to condensed consolidated financial statements.

10

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 June 30, 2019, the results of our operations for the three and six months ended June 30, 2019 and July 1, 2018 and cash flows for the six months ended June 30, 2019 and July 1, 2018. The results of operations for the three and six months ended June 30, 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- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. 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

Cloud Computing

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.

Nonemployee Share-Based Payments

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.

11

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,” respectively, 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

12

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:

	U.S.		Canada		Other International			Total
Three Months Ended June 30, 2019
Sales at Company-operated restaurants	$	181,050	$	—	$	—		$	181,050
Franchise royalty revenue	91,430		6,304		5,087			102,821
Franchise fees	5,716		708		(120		)	6,304
Franchise rental income	50,041		8,520		—			58,561
Advertising funds revenue	81,437		5,175		—			86,612
Total revenues	$	409,674	$	20,707	$	4,967		$	435,348
Six Months Ended June 30, 2019
Sales at Company-operated restaurants	$	348,747	$	—	$	—		$	348,747
Franchise royalty revenue	175,808		11,812		10,044			197,664
Franchise fees	11,725		1,120		569			13,414
Franchise rental income	100,706		16,307		—			117,013
Advertising funds revenue	157,418		9,675		—			167,093
Total revenues	$	794,404	$	38,914	$	10,613		$	843,931
Three Months Ended July 1, 2018
Sales at Company-operated restaurants	$	167,344	$	—	$	—		$	167,344
Franchise royalty revenue	87,224		6,073		4,861			98,158
Franchise fees	7,011		2,275		115			9,401
Franchise rental income	44,881		6,648		—			51,529
Advertising funds revenue	79,485		5,085		—			84,570
Total revenues	$	385,945	$	20,081	$	4,976		$	411,002
Six Months Ended July 1, 2018
Sales at Company-operated restaurants	$	320,993	$	—	$	—		$	320,993
Franchise royalty revenue	167,446		11,436		9,219			188,101
Franchise fees	14,096		2,921		349			17,366
Franchise rental income	89,146		12,490		—			101,636
Advertising funds revenue	153,899		9,571		—			163,470
Total revenues	$	745,580	$	36,418	$	9,568		$	791,566

13

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Contract Balances

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

	June 30, 2019 (a)		December 30, 2018 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	43,398	$	40,300
Receivables, which are included in “Advertising funds restricted assets”	49,308		47,332
Deferred franchise fees (c)	101,267		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 condensed consolidated statements of operations.

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

(c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,679 and $91,588 as of June 30, 2019, respectively, and $9,973 and $92,232 as of December 30, 2018, respectively.

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	June 30, 2019			July 1, 2018
Deferred franchise fees at beginning of period	$	102,205		$	102,492
Revenue recognized during the period	(4,609		)	(5,127		)
New deferrals due to cash received and other	3,671			6,358
Deferred franchise fees at end of period	$	101,267		$	103,723

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)	$	4,260
2020	7,025
2021	5,985
2022	5,782
2023	5,527
Thereafter	72,688
	$	101,267

_______________

(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.

14

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(4) Acquisitions

During the six months ended June 30, 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 franchisees:

	Six Months Ended
	June 30, 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 ended March 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, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages.

During the six months ended July 1, 2018, the Company completed the sale of three Company-operated restaurants to a franchisee and facilitated 64 Franchise Flips. During the six months ended June 30, 2019, no Company-operated restaurants were sold to franchisees and no Franchise Flips were facilitated by the Company.

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.”

15

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 disposition activity recorded as a result of our system optimization initiative:

	Three Months Ended					Six Months Ended
	June 30, 2019		July 1, 2018			June 30, 2019		July 1, 2018
Gain on sale of restaurants, net (a)	$	—	$	89		$	—	$	89
Post-closing adjustments on sales of restaurants (b)	62		(13		)	54		(225		)
Gain (loss) on sales of other assets, net (c)	48		16			68		(342		)
System optimization gains (losses), net	$	110	$	92		$	122	$	(478	)

_______________

(a) During the three and six months ended July 1, 2018, the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. The value of the net assets that were included in the sale totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale.

(b) The six months ended July 1, 2018 includes cash proceeds, net of payments of $6.

(c) During the three and six months ended June 30, 2019, the Company received cash proceeds of $1,240, primarily from the sale of surplus properties. During the three and six months ended July 1, 2018, the Company received cash proceeds of $27 and $372, respectively, primarily from the sale of surplus properties.

Assets Held for Sale

As of June 30, 2019 and December 30, 2018, the Company had assets held for sale of $2,952 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				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
G&A realignment	$	3,517	$	3,120	$	4,299	$	5,746
System optimization initiative	53		4		69		4
Reorganization and realignment costs	$	3,570	$	3,124	$	4,368	$	5,750

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses. Additionally, the Company announced in May 2019 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, and the elimination of the Chief Operations Officer position. During the six months ended June 30, 2019 and July 1, 2018, the Company recognized costs related to the plan totaling $4,299 and $5,746, respectively, which primarily included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating approximately $1,700, comprised of (1) severance and related employee costs of approximately $100, (2) recruitment and relocation costs of approximately $1,000, (3) third-party and other costs of approximately $100 and (4) share-based compensation of approximately $500, the majority of which the Company expects to recognize during the remainder of 2019. The Company expects to incur total costs aggregating approximately $35,000 to $38,000 related to the plan.

As a result of the leadership changes described above, the Company is currently evaluating its management and operating structure and anticipates this evaluation will result in a change to its existing operating segment structure by the end of 2019.

16

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				Six Months Ended				Total Incurred Since Inception
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Severance and related employee costs	$	2,130	$	1,052	$	2,602	$	3,111	$	21,355
Recruitment and relocation costs	482		360		596		508		2,162
Third-party and other costs	71		604		87		932		2,197
	2,683		2,016		3,285		4,551		25,714
Share-based compensation (a)	834		1,104		1,014		1,195		7,698
Termination of defined benefit plans	—		—		—		—		1,335
Total G&A realignment	$	3,517	$	3,120	$	4,299	$	5,746	$	34,747

_______________

(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 $4,835 and $607 as of June 30, 2019, respectively, and $7,985 and $2,107 as of July 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan.

	Balance December 30, 2018		Charges		Payments			Balance June 30, 2019
Severance and related employee costs	$	7,241	$	2,602	$	(4,724	)	$	5,119
Recruitment and relocation costs	83		596		(356		)	323
Third-party and other costs	—		87		(87		)	—
	$	7,324	$	3,285	$	(5,167	)	$	5,442

	Balance December 31, 2017		Charges		Payments			Balance July 1, 2018
Severance and related employee costs	$	12,093	$	3,111	$	(5,326	)	$	9,878
Recruitment and relocation costs	177		508		(471		)	214
Third-party and other costs	—		932		(932		)	—
	$	12,270	$	4,551	$	(6,729	)	$	10,092

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,261 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.

17

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(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 Hortons is a registered trademark of Tim Hortons USA Inc.) In addition, a wholly-owned subsidiary of Wendy’s has a 20% share in a joint venture for the operation of Wendy’s restaurants in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method of accounting, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.”

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

	Six Months Ended
	June 30, 2019			July 1, 2018
Balance at beginning of period	$	47,021		$	55,363
Investment	—			13
Equity in earnings for the period	6,048			4,827
Amortization of purchase price adjustments (a)	(1,129		)	(1,179		)
	4,919			3,648
Distributions received	(7,018		)	(5,756		)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	2,359			(1,763		)
Balance at end of period	$	47,281		$	51,505

_______________

(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.

18

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(8) Long-Term Debt

Long-term debt consisted of the following:

	June 30, 2019			December 30, 2018
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	$	400,000		$	—
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	450,000			—
Series 2018-1 Class A-2 Notes:
3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025	443,250			445,500
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	467,875			470,250
Series 2015-1 Class A-2 Notes:
4.080% Series 2015-1 Class A-2-II Notes, repaid in connection with the June 2019 refinancing	—			870,750
4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025	481,250			483,750
7% debentures, due in 2025	91,403			90,769
Unamortized debt issuance costs	(36,061		)	(32,217		)
	2,297,717			2,328,802
Less amounts payable within one year	(22,750		)	(23,250		)
Total long-term debt	$	2,274,967		$	2,305,552

On June 26, 2019, Wendy’s Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, completed a debt refinancing transaction under which the Master Issuer issued fixed rate senior secured notes in the following 2019-1 series: Class A-2-I with an initial principal amount of $400,000 and Class A-2-II with an initial principal amount of $450,000 (collectively, the “Series 2019-1 Class A-2 Notes”). Interest payments on the Series 2019-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2019-1 Class A-2 Notes is in June 2049. If the Master Issuer has not repaid or refinanced the Series 2019-1 Class A-2 Notes prior to the respective anticipated repayment date, additional interest will accrue on each tranche of the Series 2019-1 Class A-2 Notes at a rate equal to the greater of (A) 5.00% per annum and (B) a per annum interest rate equal to the amount, if any, by which the sum of (i) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on such anticipated repayment date of the United States Treasury Security having a term closest to 10 years, plus (ii) 5.00%, plus (iii) (1) with respect to the Series 2019-1 Class A-2-I Notes, 1.863%, and (2) with respect to the Series 2019-1 Class A-2-II Notes, 2.051%, exceeds the original interest rate with respect to such tranche. The Master Issuer’s outstanding Series 2015-1 Class A-2-II Notes were repaid as part of the refinancing transaction. As a result, the Company recorded a loss on early extinguishment of debt of $7,150 during the three months ended June 30, 2019, which was comprised of the write-off of certain unamortized deferred financing costs. The Series 2019-1 Class A-2 Notes have scheduled principal payments of $4,250 in 2019, $8,500 annually from 2020 through 2025, $378,500 in 2026, $4,500 in each of 2027 and 2028 and $407,250 in 2029.

In connection with the issuance of the Series 2019-1 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of Series 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2019-1 Class A-1 Notes” and, together with the Series 2019-1 Class A-2 Notes, the “Series 2019-1 Senior Notes”), which allows for the drawing of up to $150,000 on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2019-1 Class A-1 Notes during the three months ended June 30, 2019. The Series 2019-1 Class A-1 Notes replaced the Company’s $150,000 Series 2018-1 Class A-1 Notes, which were canceled on the closing date, and the letters of credit outstanding against the Series 2018-1 Class A-1 Notes were transferred to the Series 2019-1 Class A-1 Notes.

The Series 2019-1 Senior Notes are secured by substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors (the “Guarantors”), excluding certain real estate assets and subject to certain limitations. The Series 2019-1 Senior Notes are subject to the same series of covenants and restrictions as the Company’s outstanding Series 2018-1 Class A-2 Notes and Series 2015-1 Class A-2 Notes.

19

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

During the three and six months ended June 30, 2019, the Company incurred debt issuance costs of $14,008 in connection with the issuance of the Series 2019-1 Senior Notes. The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2019-1 Senior Notes utilizing the effective interest rate method.

Wendy’s U.S. advertising fund has a revolving line of credit of $25,000. Neither the Company nor Wendy’s is the guarantor of the debt. The advertising fund facility was established to fund the advertising fund operations. During the six months ended July 1, 2018, the Company borrowed $5,809 and repaid $7,096 under the line of credit. There were no borrowings or repayments under the line of credit during the six months ended June 30, 2019.

(9) 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:

	June 30, 2019				December 30, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	221,818	$	221,818	$	222,228	$	222,228	Level 1
Other investments in equity securities (a)	639		1,945		639		2,181		Level 3
Financial liabilities
Series 2019-1 Class A-2-I Notes (b)	400,000		402,704		—		—		Level 2
Series 2019-1 Class A-2-II Notes (b)	450,000		453,146		—		—		Level 2
Series 2018-1 Class A-2-I Notes (b)	443,250		446,747		445,500		424,026		Level 2
Series 2018-1 Class A-2-II Notes (b)	467,875		469,756		470,250		439,353		Level 2
Series 2015-1 Class A-2-II Notes (b)	—		—		870,750		865,342		Level 2
Series 2015-1 Class A-2-III Notes (b)	481,250		500,519		483,750		482,522		Level 2
7% debentures, due in 2025 (b)	91,403		105,750		90,769		102,750		Level 2
Guarantees of franchisee loan obligations (c)	9		9		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.

20

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(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, favorable lease assets and ROU 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 10 for further information on impairment of our long-lived assets.

			Fair Value Measurements
	June 30, 2019		Level 1		Level 2		Level 3
Held and used	$	2,112	$	—	$	—	$	2,112
Held for sale	1,215		—		—		1,215
Total	$	3,327	$	—	$	—	$	3,327

			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

(10) Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration of operating performance of certain Company-operated restaurants, (2) closing Company-operated restaurants and classifying such surplus properties as held for sale and (3) 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.

21

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

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

	Three Months Ended				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Surplus properties	$	112	$	—	$	1,397	$	41
Company-operated restaurants	86		1,603		287		1,603
Restaurants leased or subleased to franchisees	—		—		—		165
	$	198	$	1,603	$	1,684	$	1,809

(11) Income Taxes

The Company’s effective tax rate for the three months ended June 30, 2019 and July 1, 2018 was 29.2% and 29.3% respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to (1) state income taxes, including non-recurring changes to state deferred taxes, (2) net excess tax benefits related to share-based payments, which resulted in a benefit of $889 and $798 for the three months ended June 30, 2019 and July 1, 2018, respectively, (3) valuation allowance changes, net of federal benefit, and (4) the impact of the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

The Company’s effective tax rate for the six months ended June 30, 2019 and July 1, 2018 was 24.9% and 11.6% 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 $2,925 and $6,891 for the six months ended June 30, 2019 and July 1, 2018, respectively, (2) state income taxes, including non-recurring changes to state deferred taxes, (3) the impact of the Tax Act and (4) valuation allowance changes, net of federal benefit.

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 and second quarters of 2018 under Staff Accounting Bulletin 118, we adjusted our provisional amounts for a discrete net tax benefit of $2,795. This net benefit included $4,750 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 and six months ended June 30, 2019. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $7,760 due to the lapse of statutes of limitations and expected settlements with taxing authorities.

The current portion of refundable income taxes was $7,572 and $14,475 as of June 30, 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 June 30, 2019 and December 30, 2018.

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THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(12) 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		Six Months Ended
	June 30, 2019	July 1, 2018	June 30, 2019	July 1, 2018
Common stock:
Weighted average basic shares outstanding	231,029	238,991	230,807	239,459
Dilutive effect of stock options and restricted shares	5,064	7,161	5,186	7,826
Weighted average diluted shares outstanding	236,093	246,152	235,993	247,285

Diluted net income per share for the three and six months ended June 30, 2019 and July 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 2,049 and 2,104 for the three and six months ended June 30, 2019, respectively, and 27 and 1,369 for the three and six months ended July 1, 2018, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(13) Stockholders’ Equity

Dividends

During each of the first and second quarters of 2019, the Company paid quarterly cash dividends of $.10 per share. During each of the first and second quarters of 2018, the Company paid quarterly cash dividends of $.085 per share.

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 six months ended June 30, 2019, the Company repurchased 2,824 shares with an aggregate purchase price of $49,721, of which $807 was accrued at June 30, 2019, and excluding commissions of $40, under the November 2018 and February 2019 authorizations. As of June 30, 2019, the Company had $196,736 of availability remaining under its February 2019 authorization. Subsequent to June 30, 2019 through July 31, 2019, the Company repurchased 521 shares under the February 2019 authorization with an aggregate purchase price of $9,980, excluding commissions of $7.

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 six months ended July 1, 2018, the Company repurchased 3,675 shares under the February 2018 repurchase authorization with an aggregate purchase price of $62,490, of which $2,146 was accrued at July 1, 2018, and excluding commissions of $52. Additionally, during the six months ended July 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, excluding commissions of $19.

23

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	9,860			—			9,860
Balance at June 30, 2019	$	(51,813	)	$	—		$	(51,813	)
Balance at December 31, 2017	$	(45,149	)	$	(1,049	)	$	(46,198	)
Current-period other comprehensive (loss) income	(10,369		)	117			(10,252		)
Balance at July 1, 2018	$	(55,518	)	$	(932	)	$	(56,450	)

(14) 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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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.

24

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.”

25

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		Six Months Ended
	June 30, 2019		June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	1,631	$	4,748
Interest on finance lease liabilities	9,939		16,692
	11,570		21,440
Operating lease cost	19,086		43,729
Variable lease cost (a)	15,371		29,475
Short-term lease cost	1,153		2,279
Total operating lease cost (b)	35,610		75,483
Total lease cost	$	47,180	$	96,923

_______________

(a) The three and six months ended June 30, 2019 includes expenses for executory costs of $9,779 and $19,303, respectively, for which the Company is reimbursed by sublessees.

(b) The three and six months ended June 30, 2019 includes $28,022 and $60,473, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $7,007 and $13,600, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

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

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	19,567
Operating cash flows from operating leases	46,425
Financing cash flows from finance leases	3,521
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	23,534
Operating lease liabilities	5,677

26

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:

	June 30, 2019
Weighted-average remaining lease term (years):
Finance leases	17.5
Operating leases	15.7
Weighted average discount rate:
Finance leases	10.11	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

27

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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a) Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, represents lessees’ variable payments to the Company for executory costs.

28

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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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.

29

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:

	June 30, 2019
Land	$	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
	595,005
Accumulated depreciation and amortization	(149,931		)
	$	445,074

(15) 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 six months ended June 30, 2019 and July 1, 2018, Wendy’s paid TimWen $8,140 and $6,504, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $103 and $108 during the six months ended June 30, 2019 and July 1, 2018, respectively, which has been included as a reduction to “General and administrative.”

(16) 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 $68,953 as of June 30, 2019. These leases extend through 2056. We have not received any notice of default related to these leases as of June 30, 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 June 30, 2019, the Company had outstanding letters of credit with various parties totaling $25,086. The outstanding letters of credit include amounts outstanding against the Series 2019-1 Class A-1 Notes. We do not expect any material loss to result from these letters of credit.

30

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 that 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 six months ended June 30, 2019 were $5,481. As of June 30, 2019, the Company estimates future purchases to be approximately $5,400 for the remainder of 2019, $11,600 in 2020, $12,100 in 2021, $13,000 in 2022 and $13,700 in 2023 based on current pricing and the expected ratio of usage at Company-operated restaurants to usage at franchised restaurants.

(17) 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. As of June 30, 2019, there were no material developments in those legal proceedings.

31

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 June 30, 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 30 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- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. 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 June 30, 2019, the Wendy’s restaurant system was comprised of 6,719 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)

32

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. Additionally, the Company announced in May 2019 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, and the elimination of the Chief Operations Officer position. During the six months ended June 30, 2019 and July 1, 2018, the Company recognized costs related to the plan totaling $4.3 million and $5.7 million, respectively, which primarily included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating approximately $1.7 million, comprised of (1) severance and related employee costs of approximately $0.1 million, (2) recruitment and relocation costs of approximately $1.0 million, (3) third-party and other costs of approximately $0.1 million and (4) share-based compensation of approximately $0.5 million, the majority of which the Company expects to recognize during the remainder of 2019. The Company expects to incur total costs aggregating approximately $35.0 million to $38.0 million, of which $26.0 million to $29.0 million will be cash expenditures, related to the plan. The Company expects to realize a total G&A expense reduction through the plan of approximately $35.0 million.

As a result of the leadership changes described above, the Company is currently evaluating its management and operating structure and anticipates this evaluation will result in a change to its existing operating segment structure by the end of 2019.

33

Results of Operations

The tables included throughout this Results of Operations set forth in millions the Company’s condensed consolidated results of operations for the second quarter and the first six months of 2019 and 2018.

	Second Quarter									Six Months
	2019			2018			Change			2019			2018			Change
Revenues:
Sales	$	181.1		$	167.3		$	13.8		$	348.7		$	321.0		$	27.7
Franchise royalty revenue and fees	109.1			107.6			1.5			211.1			205.5			5.6
Franchise rental income	58.5			51.5			7.0			117.0			101.6			15.4
Advertising funds revenue	86.6			84.6			2.0			167.1			163.5			3.6
	435.3			411.0			24.3			843.9			791.6			52.3
Costs and expenses:
Cost of sales	151.1			138.2			12.9			293.7			270.4			23.3
Franchise support and other costs	4.0			7.0			(3.0		)	10.1			13.2			(3.1		)
Franchise rental expense	28.0			24.3			3.7			60.5			47.6			12.9
Advertising funds expense	88.7			84.6			4.1			169.1			163.5			5.6
General and administrative	50.8			49.2			1.6			100.1			99.5			0.6
Depreciation and amortization	31.5			33.4			(1.9		)	64.7			65.6			(0.9		)
System optimization (gains) losses, net	(0.1		)	(0.1		)	—			(0.1		)	0.5			(0.6		)
Reorganization and realignment costs	3.6			3.1			0.5			4.4			5.7			(1.3		)
Impairment of long-lived assets	0.2			1.6			(1.4		)	1.7			1.8			(0.1		)
Other operating income, net	(3.1		)	(1.8		)	(1.3		)	(7.1		)	(2.9		)	(4.2		)
	354.7			339.5			15.2			697.1			664.9			32.2
Operating profit	80.6			71.5			9.1			146.8			126.7			20.1
Interest expense, net	(29.9		)	(30.1		)	0.2			(59.0		)	(60.3		)	1.3
Loss on early extinguishment of debt	(7.2		)	—			(7.2		)	(7.2		)	(11.5		)	4.3
Other income, net	2.2			0.9			1.3			5.0			1.7			3.3
Income before income taxes	45.7			42.3			3.4			85.6			56.6			29.0
Provision for income taxes	(13.3		)	(12.4		)	(0.9		)	(21.3		)	(6.6		)	(14.7		)
Net income	$	32.4		$	29.9		$	2.5		$	64.3		$	50.0		$	14.3

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	Second Quarter								Six Months
	2019		% of Total Revenues		2018		% of Total Revenues		2019		% of Total Revenues		2018		% of Total Revenues
Revenues:
Sales	$	181.1	41.6	%	$	167.3	40.7	%	$	348.7	41.3	%	$	321.0	40.5	%
Franchise royalty revenue and fees:
Royalty revenue	102.8		23.6	%	98.2		23.9	%	197.7		23.4	%	188.1		23.8	%
Franchise fees	6.3		1.5	%	9.4		2.3	%	13.4		1.6	%	17.4		2.2	%
Total franchise royalty revenue and fees	109.1		25.1	%	107.6		26.2	%	211.1		25.0	%	205.5		26.0	%
Franchise rental income	58.5		13.4	%	51.5		12.5	%	117.0		13.9	%	101.6		12.8	%
Advertising funds revenue	86.6		19.9	%	84.6		20.6	%	167.1		19.8	%	163.5		20.7	%
Total revenues	$	435.3	100.0	%	$	411.0	100.0	%	$	843.9	100.0	%	$	791.6	100.0	%
	Second Quarter								Six Months
	2019		% of  Sales		2018		% of  Sales		2019		% of  Sales		2018		% of  Sales
Cost of sales:
Food and paper	$	57.8	31.9	%	$	52.9	31.6	%	$	110.0	31.5	%	$	101.8	31.7	%
Restaurant labor	53.8		29.7	%	48.9		29.2	%	105.4		30.2	%	95.7		29.8	%
Occupancy, advertising and other operating costs	39.5		21.9	%	36.4		21.8	%	78.3		22.5	%	72.9		22.7	%
Total cost of sales	$	151.1	83.5	%	$	138.2	82.6	%	$	293.7	84.2	%	$	270.4	84.2	%

	Second Quarter								Six Months
	2019		% of Sales		2018		% of Sales		2019		% of Sales		2018		% of Sales
Restaurant margin	$	30.0	16.5	%	$	29.1	17.4	%	$	55.0	15.8	%	$	50.6	15.8	%

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

	Second Quarter				Six Months
	2019		2018		2019		2018
Key business measures:
North America same-restaurant sales growth:
Company-operated	0.8	%	2.0	%	1.4	%	1.4	%
Franchised	1.5	%	1.9	%	1.4	%	1.8	%
Systemwide	1.4	%	1.9	%	1.4	%	1.8	%
Global same-restaurant sales growth:
Company-operated	0.8	%	2.0	%	1.4	%	1.4	%
Franchised (a)	1.6	%	2.1	%	1.5	%	1.9	%
Systemwide (a)	1.6	%	2.1	%	1.5	%	1.9	%

________________

(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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	Second Quarter				Six Months
	2019		2018		2019		2018
Key business measures (continued):
Systemwide sales: (a)
Company-operated	$	181.1	$	167.3	$	348.7	$	321.0
North America franchised	2,482.5		2,434.2		4,773.2		4,684.9
North America systemwide	2,663.6		2,601.5		5,121.9		5,005.9
International franchised (b)	140.1		132.1		273.0		259.3
Global systemwide	$	2,803.7	$	2,733.6	$	5,394.9	$	5,265.2

________________

(a) During the second quarter of 2019 and 2018, North America systemwide sales increased 3.0% and 2.7%, respectively, international franchised sales increased 10.4% and 12.8%, respectively, and global systemwide sales increased 3.3% and 3.1%, respectively, on a constant currency basis. During the first six months of 2019 and 2018, North America systemwide sales increased 3.0% and 2.7%, respectively, international franchised sales increased 10.2% and 13.2%, respectively, and global systemwide sales increased 3.3% and 3.2%, 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.

	Second Quarter
	Company-operated	North America Franchised		International Franchised		Systemwide
Restaurant count:
Restaurant count at March 31, 2019	358	5,825		527		6,710
Opened	—	20		8		28
Closed	—	(17	)	(2	)	(19	)
Net purchased from (sold by) franchisees	—	—		—		—
Restaurant count at June 30, 2019	358	5,828		533		6,719
	Six Months
	Company-operated	North America Franchised		International Franchised		Systemwide
Restaurant count at December 30, 2018	353	5,825		533		6,711
Opened	—	49		22		71
Closed	—	(41	)	(22	)	(63	)
Net purchased from (sold by) franchisees	5	(5	)	—		—
Restaurant count at June 30, 2019	358	5,828		533		6,719

Sales	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Sales	$	181.1	$	167.3	$	13.8	$	348.7	$	321.0	$	27.7

The increase in sales for the second quarter and the first six months of 2019 was primarily due to a net increase in the number of Company-operated restaurants in operation during 2019 compared to 2018. In addition, sales for the second quarter and the first six months of 2019 benefited from a 0.8% and 1.4% increase in Company-operated same-restaurant sales, respectively. 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.

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Franchise Royalty Revenue and Fees	Second Quarter							Six Months
	2019		2018		Change			2019		2018		Change
Royalty revenue	$	102.8	$	98.2	$	4.6		$	197.7	$	188.1	$	9.6
Franchise fees	6.3		9.4		(3.1		)	13.4		17.4		(4.0		)
	$	109.1	$	107.6	$	1.5		$	211.1	$	205.5	$	5.6

The increase in franchise royalty revenue during the second quarter and the first six months of 2019 was primarily due to a 1.6% and 1.5% increase in franchise same-restaurant sales, respectively. 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 second quarter and the first six months of 2019 was primarily due to not facilitating any franchisee-to-franchisee restaurant transfers (“Franchise Flips”) in 2019 and lower other miscellaneous franchise fees, partially offset by higher fees for providing information technology services and other services to franchisees.

Franchise Rental Income	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Franchise rental income	$	58.5	$	51.5	$	7.0	$	117.0	$	101.6	$	15.4

The increase in franchise rental income during the second quarter and the first six months 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. This increase was partially offset by the assignment of certain leases to a franchisee.

Advertising Funds Revenue	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Advertising funds revenue	$	86.6	$	84.6	$	2.0	$	167.1	$	163.5	$	3.6

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 second quarter and the first six months of 2019 was primarily due to an 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	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Food and paper	31.9	%	31.6	%	0.3	%	31.5	%	31.7	%	(0.2	)%
Restaurant labor	29.7	%	29.2	%	0.5	%	30.2	%	29.8	%	0.4	%
Occupancy, advertising and other operating costs	21.9	%	21.8	%	0.1	%	22.5	%	22.7	%	(0.2	)%
	83.5	%	82.6	%	0.9	%	84.2	%	84.2	%	—	%

Cost of sales, as a percent of sales, during the second quarter and the first six months of 2019 was impacted by (1) an increase in restaurant labor rates, (2) a decrease in customer count and (3) an increase in commodity costs. These impacts were partially offset by benefits from strategic price increases on certain of our menu items.

Franchise Support and Other Costs	Second Quarter							Six Months
	2019		2018		Change			2019		2018		Change
Franchise support and other costs	$	4.0	$	7.0	$	(3.0	)	$	10.1	$	13.2	$	(3.1	)

The decrease in franchise support and other costs during the second quarter and the first six months of 2019 was primarily due to lower costs incurred to provide information technology and other services to our franchisees.

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Franchise Rental Expense	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Franchise rental expense	$	28.0	$	24.3	$	3.7	$	60.5	$	47.6	$	12.9

The increase in franchise rental expense during the second quarter and the first six months 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. This increase was partially offset by the impact of assigning certain leases to a franchisee.

Advertising Funds Expense	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Advertising funds expense	$	88.7	$	84.6	$	4.1	$	169.1	$	163.5	$	5.6

The increase in advertising funds expense during the second quarter and the first six months of 2019 was primarily 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. During the second quarter and the first six months of 2019, advertising funds expense exceeded advertising funds revenue by $2.1 million, reflecting a portion of the expected advertising spend in excess of advertising funds revenue for the remainder of 2019. This excess for 2019 is expected to approximate the amount by which advertising funds revenue exceeded advertising funds expense in 2018.

General and Administrative	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Employee compensation and related expenses	$	40.8	$	39.8	$	1.0	$	81.8	$	81.3	$	0.5
Other, net	10.0		9.4		0.6		18.3		18.2		0.1
	$	50.8	$	49.2	$	1.6	$	100.1	$	99.5	$	0.6

The increase in general and administrative expenses during the second quarter and the first six months of 2019 was primarily due to higher employee compensation and related expenses, reflecting additional expenditures to support our digital experience and international organizations, as well as timing of other employee-related expenses. These increases were partially offset by changes in staffing driven by our G&A realignment plan.

Depreciation and Amortization	Second Quarter							Six Months
	2019		2018		Change			2019		2018		Change
Restaurants	$	20.0	$	22.2	$	(2.2	)	$	41.9	$	42.9	$	(1.0	)
Corporate and other	11.5		11.2		0.3			22.8		22.7		0.1
	$	31.5	$	33.4	$	(1.9	)	$	64.7	$	65.6	$	(0.9	)

The decrease in restaurant depreciation and amortization during the second quarter and the first six months of 2019 was primarily due to the assignment of certain leases to a franchisee, resulting in the write-off of the related net investment in the leases. Corporate and other expense increased due to depreciation and amortization for technology investments.

System Optimization (Gains) Losses, Net	Second Quarter								Six Months
	2019			2018			Change		2019			2018		Change
System optimization (gains) losses, net	$	(0.1	)	$	(0.1	)	$	—	$	(0.1	)	$	0.5	$	(0.6	)

System optimization (gains) losses, net for the second quarter and the first six months of 2019 and 2018 were primarily comprised of post-closing adjustments on previous sales of restaurants and gains (losses) on the sale of surplus properties.

38

Reorganization and Realignment Costs	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
G&A realignment	$	3.5	$	3.1	$	0.4	$	4.3	$	5.7	(1.4		)
System optimization initiative	0.1		—		0.1		0.1		—		0.1
	$	3.6	$	3.1	$	0.5	$	4.4	$	5.7	$	(1.3	)

In May 2017, the Company initiated a G&A realignment plan to further reduce its G&A expenses. In addition, the Company announced changes to its leadership structure in May 2019. G&A realignment costs for the second quarter and the first six months of 2019 and 2018 were primarily comprised of severance and related employee costs and share-based compensation.

Impairment of Long-Lived Assets	Second Quarter							Six Months
	2019		2018		Change			2019		2018		Change
Impairment of long-lived assets	$	0.2	$	1.6	$	(1.4	)	$	1.7	$	1.8	$	(0.1	)

The change in impairment charges during the second quarter and the first six months of 2019 was primarily driven by lower impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants when compared to the first six months of 2018. In addition, the change in impairment charges during the first six months of 2019 was offset by an increase in losses resulting from closing Company-operated restaurants and classifying such surplus properties as held for sale.

Other Operating Income, Net	Second Quarter									Six Months
	2019			2018			Change			2019			2018			Change
Equity in earnings in joint ventures, net	$	(3.1	)	$	(1.8	)	$	(1.3	)	$	(4.9	)	$	(3.6	)	$	(1.3	)
Gains on sales-type leases	—			—			—			(2.0		)	$	—		(2.0		)
Lease buyout	—			—			—			(0.2		)	0.6			(0.8		)
Other, net	—			—			—			—			$	0.1		(0.1		)
	$	(3.1	)	$	(1.8	)	$	(1.3	)	$	(7.1	)	$	(2.9	)	$	(4.2	)

The change in other operating income, net during the second quarter of 2019 was due to an increase in the equity in earnings from our TimWen joint venture. The change in other operating income, net during the first six months of 2019 was primarily due to gains on new and modified sales-type leases as a result of the new accounting guidance for leases, as well as an increase in the equity in earnings from our TimWen joint venture.

Interest Expense, Net	Second Quarter							Six Months
	2019		2018		Change			2019		2018		Change
Interest expense, net	$	29.9	$	30.1	$	(0.2	)	$	59.0	$	60.3	$	(1.3	)

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

Loss on Early Extinguishment of Debt	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Loss on early extinguishment of debt	$	7.2	$	—	$	7.2	$	7.2	$	11.5	$	(4.3	)

During the second quarter of 2019, in connection with the refinancing of a portion of the Company’s securitized financing facility, the Company incurred a loss on the early extinguishment of debt as a result of repaying its outstanding Series 2015-1 Class A-2-II Notes primarily with the proceeds from the issuance of its Series 2019-1 Class A-2 Notes. The loss on the early extinguishment of debt of $7.2 million was comprised of the write-off of certain deferred financing costs.

39

During the first quarter of 2018, in connection with the refinancing of a portion of the Company’s securitized financing facility, the Company incurred a loss on the early extinguishment of debt as a result of repaying its outstanding Series 2015-1 Class A-2-I Notes with the proceeds from the issuance of its Series 2018-1 Class A-2 Notes. 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	Second Quarter						Six Months
	2019		2018		Change		2019		2018		Change
Other income, net	$	2.2	$	0.9	$	1.3	$	5.0	$	1.7	$	3.3

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

Provision for Income Taxes	Second Quarter									Six Months
	2019			2018			Change			2019			2018			Change
Income before income taxes	$	45.7		$	42.3		$	3.4		$	85.6		$	56.6		$	29.0
Provision for income taxes	(13.3		)	(12.4		)	(0.9		)	(21.3		)	(6.6		)	(14.7		)
Effective tax rate on income	29.2		%	29.3		%	(0.1		)%	24.9		%	11.6		%	13.3		%

Our effective tax rates in the second 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) state income taxes, including non-recurring changes to state deferred taxes, (2) net excess benefits related to share-based payments, which resulted in a benefit of $0.9 million and $0.8 million in the second quarter of 2019 and 2018, respectively, (3) valuation allowance changes, net of federal benefit, and (4) the impact of the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

Our effective tax rates in the first six months 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 $2.9 million and $6.9 million in the first six months of 2019 and 2018, respectively, (2) state income taxes, including non-recurring changes to state deferred taxes, (3) the impact of the Tax Act and (4) valuation allowance changes, net of federal benefit.

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 $50.0 million to $55.0 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 $46.1 million as discussed below in “Dividends;” and

• potential stock repurchases of up to $196.7 million, of which $10.0 million was repurchased subsequent to June 30, 2019 through July 31, 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.

40

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

	Six Months
	2019			2018			Change
Net cash provided by (used in):
Operating activities	$	154.1		$	148.4		$	5.7
Investing activities	(29.9		)	(22.6		)	(7.3		)
Financing activities	(130.2		)	(95.3		)	(34.9		)
Effect of exchange rate changes on cash	3.8			(4.4		)	8.2
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(2.2	)	$	26.1		$	(28.3	)

Operating Activities

Cash provided by operating activities was $154.1 million and $148.4 million in the first six months 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 increased $5.7 million during the first six months of 2019 as compared to the first six months of 2018, primarily due to (1) a decrease in payments for incentive compensation (2) higher net income, adjusted for non-cash expenses and (3) the timing of receipt of rental payments from franchisees. These favorable changes were partially offset by (1) the timing of collections of royalty receivables and (2) the timing of payments for marketing expenses of the national advertising funds.

Investing Activities

Cash used in investing activities increased $7.3 million during the first six months of 2019 as compared to the first six months 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 $1.6 million.

Financing Activities

Cash used in financing activities increased $34.9 million during the first six months of 2019 as compared to the first six months of 2018, primarily due to (1) a net increase in cash used for long-term debt activities of $76.5 million, reflecting the respective impacts of the completion of debt refinancing transactions during the first six months of 2019 and 2018 and (2) an increase in dividends of $5.5 million. These changes were partially offset by (1) a decrease in repurchases of common stock of $33.5 million, (2) an increase in proceeds from stock option exercises, net of payments related to tax withholding for share-based compensation, of $8.3 million and (3) 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 six months of 2018.

Long-Term Debt, Including Current Portion

Except as described below, there were no material changes to the terms of any debt obligations since December 30, 2018. The Company was in compliance with its debt covenants as of June 30, 2019. See Note 8 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

On June 26, 2019, Wendy’s Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, completed a debt refinancing transaction under which the Master Issuer issued fixed rate senior secured notes in the following 2019-1 series: Class A-2-I with an interest rate of 3.783% and initial principal amount of $400.0 million and Class A-2-II with an interest rate of 4.080% and initial principal amount of $450.0 million (collectively, the “Series 2019-1 Class A-2 Notes”). The Master Issuer’s outstanding Series 2015-1 Class A-2-II Notes were redeemed as part of the refinancing transaction.

In connection with the issuance of the Series 2019-1 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of Series 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2019-1 Class A-1 Notes”), which allows for the drawing of up to $150.0 million using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2019-1 Class A-1 Notes during the three months ended June 30, 2019. The Series 2019-1 Class A-1

41

Notes replaced the Company’s $150.0 million Series 2018-1 Class A-1 Notes, which were canceled on the closing date and the letters of credit outstanding against the Series 2018-1 Class A-1 Notes were transferred to the Series 2019-1 Class A-1 Notes.

Dividends

On March 15, 2019 and June 17, 2019, the Company paid quarterly cash dividends of $.10 per share on its common stock, aggregating $46.2 million. On August 1, 2019, the Company declared a dividend of $.10 per share to be paid on September 17, 2019 to stockholders of record as of September 3, 2019. If the Company pays regular quarterly cash dividends for the remainder of 2019 at the same rate as declared in the third quarter of 2019, the Company’s total cash requirement for dividends for the remainder of 2019 would be approximately $46.1 million based on the number of shares of its common stock outstanding at July 31, 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 six months ended June 30, 2019, the Company repurchased 2.8 million shares with an aggregate purchase price of $49.7 million, of which $0.8 million was accrued at June 30, 2019, and excluding commissions, under the November 2018 and February 2019 authorizations. As of June 30, 2019, the Company had $196.7 million of availability remaining under its February 2019 authorization. Subsequent to June 30, 2019 through July 31, 2019, the Company repurchased 0.5 million shares under the February 2019 authorization with an aggregate purchase price of $10.0 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 six months ended July 1, 2018, the Company repurchased 3.7 million shares under the February 2018 repurchase authorization with an aggregate purchase price of $62.5 million, of which $2.1 million was accrued at July 1, 2018, and excluding commissions of $0.1 million. Additionally, during the six months ended July 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 our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

This “Quantitative and Qualitative Disclosures about Market Risk” should be read in conjunction with “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our annual report on Form 10-K for the fiscal year ended December 30, 2018 (the “Form 10-K”).

As of June 30, 2019, there were no material changes from the information contained in the Form 10-K, except as described below.

42

Interest Rate Risk

As discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation” under “Liquidity and Capital Resources,” the Company completed an $850.0 million debt refinancing transaction on June 26, 2019. The Company’s outstanding Series 2015-1 Class A-2-II Notes were repaid as part of the refinancing transaction. In aggregate, the Company’s new Series 2019-1 Class A-2 Notes bear a weighted-average fixed-rate interest at rates slightly lower than our historical effective rates on the Series 2015-1 Class A-2-II Notes. In addition, the principal amounts outstanding on the Series 2019-1 Class A-2 Notes are lower than the amounts that were outstanding on the Series 2015-1 Class A-2-II Notes. In connection with the issuance of the Series 2019-1 Class A-2 Notes, a wholly-owned subsidiary of the Company also entered into a revolving financing facility, the Series 2019-1 Class A-1 Notes, which allows for the drawing of up to $150.0 million using various credit instruments, including a letter of credit facility. The Series 2019-1 Class A-1 Notes replaced the Company’s $150.0 million Series 2018-1 Class A-1 Notes, which were canceled on the closing date, and the letters of credit outstanding against the Series 2018-1 Class A-1 Notes were transferred to the Series 2019-1 Class A-1 Notes.

Consequently, our long-term debt, including the current portion, aggregated $2,342.4 million as of June 30, 2019 (excluding unamortized debt issuance costs and the effect of purchase accounting adjustments). The Company’s predominantly fixed-rate debt structure has reduced its exposure to interest rate increases that could adversely affect its earnings and cash flows. The Company is exposed to interest rate increases under the Series 2019-1 Class A-1 Notes; however, the Company had no outstanding borrowings under the Series 2019-1 Class A-1 Notes as of June 30, 2019.

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 the Company’s 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 June 30, 2019. Based on such evaluations, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 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

There were no changes in the internal control over financial reporting of the Company during the second 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.

43

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;

44

• 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;

• 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

• 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.

45

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 and our Quarterly Report on Form 10-Q for the period ended March 31, 2019, which could materially affect our business, financial condition or future results. Except as described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K and our Quarterly Report on Form 10-Q for the period ended March 31, 2019.

46

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

The following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the second quarter of 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)
April 1, 2019 through May 5, 2019	349,393		$18.40	307,555		$211,458
May 6, 2019 through June 2, 2019	355,836		$18.69	352,527		$204,874
June 3, 2019 through June 30, 2019	424,461		$19.38	420,110		$196,736
Total	1,129,690		$18.86	1,080,192		$196,736

(1) Includes 49,498 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.

Subsequent to June 30, 2019 through July 31, 2019, the Company repurchased 0.5 million shares under the February 2019 authorization with an aggregate purchase price of $10.0 million, excluding commissions.

47

Item 6. Exhibits.

EXHIBIT NO.	DESCRIPTION
4.1	Series 2019-1 Supplement to Base Indenture, dated as of June 26, 2019, by and between Wendy’s Funding, LLC, as Master Issuer of the Series 2019-1 fixed rate senior secured notes, Class A-2, and Series 2019-1 variable funding senior notes, Class A-1, and Citibank, N.A., as Trustee and Series 2019-1 Securities Intermediary, incorporated herein by reference to Exhibit 4.1 of The Wendy’s Company Current Report on Form 8-K filed on June 26,2019 (SEC file no. 001-02207).
4.2	Fourth Supplement to the Base Indenture, dated as of June 26, 2019, by and between Wendy’s Funding, LLC, as Master Issuer, and Citibank, N.A., as Trustee, incorporated herein by reference to Exhibit 4.2 of The Wendy’s Company Current Report on Form 8-K filed on June 26, 2019 (SEC file no. 001-02207).
10.1	2019-1 Class A-2 Note Purchase Agreement, dated as of June 13, 2019, by and among The Wendy’s Company, the subsidiaries of The Wendy’s Company party thereto and Guggenheim Securities, LLC and Citigroup Global Markets Inc., each acting on behalf of itself and as the representatives of the initial purchasers, incorporated herein by reference to Exhibit 10.1 of The Wendy’s Company Current Report on Form 8-K filed on June 13, 2019 (SEC file no. 001-02207).
10.2	Class A-1 Note Purchase Agreement, dated as of June  26, 2019, by and among Wendy’s Funding, LLC, as Master Issuer, each of Quality Is Our Recipe, LLC, Wendy’s Properties, LLC and Wendy’s SPV Guarantor, LLC, as Guarantors, Wendy’s International, LLC, as Manager, the conduit investors party thereto, the financial institutions party thereto, certain funding agents, and Coöperatieve Rabobank, U.A., New York Branch, as L/C Provider, Swingline Lender and Administrative Agent, incorporated herein by reference to Exhibit 10.1 of The Wendy’s Company Current Report on Form 8-K filed on June 26, 2019 (SEC file no. 001-02207).
10.3	Second Amendment to the Management Agreement, dated as of June  26, 2019, by and among Wendy’s Funding, LLC, as Master Issuer, certain subsidiaries of Wendy’s Funding, LLC party thereto, Wendy’s International, LLC, as Manager, and Citibank, N.A., as Trustee, incorporated herein by reference to Exhibit 10.2 of The Wendy’s Company Current Report on Form 8-K filed on June 26, 2019 (SEC file no. 001-02207).
31.1	Certification of the Chief Executive Officer of The Wendy’s Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of the Chief Financial Officer of The Wendy’s Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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.

48

SIGNATURES

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

	THE WENDY’S COMPANY (Registrant)
Date: August 7, 2019	By: /s/ Gunther Plosch
	Gunther Plosch
	Chief Financial Officer
	(On behalf of the registrant)
Date: August 7, 2019	By: /s/ Leigh A. Burnside
	Leigh A. Burnside
	Senior Vice President, Finance and Chief Accounting Officer
	(Principal Accounting Officer)

49

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Todd A. Penegor, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: August 7, 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: August 7, 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 June 30, 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: August 7, 2019

/s/ Todd A. Penegor             

Todd A. Penegor

President and Chief Executive Officer

Date: August 7, 2019

/s/ Gunther Plosch               

Gunther Plosch

Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 31, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2019
Document Transition Report	false
Entity File Number	1-2207
Entity Registrant Name	THE WENDY'S COMPANY
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-0471180
Entity Address, Address Line One	One Dave Thomas Blvd.
Entity Address, City or Town	Dublin,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43017
City Area Code	614
Local Phone Number	764-3100
Title of 12(b) Security	Common Stock, $.10 par value
Trading Symbol	WEN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0000030697
Current Fiscal Year End Date	--12-29
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		230,603,094

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 30, 2018
Current assets:
Cash and cash equivalents	$ 426,216	$ 431,405
Restricted cash	29,494	29,860
Accounts and notes receivable, net	101,083	109,805
Inventories	3,546	3,687
Prepaid expenses and other current assets	18,622	14,452
Advertising funds restricted assets	93,422	76,509
Total current assets	672,383	665,718
Properties	992,302	1,023,267
Finance lease assets	197,691	189,969
Operating lease assets	895,280	0
Goodwill	755,887	747,884
Other intangible assets	1,257,323	1,294,153
Investments	47,920	47,660
Net investment in sales-type and direct financing leases	241,584	226,477
Other assets	103,523	96,907
Total assets	5,163,893	4,292,035
Current liabilities:
Current portion of long-term debt	22,750	23,250
Current portion of finance lease liabilities	9,917	8,405
Current portion of operating lease liabilities	43,321	0
Accounts payable	17,315	21,741
Accrued expenses and other current liabilities	148,852	150,636
Advertising funds restricted liabilities	99,120	80,153
Total current liabilities	341,275	284,185
Long-term debt	2,274,967	2,305,552
Long-term finance lease liabilities	465,226	447,231
Long-term operating lease liabilities	931,033	0
Deferred income taxes	271,283	269,160
Deferred franchise fees	91,588	92,232
Other liabilities	140,473	245,226
Total liabilities	4,515,845	3,643,586
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 231,092 and 231,233 shares outstanding, respectively	47,042	47,042
Additional paid-in capital	2,883,484	2,884,696
Retained earnings	163,249	146,277
Common stock held in treasury, at cost; 239,332 and 239,191 shares, respectively	(2,393,914)	(2,367,893)
Accumulated other comprehensive loss	(51,813)	(61,673)
Total stockholders’ equity	648,048	648,449
Total liabilities and stockholders’ equity	$ 5,163,893	$ 4,292,035

XML

Condensed Consolidated Balance Sheets Balance Sheet Parentheticals - $ / shares shares in Thousands	Jun. 30, 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	231,092	231,233
Treasury Stock, Shares	239,332	239,191

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Revenues
Franchise rental income	$ 58,561	$ 51,529	$ 117,013	$ 101,636
Revenues	435,348	411,002	843,931	791,566
Costs and expenses:
Cost of sales	151,092	138,154	293,671	270,373
Franchise support and other costs	4,066	7,031	10,084	13,204
Franchise rental expense	28,027	24,306	60,478	47,569
Advertising funds expense	88,667	84,570	169,148	163,470
General and administrative	50,784	49,163	100,097	99,519
Depreciation and amortization	31,484	33,427	64,669	65,579
System optimization (gains) losses, net	(110)	(92)	(122)	478
Reorganization and realignment costs	3,570	3,124	4,368	5,750
Impairment of long-lived assets	198	1,603	1,684	1,809
Other operating income, net	(3,003)	(1,767)	(6,985)	(2,930)
Costs and expenses	354,775	339,519	697,092	664,821
Operating profit	80,573	71,483	146,839	126,745
Interest expense, net	(29,931)	(30,136)	(59,013)	(60,314)
Loss on early extinguishment of debt	(7,150)	0	(7,150)	(11,475)
Other income, net	2,247	917	4,947	1,661
Income before income taxes	45,739	42,264	85,623	56,617
Provision for income taxes	(13,353)	(12,388)	(21,343)	(6,582)
Net income	$ 32,386	$ 29,876	$ 64,280	$ 50,035
Earnings per share
Earnings Per Share, Basic	$ 0.14	$ 0.13	$ 0.28	$ 0.21
Earnings Per Share, Diluted	$ 0.14	$ 0.12	$ 0.27	$ 0.20
Sales
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 181,050	$ 167,344	$ 348,747	$ 320,993
Franchise royalty revenue and fees
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	109,125	107,559	211,078	205,467
Advertising funds revenue
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 86,612	$ 84,570	$ 167,093	$ 163,470

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Net income	$ 32,386	$ 29,876	$ 64,280	$ 50,035
Other comprehensive income (loss), net:
Foreign currency translation adjustment	3,835	(4,325)	9,860	(10,369)
Change in unrecognized pension loss; Unrealized gains arising during the period	0	0	0	156
Change in unrecognized pension loss; Income tax provision	0	0	0	(39)
Change in unrecognized pension loss; Unrealized gains arising during the period, net of tax	0	0	0	117
Other comprehensive income (loss), net	3,835	(4,325)	9,860	(10,252)
Comprehensive income	$ 36,221	$ 25,551	$ 74,140	$ 39,783

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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
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. 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)
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	50,035
Other comprehensive (loss) income, net	(10,252)
Stockholders' Equity, end of period at Jul. 01, 2018	430,539	47,042	2,883,167	(224,120)	(2,219,100)	(56,450)
Stockholders' Equity, beginning 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
Net income	29,876	0	0	29,876	0	0
Other comprehensive (loss) income, net	(4,325)	0	0	0	0	(4,325)
Cash Dividends	(20,290)	0	0	(20,290)	0	0
Repurchases of common stock	(45,787)	0	0	0	(45,787)	0
Share-based compensation	5,133	0	5,133	0	0	0
Common stock issued upon exercises of stock options	3,236	0	396	0	2,840	0
Common stock issued upon vesting of restricted shares	(371)	0	(1,199)	0	828	0
Other	70	0	33	(6)	43	0
Stockholders' Equity, end of period at Jul. 01, 2018	430,539	47,042	2,883,167	(224,120)	(2,219,100)	(56,450)
Increase (Decrease) in Stockholders' Equity
Cumulative effect of change in accounting principle	(1,105)	0	0	(1,105)	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)
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	64,280
Other comprehensive (loss) income, net	9,860
Stockholders' Equity, end of period at Jun. 30, 2019	648,048	47,042	2,883,484	163,249	(2,393,914)	(51,813)
Stockholders' Equity, beginning 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
Net income	32,386	0	0	32,386	0	0
Other comprehensive (loss) income, net	3,835	0	0	0	0	3,835
Cash Dividends	(23,124)	0	0	(23,124)	0	0
Repurchases of common stock	(20,391)	0	0	0	(20,391)	0
Share-based compensation	4,986	0	4,986	0	0	0
Common stock issued upon exercises of stock options	10,491	0	(339)	0	10,830	0
Common stock issued upon vesting of restricted shares	(888)	0	(1,852)	0	964	0
Other	59	0	26	(4)	37	0
Stockholders' Equity, end of period at Jun. 30, 2019	$ 648,048	$ 47,042	$ 2,883,484	$ 163,249	$ (2,393,914)	$ (51,813)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018
Cash flows from operating activities:
Net income	$ 64,280	$ 50,035
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	64,669	65,579
Share-based compensation	10,008	9,591
Impairment of long-lived assets	1,684	1,809
Deferred income tax	3,422	(2,508)
Non-cash rental expense (income), net	11,519	(6,239)
Change in operating lease liabilities	(20,983)	0
Net receipt of deferred vendor incentives	5,312	4,904
System optimization (gains) losses, net	(122)	478
Distributions received from joint ventures, net of equity in earnings	2,099	2,108
Long-term debt-related activities, net	10,799	15,036
Changes in operating assets and liabilities and other, net	1,373	7,628
Net cash provided by operating activities	154,060	148,421
Cash flows from investing activities:
Capital expenditures	(25,484)	(23,898)
Acquisitions	(5,052)	0
Dispositions	1,240	1,814
Proceeds from sale of investments	130	0
Notes receivable, net	(750)	(538)
Payments for investments	0	(13)
Net cash used in investing activities	(29,916)	(22,635)
Cash flows from financing activities:
Proceeds from long-term debt	850,000	930,809
Repayments of long-term debt	(877,876)	(878,849)
Repayments of finance lease liabilities	(3,521)	(2,784)
Deferred financing costs	(14,008)	(17,340)
Repurchases of common stock	(50,781)	(84,307)
Dividends	(46,193)	(40,645)
Proceeds from stock option exercises	19,160	13,197
Payments related to tax withholding for share-based compensation	(6,957)	(9,269)
Contingent consideration payment	0	(6,100)
Net cash used in financing activities	(130,176)	(95,288)
Net cash (used in) provided by operations before effect of exchange rate changes on cash	(6,032)	30,498
Effect of exchange rate changes on cash	3,866	(4,401)
Net (decrease) increase in cash, cash equivalents and restricted cash	(2,166)	26,097
Cash, cash equivalents and restricted cash at beginning of period	486,512	212,824
Cash, cash equivalents and restricted cash at end of period	484,346	238,921
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	5,398	7,463
Finance leases	23,534	1,904
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Total cash, cash equivalents and restricted cash	$ 484,346	$ 212,824

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Basis of Presentation

6 Months Ended

Jun. 30, 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 June 30, 2019, the results of our operations for the three and six months ended June 30, 2019 and July 1, 2018 and cash flows for the six months ended June 30, 2019 and July 1, 2018. The results of operations for the three and six months ended June 30, 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- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. 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

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Standards

New Accounting Standards

New Accounting Standards Adopted

Cloud Computing

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.

Nonemployee Share-Based Payments

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,” respectively, 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

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Revenue (Notes)

6 Months Ended

Jun. 30, 2019

Revenue [Abstract]

Revenue from Contract with Customer

Revenue

Disaggregation of Revenue

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

	U.S.		Canada		Other International			Total
Three Months Ended June 30, 2019
Sales at Company-operated restaurants	$	181,050	$	—	$	—		$	181,050
Franchise royalty revenue	91,430		6,304		5,087			102,821
Franchise fees	5,716		708		(120		)	6,304
Franchise rental income	50,041		8,520		—			58,561
Advertising funds revenue	81,437		5,175		—			86,612
Total revenues	$	409,674	$	20,707	$	4,967		$	435,348
Six Months Ended June 30, 2019
Sales at Company-operated restaurants	$	348,747	$	—	$	—		$	348,747
Franchise royalty revenue	175,808		11,812		10,044			197,664
Franchise fees	11,725		1,120		569			13,414
Franchise rental income	100,706		16,307		—			117,013
Advertising funds revenue	157,418		9,675		—			167,093
Total revenues	$	794,404	$	38,914	$	10,613		$	843,931
Three Months Ended July 1, 2018
Sales at Company-operated restaurants	$	167,344	$	—	$	—		$	167,344
Franchise royalty revenue	87,224		6,073		4,861			98,158
Franchise fees	7,011		2,275		115			9,401
Franchise rental income	44,881		6,648		—			51,529
Advertising funds revenue	79,485		5,085		—			84,570
Total revenues	$	385,945	$	20,081	$	4,976		$	411,002
Six Months Ended July 1, 2018
Sales at Company-operated restaurants	$	320,993	$	—	$	—		$	320,993
Franchise royalty revenue	167,446		11,436		9,219			188,101
Franchise fees	14,096		2,921		349			17,366
Franchise rental income	89,146		12,490		—			101,636
Advertising funds revenue	153,899		9,571		—			163,470
Total revenues	$	745,580	$	36,418	$	9,568		$	791,566

Contract Balances

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

	June 30, 2019 (a)		December 30, 2018 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	43,398	$	40,300
Receivables, which are included in “Advertising funds restricted assets”	49,308		47,332
Deferred franchise fees (c)	101,267		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 condensed consolidated statements of operations.

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

(c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,679 and $91,588 as of June 30, 2019, respectively, and $9,973 and $92,232 as of December 30, 2018, respectively.

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	June 30, 2019			July 1, 2018
Deferred franchise fees at beginning of period	$	102,205		$	102,492
Revenue recognized during the period	(4,609		)	(5,127		)
New deferrals due to cash received and other	3,671			6,358
Deferred franchise fees at end of period	$	101,267		$	103,723

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)	$	4,260
2020	7,025
2021	5,985
2022	5,782
2023	5,527
Thereafter	72,688
	$	101,267

_______________

(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)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisitions

Acquisitions

During the six months ended June 30, 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 franchisees:

	Six Months Ended
	June 30, 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 ended March 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

6 Months Ended

Jun. 30, 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, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages.

During the six months ended July 1, 2018, the Company completed the sale of three Company-operated restaurants to a franchisee and facilitated 64 Franchise Flips. During the six months ended June 30, 2019, no Company-operated restaurants were sold to franchisees and no Franchise Flips were facilitated by the Company.

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					Six Months Ended
	June 30, 2019		July 1, 2018			June 30, 2019		July 1, 2018
Gain on sale of restaurants, net (a)	$	—	$	89		$	—	$	89
Post-closing adjustments on sales of restaurants (b)	62		(13		)	54		(225		)
Gain (loss) on sales of other assets, net (c)	48		16			68		(342		)
System optimization gains (losses), net	$	110	$	92		$	122	$	(478	)

_______________

(a) During the three and six months ended July 1, 2018, the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. The value of the net assets that were included in the sale totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale.

(b) The six months ended July 1, 2018 includes cash proceeds, net of payments of $6.

(c) During the three and six months ended June 30, 2019, the Company received cash proceeds of $1,240, primarily from the sale of surplus properties. During the three and six months ended July 1, 2018, the Company received cash proceeds of $27 and $372, respectively, primarily from the sale of surplus properties.

Assets Held for Sale

As of June 30, 2019 and December 30, 2018, the Company had assets held for sale of $2,952 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

6 Months Ended

Jun. 30, 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				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
G&A realignment	$	3,517	$	3,120	$	4,299	$	5,746
System optimization initiative	53		4		69		4
Reorganization and realignment costs	$	3,570	$	3,124	$	4,368	$	5,750

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses. Additionally, the Company announced in May 2019 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, and the elimination of the Chief Operations Officer position. During the six months ended June 30, 2019 and July 1, 2018, the Company recognized costs related to the plan totaling $4,299 and $5,746, respectively, which primarily included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating approximately $1,700, comprised of (1) severance and related employee costs of approximately $100, (2) recruitment and relocation costs of approximately $1,000, (3) third-party and other costs of approximately $100 and (4) share-based compensation of approximately $500, the majority of which the Company expects to recognize during the remainder of 2019. The Company expects to incur total costs aggregating approximately $35,000 to $38,000 related to the plan.

As a result of the leadership changes described above, the Company is currently evaluating its 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				Six Months Ended				Total Incurred Since Inception
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Severance and related employee costs	$	2,130	$	1,052	$	2,602	$	3,111	$	21,355
Recruitment and relocation costs	482		360		596		508		2,162
Third-party and other costs	71		604		87		932		2,197
	2,683		2,016		3,285		4,551		25,714
Share-based compensation (a)	834		1,104		1,014		1,195		7,698
Termination of defined benefit plans	—		—		—		—		1,335
Total G&A realignment	$	3,517	$	3,120	$	4,299	$	5,746	$	34,747

_______________

(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 $4,835 and $607 as of June 30, 2019, respectively, and $7,985 and $2,107 as of July 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan.

	Balance December 30, 2018		Charges		Payments			Balance June 30, 2019
Severance and related employee costs	$	7,241	$	2,602	$	(4,724	)	$	5,119
Recruitment and relocation costs	83		596		(356		)	323
Third-party and other costs	—		87		(87		)	—
	$	7,324	$	3,285	$	(5,167	)	$	5,442

	Balance December 31, 2017		Charges		Payments			Balance July 1, 2018
Severance and related employee costs	$	12,093	$	3,111	$	(5,326	)	$	9,878
Recruitment and relocation costs	177		508		(471		)	214
Third-party and other costs	—		932		(932		)	—
	$	12,270	$	4,551	$	(6,729	)	$	10,092

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,261 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

6 Months Ended

Jun. 30, 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 Hortons is a registered trademark of Tim Hortons USA Inc.) In addition, a wholly-owned subsidiary of Wendy’s has a 20% share in a joint venture for the operation of Wendy’s restaurants in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method of accounting, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.”

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

	Six Months Ended
	June 30, 2019			July 1, 2018
Balance at beginning of period	$	47,021		$	55,363
Investment	—			13
Equity in earnings for the period	6,048			4,827
Amortization of purchase price adjustments (a)	(1,129		)	(1,179		)
	4,919			3,648
Distributions received	(7,018		)	(5,756		)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	2,359			(1,763		)
Balance at end of period	$	47,281		$	51,505

_______________

(a)

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

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Long-Term Debt (Notes)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consisted of the following:

	June 30, 2019			December 30, 2018
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	$	400,000		$	—
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	450,000			—
Series 2018-1 Class A-2 Notes:
3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025	443,250			445,500
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	467,875			470,250
Series 2015-1 Class A-2 Notes:
4.080% Series 2015-1 Class A-2-II Notes, repaid in connection with the June 2019 refinancing	—			870,750
4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025	481,250			483,750
7% debentures, due in 2025	91,403			90,769
Unamortized debt issuance costs	(36,061		)	(32,217		)
	2,297,717			2,328,802
Less amounts payable within one year	(22,750		)	(23,250		)
Total long-term debt	$	2,274,967		$	2,305,552

On June 26, 2019, Wendy’s Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, completed a debt refinancing transaction under which the Master Issuer issued fixed rate senior secured notes in the following 2019-1 series: Class A-2-I with an initial principal amount of $400,000 and Class A-2-II with an initial principal amount of $450,000 (collectively, the “Series 2019-1 Class A-2 Notes”). Interest payments on the Series 2019-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2019-1 Class A-2 Notes is in June 2049. If the Master Issuer has not repaid or refinanced the Series 2019-1 Class A-2 Notes prior to the respective anticipated repayment date, additional interest will accrue on each tranche of the Series 2019-1 Class A-2 Notes at a rate equal to the greater of (A) 5.00% per annum and (B) a per annum interest rate equal to the amount, if any, by which the sum of (i) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on such anticipated repayment date of the United States Treasury Security having a term closest to 10 years, plus (ii) 5.00%, plus (iii) (1) with respect to the Series 2019-1 Class A-2-I Notes, 1.863%, and (2) with respect to the Series 2019-1 Class A-2-II Notes, 2.051%, exceeds the original interest rate with respect to such tranche. The Master Issuer’s outstanding Series 2015-1 Class A-2-II Notes were repaid as part of the refinancing transaction. As a result, the Company recorded a loss on early extinguishment of debt of $7,150 during the three months ended June 30, 2019, which was comprised of the write-off of certain unamortized deferred financing costs. The Series 2019-1 Class A-2 Notes have scheduled principal payments of $4,250 in 2019, $8,500 annually from 2020 through 2025, $378,500 in 2026, $4,500 in each of 2027 and 2028 and $407,250 in 2029.

In connection with the issuance of the Series 2019-1 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of Series 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2019-1 Class A-1 Notes” and, together with the Series 2019-1 Class A-2 Notes, the “Series 2019-1 Senior Notes”), which allows for the drawing of up to $150,000 on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2019-1 Class A-1 Notes during the three months ended June 30, 2019. The Series 2019-1 Class A-1 Notes replaced the Company’s $150,000 Series 2018-1 Class A-1 Notes, which were canceled on the closing date, and the letters of credit outstanding against the Series 2018-1 Class A-1 Notes were transferred to the Series 2019-1 Class A-1 Notes.

The Series 2019-1 Senior Notes are secured by substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors (the “Guarantors”), excluding certain real estate assets and subject to certain limitations. The Series 2019-1 Senior Notes are subject to the same series of covenants and restrictions as the Company’s outstanding Series 2018-1 Class A-2 Notes and Series 2015-1 Class A-2 Notes.

During the three and six months ended June 30, 2019, the Company incurred debt issuance costs of $14,008 in connection with the issuance of the Series 2019-1 Senior Notes. The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2019-1 Senior Notes utilizing the effective interest rate method.

Wendy’s U.S. advertising fund has a revolving line of credit of $25,000. Neither the Company nor Wendy’s is the guarantor of the debt. The advertising fund facility was established to fund the advertising fund operations. During the six months ended July 1, 2018, the Company borrowed $5,809 and repaid $7,096 under the line of credit. There were no borrowings or repayments under the line of credit during the six months ended June 30, 2019.

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Fair Value Measurements

6 Months Ended

Jun. 30, 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:

	June 30, 2019				December 30, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	221,818	$	221,818	$	222,228	$	222,228	Level 1
Other investments in equity securities (a)	639		1,945		639		2,181		Level 3
Financial liabilities
Series 2019-1 Class A-2-I Notes (b)	400,000		402,704		—		—		Level 2
Series 2019-1 Class A-2-II Notes (b)	450,000		453,146		—		—		Level 2
Series 2018-1 Class A-2-I Notes (b)	443,250		446,747		445,500		424,026		Level 2
Series 2018-1 Class A-2-II Notes (b)	467,875		469,756		470,250		439,353		Level 2
Series 2015-1 Class A-2-II Notes (b)	—		—		870,750		865,342		Level 2
Series 2015-1 Class A-2-III Notes (b)	481,250		500,519		483,750		482,522		Level 2
7% debentures, due in 2025 (b)	91,403		105,750		90,769		102,750		Level 2
Guarantees of franchisee loan obligations (c)	9		9		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, favorable lease assets and ROU 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 10 for further information on impairment of our long-lived assets.

			Fair Value Measurements
	June 30, 2019		Level 1		Level 2		Level 3
Held and used	$	2,112	$	—	$	—	$	2,112
Held for sale	1,215		—		—		1,215
Total	$	3,327	$	—	$	—	$	3,327

			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

6 Months Ended

Jun. 30, 2019

Asset Impairment Charges [Abstract]

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration of operating performance of certain Company-operated restaurants, (2) closing Company-operated restaurants and classifying such surplus properties as held for sale and (3) 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				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Surplus properties	$	112	$	—	$	1,397	$	41
Company-operated restaurants	86		1,603		287		1,603
Restaurants leased or subleased to franchisees	—		—		—		165
	$	198	$	1,603	$	1,684	$	1,809

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the three months ended June 30, 2019 and July 1, 2018 was 29.2% and 29.3% respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to (1) state income taxes, including non-recurring changes to state deferred taxes, (2) net excess tax benefits related to share-based payments, which resulted in a benefit of $889 and $798 for the three months ended June 30, 2019 and July 1, 2018, respectively, (3) valuation allowance changes, net of federal benefit, and (4) the impact of the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

The Company’s effective tax rate for the six months ended June 30, 2019 and July 1, 2018 was 24.9% and 11.6% 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 $2,925 and $6,891 for the six months ended June 30, 2019 and July 1, 2018, respectively, (2) state income taxes, including non-recurring changes to state deferred taxes, (3) the impact of the Tax Act and (4) valuation allowance changes, net of federal benefit.

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 and second quarters of 2018 under Staff Accounting Bulletin 118, we adjusted our provisional amounts for a discrete net tax benefit of $2,795. This net benefit included $4,750 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 and six months ended June 30, 2019. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $7,760 due to the lapse of statutes of limitations and expected settlements with taxing authorities.

The current portion of refundable income taxes was $7,572 and $14,475 as of June 30, 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 June 30, 2019 and December 30, 2018.

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Net Income Per Share

6 Months Ended

Jun. 30, 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		Six Months Ended
	June 30, 2019	July 1, 2018	June 30, 2019	July 1, 2018
Common stock:
Weighted average basic shares outstanding	231,029	238,991	230,807	239,459
Dilutive effect of stock options and restricted shares	5,064	7,161	5,186	7,826
Weighted average diluted shares outstanding	236,093	246,152	235,993	247,285

Diluted net income per share for the three and six months ended June 30, 2019 and July 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 2,049 and 2,104 for the three and six months ended June 30, 2019, respectively, and 27 and 1,369 for the three and six months ended July 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

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Dividends

During each of the first and second quarters of 2019, the Company paid quarterly cash dividends of $.10 per share. During each of the first and second quarters of 2018, the Company paid quarterly cash dividends of $.085 per share.

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 six months ended June 30, 2019, the Company repurchased 2,824 shares with an aggregate purchase price of $49,721, of which $807 was accrued at June 30, 2019, and excluding commissions of $40, under the November 2018 and February 2019 authorizations. As of June 30, 2019, the Company had $196,736 of availability remaining under its February 2019 authorization. Subsequent to June 30, 2019 through July 31, 2019, the Company repurchased 521 shares under the February 2019 authorization with an aggregate purchase price of $9,980, excluding commissions of $7.

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 six months ended July 1, 2018, the Company repurchased 3,675 shares under the February 2018 repurchase authorization with an aggregate purchase price of $62,490, of which $2,146 was accrued at July 1, 2018, and excluding commissions of $52. Additionally, during the six months ended July 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, 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	9,860			—			9,860
Balance at June 30, 2019	$	(51,813	)	$	—		$	(51,813	)
Balance at December 31, 2017	$	(45,149	)	$	(1,049	)	$	(46,198	)
Current-period other comprehensive (loss) income	(10,369		)	117			(10,252		)
Balance at July 1, 2018	$	(55,518	)	$	(932	)	$	(56,450	)

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Leases (Notes)

6 Months Ended

Jun. 30, 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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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		Six Months Ended
	June 30, 2019		June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	1,631	$	4,748
Interest on finance lease liabilities	9,939		16,692
	11,570		21,440
Operating lease cost	19,086		43,729
Variable lease cost (a)	15,371		29,475
Short-term lease cost	1,153		2,279
Total operating lease cost (b)	35,610		75,483
Total lease cost	$	47,180	$	96,923

_______________

(a) The three and six months ended June 30, 2019 includes expenses for executory costs of $9,779 and $19,303, respectively, for which the Company is reimbursed by sublessees.

(b) The three and six months ended June 30, 2019 includes $28,022 and $60,473, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $7,007 and $13,600, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

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

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	19,567
Operating cash flows from operating leases	46,425
Financing cash flows from finance leases	3,521
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	23,534
Operating lease liabilities	5,677

The following table includes supplemental information related to leases:

	June 30, 2019
Weighted-average remaining lease term (years):
Finance leases	17.5
Operating leases	15.7
Weighted average discount rate:
Finance leases	10.11	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a) Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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:

	June 30, 2019
Land	$	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
	595,005
Accumulated depreciation and amortization	(149,931		)
	$	445,074

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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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		Six Months Ended
	June 30, 2019		June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	1,631	$	4,748
Interest on finance lease liabilities	9,939		16,692
	11,570		21,440
Operating lease cost	19,086		43,729
Variable lease cost (a)	15,371		29,475
Short-term lease cost	1,153		2,279
Total operating lease cost (b)	35,610		75,483
Total lease cost	$	47,180	$	96,923

_______________

(a) The three and six months ended June 30, 2019 includes expenses for executory costs of $9,779 and $19,303, respectively, for which the Company is reimbursed by sublessees.

(b) The three and six months ended June 30, 2019 includes $28,022 and $60,473, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $7,007 and $13,600, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

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

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	19,567
Operating cash flows from operating leases	46,425
Financing cash flows from finance leases	3,521
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	23,534
Operating lease liabilities	5,677

The following table includes supplemental information related to leases:

	June 30, 2019
Weighted-average remaining lease term (years):
Finance leases	17.5
Operating leases	15.7
Weighted average discount rate:
Finance leases	10.11	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a) Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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:

	June 30, 2019
Land	$	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
	595,005
Accumulated depreciation and amortization	(149,931		)
	$	445,074

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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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		Six Months Ended
	June 30, 2019		June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	1,631	$	4,748
Interest on finance lease liabilities	9,939		16,692
	11,570		21,440
Operating lease cost	19,086		43,729
Variable lease cost (a)	15,371		29,475
Short-term lease cost	1,153		2,279
Total operating lease cost (b)	35,610		75,483
Total lease cost	$	47,180	$	96,923

_______________

(a) The three and six months ended June 30, 2019 includes expenses for executory costs of $9,779 and $19,303, respectively, for which the Company is reimbursed by sublessees.

(b) The three and six months ended June 30, 2019 includes $28,022 and $60,473, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $7,007 and $13,600, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

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

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	19,567
Operating cash flows from operating leases	46,425
Financing cash flows from finance leases	3,521
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	23,534
Operating lease liabilities	5,677

The following table includes supplemental information related to leases:

	June 30, 2019
Weighted-average remaining lease term (years):
Finance leases	17.5
Operating leases	15.7
Weighted average discount rate:
Finance leases	10.11	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a) Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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:

	June 30, 2019
Land	$	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
	595,005
Accumulated depreciation and amortization	(149,931		)
	$	445,074

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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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		Six Months Ended
	June 30, 2019		June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	1,631	$	4,748
Interest on finance lease liabilities	9,939		16,692
	11,570		21,440
Operating lease cost	19,086		43,729
Variable lease cost (a)	15,371		29,475
Short-term lease cost	1,153		2,279
Total operating lease cost (b)	35,610		75,483
Total lease cost	$	47,180	$	96,923

_______________

(a) The three and six months ended June 30, 2019 includes expenses for executory costs of $9,779 and $19,303, respectively, for which the Company is reimbursed by sublessees.

(b) The three and six months ended June 30, 2019 includes $28,022 and $60,473, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $7,007 and $13,600, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

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

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	19,567
Operating cash flows from operating leases	46,425
Financing cash flows from finance leases	3,521
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	23,534
Operating lease liabilities	5,677

The following table includes supplemental information related to leases:

	June 30, 2019
Weighted-average remaining lease term (years):
Finance leases	17.5
Operating leases	15.7
Weighted average discount rate:
Finance leases	10.11	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a) Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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:

	June 30, 2019
Land	$	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
	595,005
Accumulated depreciation and amortization	(149,931		)
	$	445,074

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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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		Six Months Ended
	June 30, 2019		June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	1,631	$	4,748
Interest on finance lease liabilities	9,939		16,692
	11,570		21,440
Operating lease cost	19,086		43,729
Variable lease cost (a)	15,371		29,475
Short-term lease cost	1,153		2,279
Total operating lease cost (b)	35,610		75,483
Total lease cost	$	47,180	$	96,923

_______________

(a) The three and six months ended June 30, 2019 includes expenses for executory costs of $9,779 and $19,303, respectively, for which the Company is reimbursed by sublessees.

(b) The three and six months ended June 30, 2019 includes $28,022 and $60,473, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $7,007 and $13,600, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

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

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	19,567
Operating cash flows from operating leases	46,425
Financing cash flows from finance leases	3,521
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	23,534
Operating lease liabilities	5,677

The following table includes supplemental information related to leases:

	June 30, 2019
Weighted-average remaining lease term (years):
Finance leases	17.5
Operating leases	15.7
Weighted average discount rate:
Finance leases	10.11	%
Operating leases	5.10	%

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a) Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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:

	June 30, 2019
Land	$	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
	595,005
Accumulated depreciation and amortization	(149,931		)
	$	445,074

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Transactions with Related Parties

6 Months Ended

Jun. 30, 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 six months ended June 30, 2019 and July 1, 2018, Wendy’s paid TimWen $8,140 and $6,504, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $103 and $108 during the six months ended June 30, 2019 and July 1, 2018, respectively, which has been included as a reduction to “General and administrative.”

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Guarantees and Other Commitments and Contingencies

6 Months Ended

Jun. 30, 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 $68,953 as of June 30, 2019. These leases extend through 2056. We have not received any notice of default related to these leases as of June 30, 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 June 30, 2019, the Company had outstanding letters of credit with various parties totaling $25,086. The outstanding letters of credit include amounts outstanding against the Series 2019-1 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 that 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 six months ended June 30, 2019 were $5,481. As of June 30, 2019, the Company estimates future purchases to be approximately $5,400 for the remainder of 2019, $11,600 in 2020, $12,100 in 2021, $13,000 in 2022 and $13,700 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

6 Months Ended

Jun. 30, 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. As of June 30, 2019, there were no material developments in those legal proceedings.

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Leases (Policies)

6 Months Ended

Jun. 30, 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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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 June 30, 2019, Wendy’s and its franchisees operated 6,719 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 1,264 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)

6 Months Ended

Jun. 30, 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

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Revenue (Tables)

6 Months Ended

Jun. 30, 2019

Revenue [Abstract]

Disaggregation of Revenue

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

	U.S.		Canada		Other International			Total
Three Months Ended June 30, 2019
Sales at Company-operated restaurants	$	181,050	$	—	$	—		$	181,050
Franchise royalty revenue	91,430		6,304		5,087			102,821
Franchise fees	5,716		708		(120		)	6,304
Franchise rental income	50,041		8,520		—			58,561
Advertising funds revenue	81,437		5,175		—			86,612
Total revenues	$	409,674	$	20,707	$	4,967		$	435,348
Six Months Ended June 30, 2019
Sales at Company-operated restaurants	$	348,747	$	—	$	—		$	348,747
Franchise royalty revenue	175,808		11,812		10,044			197,664
Franchise fees	11,725		1,120		569			13,414
Franchise rental income	100,706		16,307		—			117,013
Advertising funds revenue	157,418		9,675		—			167,093
Total revenues	$	794,404	$	38,914	$	10,613		$	843,931
Three Months Ended July 1, 2018
Sales at Company-operated restaurants	$	167,344	$	—	$	—		$	167,344
Franchise royalty revenue	87,224		6,073		4,861			98,158
Franchise fees	7,011		2,275		115			9,401
Franchise rental income	44,881		6,648		—			51,529
Advertising funds revenue	79,485		5,085		—			84,570
Total revenues	$	385,945	$	20,081	$	4,976		$	411,002
Six Months Ended July 1, 2018
Sales at Company-operated restaurants	$	320,993	$	—	$	—		$	320,993
Franchise royalty revenue	167,446		11,436		9,219			188,101
Franchise fees	14,096		2,921		349			17,366
Franchise rental income	89,146		12,490		—			101,636
Advertising funds revenue	153,899		9,571		—			163,470
Total revenues	$	745,580	$	36,418	$	9,568		$	791,566

Contract balances, assets and liabilities

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

	June 30, 2019 (a)		December 30, 2018 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	43,398	$	40,300
Receivables, which are included in “Advertising funds restricted assets”	49,308		47,332
Deferred franchise fees (c)	101,267		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 condensed consolidated statements of operations.

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

(c)

Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,679 and $91,588 as of June 30, 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:

	Six Months Ended
	June 30, 2019			July 1, 2018
Deferred franchise fees at beginning of period	$	102,205		$	102,492
Revenue recognized during the period	(4,609		)	(5,127		)
New deferrals due to cash received and other	3,671			6,358
Deferred franchise fees at end of period	$	101,267		$	103,723

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)	$	4,260
2020	7,025
2021	5,985
2022	5,782
2023	5,527
Thereafter	72,688
	$	101,267

_______________

(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)

6 Months Ended

Jun. 30, 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 franchisees:

	Six Months Ended
	June 30, 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)

6 Months Ended

Jun. 30, 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					Six Months Ended
	June 30, 2019		July 1, 2018			June 30, 2019		July 1, 2018
Gain on sale of restaurants, net (a)	$	—	$	89		$	—	$	89
Post-closing adjustments on sales of restaurants (b)	62		(13		)	54		(225		)
Gain (loss) on sales of other assets, net (c)	48		16			68		(342		)
System optimization gains (losses), net	$	110	$	92		$	122	$	(478	)

_______________

(a) During the three and six months ended July 1, 2018, the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. The value of the net assets that were included in the sale totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale.

(b) The six months ended July 1, 2018 includes cash proceeds, net of payments of $6.

(c) During the three and six months ended June 30, 2019, the Company received cash proceeds of $1,240, primarily from the sale of surplus properties. During the three and six months ended July 1, 2018, the Company received cash proceeds of $27 and $372, respectively, primarily from the sale of surplus properties.

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Reorganization and Realignment Costs (Tables)

6 Months Ended

Jun. 30, 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				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
G&A realignment	$	3,517	$	3,120	$	4,299	$	5,746
System optimization initiative	53		4		69		4
Reorganization and realignment costs	$	3,570	$	3,124	$	4,368	$	5,750

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				Six Months Ended				Total Incurred Since Inception
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Severance and related employee costs	$	2,130	$	1,052	$	2,602	$	3,111	$	21,355
Recruitment and relocation costs	482		360		596		508		2,162
Third-party and other costs	71		604		87		932		2,197
	2,683		2,016		3,285		4,551		25,714
Share-based compensation (a)	834		1,104		1,014		1,195		7,698
Termination of defined benefit plans	—		—		—		—		1,335
Total G&A realignment	$	3,517	$	3,120	$	4,299	$	5,746	$	34,747

_______________

(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 $4,835 and $607 as of June 30, 2019, respectively, and $7,985 and $2,107 as of July 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan.

	Balance December 30, 2018		Charges		Payments			Balance June 30, 2019
Severance and related employee costs	$	7,241	$	2,602	$	(4,724	)	$	5,119
Recruitment and relocation costs	83		596		(356		)	323
Third-party and other costs	—		87		(87		)	—
	$	7,324	$	3,285	$	(5,167	)	$	5,442

	Balance December 31, 2017		Charges		Payments			Balance July 1, 2018
Severance and related employee costs	$	12,093	$	3,111	$	(5,326	)	$	9,878
Recruitment and relocation costs	177		508		(471		)	214
Third-party and other costs	—		932		(932		)	—
	$	12,270	$	4,551	$	(6,729	)	$	10,092

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Investments (Tables)

6 Months Ended

Jun. 30, 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:

	Six Months Ended
	June 30, 2019			July 1, 2018
Balance at beginning of period	$	47,021		$	55,363
Investment	—			13
Equity in earnings for the period	6,048			4,827
Amortization of purchase price adjustments (a)	(1,129		)	(1,179		)
	4,919			3,648
Distributions received	(7,018		)	(5,756		)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	2,359			(1,763		)
Balance at end of period	$	47,281		$	51,505

_______________

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

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-term debt

Long-term debt consisted of the following:

	June 30, 2019			December 30, 2018
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	$	400,000		$	—
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	450,000			—
Series 2018-1 Class A-2 Notes:
3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025	443,250			445,500
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	467,875			470,250
Series 2015-1 Class A-2 Notes:
4.080% Series 2015-1 Class A-2-II Notes, repaid in connection with the June 2019 refinancing	—			870,750
4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025	481,250			483,750
7% debentures, due in 2025	91,403			90,769
Unamortized debt issuance costs	(36,061		)	(32,217		)
	2,297,717			2,328,802
Less amounts payable within one year	(22,750		)	(23,250		)
Total long-term debt	$	2,274,967		$	2,305,552

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 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:

	June 30, 2019				December 30, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	221,818	$	221,818	$	222,228	$	222,228	Level 1
Other investments in equity securities (a)	639		1,945		639		2,181		Level 3
Financial liabilities
Series 2019-1 Class A-2-I Notes (b)	400,000		402,704		—		—		Level 2
Series 2019-1 Class A-2-II Notes (b)	450,000		453,146		—		—		Level 2
Series 2018-1 Class A-2-I Notes (b)	443,250		446,747		445,500		424,026		Level 2
Series 2018-1 Class A-2-II Notes (b)	467,875		469,756		470,250		439,353		Level 2
Series 2015-1 Class A-2-II Notes (b)	—		—		870,750		865,342		Level 2
Series 2015-1 Class A-2-III Notes (b)	481,250		500,519		483,750		482,522		Level 2
7% debentures, due in 2025 (b)	91,403		105,750		90,769		102,750		Level 2
Guarantees of franchisee loan obligations (c)	9		9		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
	June 30, 2019		Level 1		Level 2		Level 3
Held and used	$	2,112	$	—	$	—	$	2,112
Held for sale	1,215		—		—		1,215
Total	$	3,327	$	—	$	—	$	3,327

			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)

6 Months Ended

Jun. 30, 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				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Surplus properties	$	112	$	—	$	1,397	$	41
Company-operated restaurants	86		1,603		287		1,603
Restaurants leased or subleased to franchisees	—		—		—		165
	$	198	$	1,603	$	1,684	$	1,809

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Net Income Per Share (Tables)

6 Months Ended

Jun. 30, 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		Six Months Ended
	June 30, 2019	July 1, 2018	June 30, 2019	July 1, 2018
Common stock:
Weighted average basic shares outstanding	231,029	238,991	230,807	239,459
Dilutive effect of stock options and restricted shares	5,064	7,161	5,186	7,826
Weighted average diluted shares outstanding	236,093	246,152	235,993	247,285

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 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	9,860			—			9,860
Balance at June 30, 2019	$	(51,813	)	$	—		$	(51,813	)
Balance at December 31, 2017	$	(45,149	)	$	(1,049	)	$	(46,198	)
Current-period other comprehensive (loss) income	(10,369		)	117			(10,252		)
Balance at July 1, 2018	$	(55,518	)	$	(932	)	$	(56,450	)

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Lease, Cost

The components of lease cost are as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	1,631	$	4,748
Interest on finance lease liabilities	9,939		16,692
	11,570		21,440
Operating lease cost	19,086		43,729
Variable lease cost (a)	15,371		29,475
Short-term lease cost	1,153		2,279
Total operating lease cost (b)	35,610		75,483
Total lease cost	$	47,180	$	96,923

_______________

(a) The three and six months ended June 30, 2019 includes expenses for executory costs of $9,779 and $19,303, respectively, for which the Company is reimbursed by sublessees.

(b)

The three and six months ended June 30, 2019 includes $28,022 and $60,473, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $7,007 and $13,600, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

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

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

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	19,567
Operating cash flows from operating leases	46,425
Financing cash flows from finance leases	3,521
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	23,534
Operating lease liabilities	5,677

Schedule of Supplemental Information Related to Leases

The following table includes supplemental information related to leases:

	June 30, 2019
Weighted-average remaining lease term (years):
Finance leases	17.5
Operating leases	15.7
Weighted average discount rate:
Finance leases	10.11	%
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 June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 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 June 30, 2019:

	Finance Leases						Operating Leases
Fiscal Year	Company-Operated			Franchise and Other			Company-Operated			Franchise and Other
2019 (a)	$	1,338		$	23,714		$	10,072		$	35,660
2020	2,697			44,918			19,921			71,537
2021	2,808			46,315			19,733			71,433
2022	2,858			47,322			19,421			71,604
2023	2,810			48,988			19,400			71,571
Thereafter	37,034			695,753			201,762			836,750
Total minimum payments	$	49,545		$	907,010		$	290,309		$	1,158,555
Less interest	(23,169		)	(458,243		)	(91,101		)	(383,409		)
Present value of minimum lease payments (b) (c)	$	26,376		$	448,767		$	199,208		$	775,146

_______________

(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 $9,917 and $465,226 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 $43,321 and $931,033 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a)

Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a)

Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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		Six Months Ended
	June 30, 2019		June 30, 2019
Sales-type and direct-financing leases:
Selling profit	$	37	$	1,971
Interest income	7,072		11,805
Operating lease income	$	43,959	$	89,164
Variable lease income	14,602		27,849
Franchise rental income (a)	$	58,561	$	117,013

_______________

(a)

Includes sublease income of $42,921 and $85,942 recognized during the three and six months ended June 30, 2019, respectively, of which $9,779 and $19,211, respectively, 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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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 June 30, 2019:

	Sales-Type and Direct Financing Leases						Operating Leases
Fiscal Year	Subleases			Owned Properties			Subleases		Owned Properties
2019 (a)	$	13,661		$	1,028		$	55,839	$	26,240
2020	27,872			2,130			112,551		52,872
2021	28,910			2,162			113,162		54,661
2022	29,548			2,243			114,269		56,134
2023	30,587			2,287			115,190		56,339
Thereafter	473,264			28,037			1,355,212		861,139
Total future minimum receipts	603,842			37,887			$	1,866,223	$	1,107,385
Unearned interest income	(377,235		)	(20,405		)
Net investment in sales-type and direct financing leases (b)	$	226,607		$	17,482

_______________

(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 $2,505 and $241,584 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 $237.

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:

	June 30, 2019
Land	$	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
	595,005
Accumulated depreciation and amortization	(149,931		)
	$	445,074

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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	Jun. 30, 2019	Dec. 30, 2018
New Accounting Pronouncements or Change in Accounting Principle
Operating lease assets			$ 895,280	$ 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	Jun. 30, 2019	Dec. 30, 2018
Prior Period Adjustments Restatement
Properties	$ 992,302	$ 1,023,267
Finance lease assets	197,691	189,969
Current portion of long-term debt	22,750	23,250
Current portion of finance lease liabilities	9,917	8,405
Long-term debt	2,274,967	2,305,552
Long-term finance lease liabilities	$ 465,226	447,231
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
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

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Revenue Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Disaggregation of Revenue
Franchise rental income	$ 58,561	$ 51,529	$ 117,013	$ 101,636
Total revenues	435,348	411,002	843,931	791,566
United States
Disaggregation of Revenue
Franchise rental income	50,041	44,881	100,706	89,146
Total revenues	409,674	385,945	794,404	745,580
Canada
Disaggregation of Revenue
Franchise rental income	8,520	6,648	16,307	12,490
Total revenues	20,707	20,081	38,914	36,418
Other International
Disaggregation of Revenue
Franchise rental income	0	0	0	0
Total revenues	4,967	4,976	10,613	9,568
Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	181,050	167,344	348,747	320,993
Sales at Company-operated restaurants | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	181,050	167,344	348,747	320,993
Sales at Company-operated restaurants | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Sales at Company-operated restaurants | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	102,821	98,158	197,664	188,101
Franchise royalty revenue | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	91,430	87,224	175,808	167,446
Franchise royalty revenue | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	6,304	6,073	11,812	11,436
Franchise royalty revenue | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	5,087	4,861	10,044	9,219
Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	6,304	9,401	13,414	17,366
Franchise fees | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	5,716	7,011	11,725	14,096
Franchise fees | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	708	2,275	1,120	2,921
Franchise fees | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax		115	569	349
Contract with Customer, Expense, Catch-up Adjustment to Revenue, Change in Estimate	(120)
Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	86,612	84,570	167,093	163,470
Advertising funds revenue | United States
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	81,437	79,485	157,418	153,899
Advertising funds revenue | Canada
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	5,175	5,085	9,675	9,571
Advertising funds revenue | Other International
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	$ 0	$ 0	$ 0	$ 0

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Revenue Contract Balances (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Dec. 30, 2018
Contract balances
Receivables, which are included in Accounts and notes receivable, net	$ 43,398		$ 40,300
Receivables, which are included in Advertising funds restricted assets	49,308		47,332
Deferred franchise fees at beginning of period	102,205	$ 102,492
Revenue recognized during the period	(4,609)	(5,127)
New deferrals due to cash received and other	3,671	6,358
Deferred franchise fees at end of period	101,267	$ 103,723
Deferred franchisee fees, current	9,679		9,973
Deferred franchise fees, noncurrent	$ 91,588		$ 92,232

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Revenue Revenue, Remaining Performance Obligation (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Revenue [Abstract]
Anticipated recognition of revenue for the remainder of 2019	$ 4,260
Anticipated recognition of revenue in 2020	7,025
Anticipated recognition of revenue in 2021	5,985
Anticipated recognition of revenue in 2022	5,782
Anticipated recognition of revenue in 2023	5,527
Anticipated recognition of revenue thereafter	72,688
Revenue, Remaining Performance Obligation, Amount	$ 101,267

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Acquisitions (Details) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($)	Jun. 30, 2019 USD ($) number_of_restaurants	Dec. 30, 2018 USD ($) number_of_restaurants
Business Acquisition
Goodwill		$ 755,887	$ 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 Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles	$ 2,989
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Financial Assets	$ 140

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System Optimization (Gains) Losses, Net Summary of Disposition Activity (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($)	Jul. 01, 2018 USD ($)	Jun. 30, 2019 USD ($) number_of_restaurants	Jul. 01, 2018 USD ($) number_of_restaurants	Jan. 01, 2017
System optimization gains (losses), net
Company-operated restaurant ownership percentage					5.00%
System optimization gains (losses), net	$ 110	$ 92	$ 122	$ (478)
Proceeds from sales			$ 1,240	$ 1,814
Sale of Company-operated restaurants to franchisees
System optimization gains (losses), net
Significant Changes, Franchises Sold | number_of_restaurants			0	3
System optimization gains (losses), net	0	89	$ 0	$ 89
Post closing adjustments on sales of restaurants	62	(13)	$ 54	(225)
Proceeds from sales		1,436		1,436
Net Assets Sold		1,139		1,139
Goodwill, Period Increase (Decrease)		(208)		(208)
Cash proceeds from post closing adjustments, net of payments				$ 6
Sale of franchise-operated restaurant to franchisee
System optimization gains (losses), net
Significant Changes, Franchises Sold | number_of_restaurants			0	64
Sale of Other Assets
System optimization gains (losses), net
System optimization gains (losses), net	48	16	$ 68	$ (342)
Proceeds from sales	$ 1,240	$ 27	$ 1,240	$ 372

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System Optimization (Gains) Losses, Net Assets Held for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 30, 2018
Property, Plant and Equipment [Abstract]
Assets held for sale	$ 2,952	$ 2,435

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Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 3,570	$ 3,124	$ 4,368	$ 5,750
G&A Realignment – May 2017 Plan
Restructuring Cost and Reserve
Reorganization and realignment costs	3,517	3,120	4,299	5,746
System Optimization
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 53	$ 4	$ 69	$ 4

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Reorganization and Realignment Costs G&A Realignment - May 2017 Plan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 3,570	$ 3,124	$ 4,368	$ 5,750
G&A Realignment – May 2017 Plan
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	1,700		1,700
Restructuring and Related Cost, Incurred Cost	2,683	2,016	3,285	4,551
Restructuring and Related Cost, Cost Incurred to Date	25,714		25,714
Reorganization and realignment costs	3,517	3,120	4,299	5,746
Restructuring Charges, Cost Incurred to Date	34,747		34,747
G&A Realignment – May 2017 Plan | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	100		100
Restructuring and Related Cost, Incurred Cost	2,130	1,052	2,602	3,111
Restructuring and Related Cost, Cost Incurred to Date	21,355		21,355
G&A Realignment – May 2017 Plan | Recruitment and relocation costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	1,000		1,000
Restructuring and Related Cost, Incurred Cost	482	360	596	508
Restructuring and Related Cost, Cost Incurred to Date	2,162		2,162
G&A Realignment – May 2017 Plan | Third-party and other costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	100		100
Restructuring and Related Cost, Incurred Cost	71	604	87	932
Restructuring and Related Cost, Cost Incurred to Date	2,197		2,197
G&A Realignment – May 2017 Plan | Share based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost Remaining	500		500
Restructuring and Related Cost, Incurred Cost	834	1,104	1,014	1,195
Restructuring and Related Cost, Cost Incurred to Date	7,698		7,698
G&A Realignment – May 2017 Plan | Termination of defined benefit plans
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	$ 0	0	$ 0
Restructuring and Related Cost, Cost Incurred to Date	1,335		1,335
G&A Realignment – May 2017 Plan | Minimum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost	35,000		35,000
G&A Realignment – May 2017 Plan | Maximum
Restructuring Cost and Reserve
Restructuring and Related Cost, Expected Cost	$ 38,000		$ 38,000

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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		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Restructuring Cost and Reserve
Beginning balance			$ 7,324	$ 12,270
Charges	$ 2,683	$ 2,016	3,285	4,551
Payments for Restructuring			(5,167)	(6,729)
Ending balance	5,442	10,092	5,442	10,092
Severance and related employee costs
Restructuring Cost and Reserve
Beginning balance			7,241	12,093
Charges	2,130	1,052	2,602	3,111
Payments for Restructuring			(4,724)	(5,326)
Ending balance	5,119	9,878	5,119	9,878
Recruitment and relocation
Restructuring Cost and Reserve
Beginning balance			83	177
Charges	482	360	596	508
Payments for Restructuring			(356)	(471)
Ending balance	323	214	323	214
Other Restructuring
Restructuring Cost and Reserve
Beginning balance			0	0
Charges	71	604	87	932
Payments for Restructuring			(87)	(932)
Ending balance	0	0	0	0
Accrued expenses and other current liabilities
Restructuring Cost and Reserve
Ending balance	4,835	7,985	4,835	7,985
Other Liabilities
Restructuring Cost and Reserve
Ending balance	$ 607	$ 2,107	$ 607	$ 2,107

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Reorganization and Realignment Costs System Optimization Costs (Details) - System Optimization $ in Thousands	Jun. 30, 2019 USD ($)
Restructuring Cost and Reserve
Restructuring and Related Cost, Cost Incurred to Date	$ 72,261
Restructuring and Related Cost, Expected Cost Remaining	$ 500

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Investments Equity Investment Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Schedule of Equity Method Investments
Investment			$ 0	$ 13
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other	$ 3,835	$ (4,325)	$ 9,860	$ (10,369)
TimWen
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	50.00%		50.00%
Equity Method Investment, Purchase Price Adjustment, Amortization Period			21 years	21 years
Brazil JV
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	20.00%		20.00%
TimWen and Brazil JV
Schedule of Equity Method Investments
Balance at beginning of period			$ 47,021	$ 55,363
Investment			0	13
Equity in earnings for the period			6,048	4,827
Amortization of Purchase Price Adjustment			(1,129)	(1,179)
Equity in earnings for the period, net of amortization of purchase price adjustments			4,919	3,648
Distributions received			(7,018)	(5,756)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other			2,359	(1,763)
Balance at end of period	$ 47,281	$ 51,505	$ 47,281	$ 51,505

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Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018	Jun. 26, 2019	Dec. 30, 2018
Debt Instrument
Unamortized debt issuance costs	$ (36,061)		$ (36,061)			$ (32,217)
Total debt	2,297,717		2,297,717			2,328,802
Less amounts payable within one year	(22,750)		(22,750)			(23,250)
Total long-term debt	2,274,967		2,274,967			2,305,552
Loss on Extinguishment of Debt	7,150	$ 0	7,150	$ 11,475
Series 2019-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 400,000		$ 400,000		$ 400,000	0
Debt Instrument, Interest Rate, Stated Percentage	3.783%		3.783%
Additional Interest Rate On Debt, After Anticipated Repayment Date					1.863%
Series 2019-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 450,000		$ 450,000		$ 450,000	0
Debt Instrument, Interest Rate, Stated Percentage	4.08%		4.08%
Additional Interest Rate On Debt, After Anticipated Repayment Date					2.051%
Series 2018-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 443,250		$ 443,250			445,500
Debt Instrument, Interest Rate, Stated Percentage	3.573%		3.573%
Series 2018-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 467,875		$ 467,875			470,250
Debt Instrument, Interest Rate, Stated Percentage	3.884%		3.884%
Series 2015-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 0		$ 0			870,750
Debt Instrument, Interest Rate, Stated Percentage	4.08%		4.08%
Series 2015-1 Class A-2-III Notes
Debt Instrument
Senior Notes	$ 481,250		$ 481,250			483,750
Debt Instrument, Interest Rate, Stated Percentage	4.497%		4.497%
7% Debentures
Debt Instrument
7% debentures, due in 2025	$ 91,403		$ 91,403			$ 90,769
Series 2019-1 Class A-2 Notes
Debt Instrument
Additional Interest Rate On Debt, After Anticipated Repayment Date					5.00%
Additional Term on Debt, After Anticipated Repayment Date			10 years
Long-term Debt, Maturities, Repayments of Principal Annually through 2019					$ 4,250
Long-term Debt, Maturities, Repayments of Principal Annually from 2020 through 2025					8,500
Long-term Debt, Maturities, Repayments of Principal Annually in 2026					378,500
Long-term Debt, Maturities, Repayments of Principal Annually from 2027 through 2028					4,500
Long-term Debt, Maturities, Repayments of Principal Annually in 2029					407,250
Series 2019-1 Class A-1 Notes | Line of Credit
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity					150,000
Line of Credit, Current	0		$ 0
Series 2018-1 Class A-1 Notes | Line of Credit
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity					$ 150,000
Series 2019-1 Senior Notes
Debt Instrument
Debt Issuance Costs, Gross	14,008		14,008
Wendy's U.S. Advertising Fund
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity	$ 25,000		25,000
Proceeds from Lines of Credit			0	5,809
Repayments of Lines of Credit			$ 0	$ 7,096

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Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 30, 2018
Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	$ 221,818	$ 222,228
Other investments in equity securities	639	639
Guarantees of franchisee loan obligations	9	17
Reported Value Measurement | Series 2019-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	400,000	0
Reported Value Measurement | Series 2019-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	450,000	0
Reported Value Measurement | Series 2018-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	443,250	445,500
Reported Value Measurement | Series 2018-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	467,875	470,250
Reported Value Measurement | Series 2015-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	0	870,750
Reported Value Measurement | Series 2015-1 Class A-2-III Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	481,250	483,750
Reported Value Measurement | 7% Debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	91,403	90,769
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	221,818	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	1,945	2,181
Guarantees of franchisee loan obligations	9	17
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-I Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	402,704	0
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	453,146	0
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	446,747	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	469,756	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	0	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	500,519	482,522
Estimate of Fair Value Measurement | 7% Debentures | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	$ 105,750	$ 102,750

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Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 30, 2018
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and Used, Long Lived, Fair Value Disclosure	$ 2,112	$ 462
Assets Held-for-sale, Long Lived, Fair Value Disclosure	1,215	1,031
Total	3,327	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	2,112	462
Assets Held-for-sale, Long Lived, Fair Value Disclosure	1,215	1,031
Total	$ 3,327	$ 1,493

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Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	$ 198	$ 1,603	$ 1,684	$ 1,809
Surplus properties
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	112	0	1,397	41
Company-operated restaurants
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	86	1,603	287	1,603
Restaurants leased or subleased to franchisees
Impaired Long-Lived Assets Held and Used
Impairment of long-lived assets	$ 0	$ 0	$ 0	$ 165

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018	Dec. 30, 2018
Effective Income Tax Rate	29.20%	29.30%	24.90%	11.60%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%	21.00%	21.00%
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options	$ 889	$ 798	$ 2,925	$ 6,891
(Provision for) benefit from income taxes	(13,353)	$ (12,388)	(21,343)	(6,582)
Decrease in Unrecognized Tax Benefits is Reasonably Possible	7,760		7,760
Income Taxes Receivable	7,572		7,572		$ 14,475
Income Taxes Receivable, Noncurrent	$ 0		$ 0		$ 0
Tax Act
(Provision for) benefit from income taxes				2,795
Effective Income Tax Rate Reconciliation, Tax Credit, Foreign, Amount				4,750
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		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Common Stock:
Weighted average basic shares outstanding	231,029	238,991	230,807	239,459
Dilutive effect of stock options and restricted shares	5,064	7,161	5,186	7,826
Weighted average diluted shares outstanding	236,093	246,152	235,993	247,285
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,049	27	2,104	1,369

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Stockholders' Equity Dividends (Details) - $ / shares	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jul. 01, 2018	Apr. 01, 2018
Dividend Paid
Common Stock, Dividends, Per Share, Cash Paid	$ 0.10	$ 0.10	$ 0.085	$ 0.085

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Stockholders' Equity Repurchases of Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands	1 Months Ended	6 Months Ended
	Jul. 31, 2019	Jun. 30, 2019	Jul. 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	521
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions	$ 9,980
Stock Repurchase Program, Cost Incurred	$ 7
February 2019 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount				$ 225,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 196,736
November 2018 and February 2019 Share Repurchase Programs
Equity, Class of Treasury Stock
Treasury Stock, Shares, Acquired		2,824
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions		$ 49,721
Stock Repurchase Program, Repurchase Accrual		807
Stock Repurchase Program, Cost Incurred		$ 40
February 2018 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount						$ 175,000
Treasury Stock, Shares, Acquired			3,675
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions			$ 62,490
Stock Repurchase Program, Repurchase Accrual			2,146
Stock Repurchase Program, Cost Incurred			$ 52
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				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jul. 01, 2018	Apr. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Accumulated Other Comprehensive Loss, Net of Tax
Balance, beginning of year		$ (61,673)		$ (46,198)	$ (61,673)	$ (46,198)
Current-period other comprehensive income (loss)	$ 3,835	6,025	$ (4,325)	(5,927)	9,860	(10,252)
Balance, end of the period	(51,813)		(56,450)		(51,813)	(56,450)
Foreign Currency Translation
Accumulated Other Comprehensive Loss, Net of Tax
Balance, beginning of year		(61,673)		(45,149)	(61,673)	(45,149)
Current-period other comprehensive income (loss)					9,860	(10,369)
Balance, end of the period	(51,813)		(55,518)		(51,813)	(55,518)
Pension
Accumulated Other Comprehensive Loss, Net of Tax
Balance, beginning of year		$ 0		$ (1,049)	0	(1,049)
Current-period other comprehensive income (loss)					0	117
Balance, end of the period	$ 0		$ (932)		$ 0	$ (932)

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Leases Lessee Lease Narrative (Details)	Jun. 30, 2019 number_of_restaurants
Lessee, Lease, Description
Number of restaurants	6,719
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)	Jun. 30, 2019 number_of_restaurants
Lessor, Lease, Description
Number of restaurants	6,719
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	1,264

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Leases Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Lease, Cost [Abstract]
Operating lease cost	$ 19,086	$ 43,729
Variable lease cost	15,371	29,475
Short-term lease cost	1,153	2,279
Total operating lease cost	35,610	75,483
Finance Lease, Cost
Amortization of finance lease assets	1,631	4,748
Interest on finance lease liabilities	9,939	16,692
Total finance lease cost	11,570	21,440
Total lease cost	47,180	96,923
Franchise rental expense
Lease, Cost [Abstract]
Franchise rental expense	28,022	60,473
Cost of sales
Lease, Cost [Abstract]
Total operating lease cost	7,007	13,600
Executory costs paid by lessee
Lease, Cost [Abstract]
Variable lease cost	$ 9,779	$ 19,303

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Leases Supplemental Cash Flow and Non-cash Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018
Cash Flow, Operating Activities, Lessee
Operating cash flows from finance leases	$ 19,567
Operating cash flows from operating leases	46,425
Cash Flow, Financing Activities, Lessee
Financing cash flows from finance leases	3,521	$ 2,784
Lessee, Lease, Description
Right-of-use assets obtained in exchange for finance lease liabilities	23,534	$ 1,904
Right-of-use asset obtained in exchange for operating lease liabilities	$ 5,677

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Leases Supplemental Information (Details)	Jun. 30, 2019
Lessee, Lease, Description
Weighted-average remaining lease term (years): Finance leases	17 years 6 months
Weighted-average remaining lease term (years): Operating leases	15 years 8 months 12 days
Weighted-average discount rate: Finance leases	10.11%
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	Jun. 30, 2019	Dec. 30, 2018
Entity Operated Units
Finance Lease Liabilities, Payments, Due
Future minimum finance lease payments, remainder of fiscal year	$ 1,338
Future minimum finance lease payments, due next twelve months		$ 1,962
Future minimum finance lease payments, due year two	2,697	1,978
Future minimum finance lease payments, due year three	2,808	2,082
Future minimum finance lease payments, due year four	2,858	2,114
Future minimum finance lease payments, due year five	2,810	2,084
Future minimum finance lease payments, due after year five	37,034	23,558
Total minimum finance lease payments	49,545	33,778
Interest incurred on total minimum finance lease payments	(23,169)	(16,874)
Present value of minimum finance lease payments	26,376	16,904
Operating Lease Liabilities, Payments Due
Future minimum operating lease payments, remainder of fiscal year	10,072
Future minimum operating lease payments, due next twelve months		20,174
Future minimum operating lease payments, due year two	19,921	20,052
Future minimum operating lease payments, due year three	19,733	19,820
Future minimum operating lease payments, due year four	19,421	19,530
Future minimum operating lease payments, due year five	19,400	19,430
Future minimum operating lease payments, due after year five	201,762	203,073
Total minimum operating lease payments	290,309	302,079
Interest incurred on total minimum operating lease payments	(91,101)
Present value of minimum operating lease payments	199,208
Franchised Units
Finance Lease Liabilities, Payments, Due
Future minimum finance lease payments, remainder of fiscal year	23,714
Future minimum finance lease payments, due next twelve months		45,125
Future minimum finance lease payments, due year two	44,918	43,969
Future minimum finance lease payments, due year three	46,315	45,522
Future minimum finance lease payments, due year four	47,322	46,573
Future minimum finance lease payments, due year five	48,988	48,109
Future minimum finance lease payments, due after year five	695,753	676,139
Total minimum finance lease payments	907,010	905,437
Interest incurred on total minimum finance lease payments	(458,243)	(466,705)
Present value of minimum finance lease payments	448,767	438,732
Operating Lease Liabilities, Payments Due
Future minimum operating lease payments, remainder of fiscal year	35,660
Future minimum operating lease payments, due next twelve months		75,703
Future minimum operating lease payments, due year two	71,537	73,320
Future minimum operating lease payments, due year three	71,433	73,167
Future minimum operating lease payments, due year four	71,604	73,300
Future minimum operating lease payments, due year five	71,571	73,377
Future minimum operating lease payments, due after year five	836,750	854,964
Total minimum operating lease payments	1,158,555	1,223,831
Interest incurred on total minimum operating lease payments	(383,409)
Present value of minimum operating lease payments	775,146
Current portion of finance lease liabilities
Finance Lease Liabilities, Payments, Due
Present value of minimum finance lease payments	9,917	8,405
Long-term finance lease liabilities
Finance Lease Liabilities, Payments, Due
Present value of minimum finance lease payments	465,226	$ 447,231
Current portion of operating lease liabilities
Operating Lease Liabilities, Payments Due
Present value of minimum operating lease payments	43,321
Long-term operating lease liabilities
Operating Lease Liabilities, Payments Due
Present value of minimum operating lease payments	$ 931,033

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Leases Components of Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018	Jun. 30, 2019	Jul. 01, 2018
Lessor Lease Income
Sales-type and direct-financing leases, selling profit	$ 37		$ 1,971
Sales-type and direct-financing leases, interest income	7,072		11,805
Operating lease rental income	43,959		89,164
Variable lease income	14,602		27,849
Franchise rental income	58,561	$ 51,529	117,013	$ 101,636
Sublease income	42,921		85,942
Executory costs paid to lessor
Lessor Lease Income
Variable lease income	$ 9,779		$ 19,211

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Leases Future Minimum Rental Receipts for Non-cancelable Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 30, 2018
Direct Financing Lease, Net Investment in Leases
Net investment in unguaranteed residual assets	$ 237
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	13,661
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	27,872	26,859
Future minimum sales-type and direct financing lease receipts, due year three	28,910	27,904
Future minimum sales-type and direct financing lease receipts, due year four	29,548	28,563
Future minimum sales-type and direct financing lease receipts, due year five	30,587	29,512
Future minimum sales-type and direct financing lease receipts, due after year five	473,264	448,851
Total future minimum sales-type and direct financing lease receipts	603,842	587,928
Unearned interest on total minimum sales-type and direct financing lease receipts	(377,235)	(377,046)
Present value of minimum sales-type and direct financing lease receipts	226,607	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	1,028
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	28,037	26,404
Total future minimum sales-type and direct financing lease receipts	37,887	36,668
Unearned interest on total minimum sales-type and direct financing lease receipts	(20,405)	(20,338)
Present value of minimum sales-type and direct financing lease receipts	17,482	16,330
Subleases, operating
Lessor, Operating Lease, Payments, Fiscal Year Maturity
Future minimum operating lease receipts, remainder of fiscal year	55,839
Future minimum operating lease receipts, next twelve months		113,180
Future minimum operating lease receipts, due year two	112,551	113,578
Future minimum operating lease receipts, due year three	113,162	114,447
Future minimum operating lease receipts, due year four	114,269	115,552
Future minimum operating lease receipts, due year five	115,190	116,463
Future minimum operating lease receipts, due after year five	1,355,212	1,372,646
Total future minimum operating lease receipts	1,866,223	1,945,866
Owned properties, operating
Lessor, Operating Lease, Payments, Fiscal Year Maturity
Future minimum operating lease receipts, remainder of fiscal year	26,240
Future minimum operating lease receipts, next twelve months		52,527
Future minimum operating lease receipts, due year two	52,872	53,066
Future minimum operating lease receipts, due year three	54,661	54,615
Future minimum operating lease receipts, due year four	56,134	56,092
Future minimum operating lease receipts, due year five	56,339	56,284
Future minimum operating lease receipts, due after year five	861,139	858,755
Total future minimum operating lease receipts	1,107,385	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	2,505	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	$ 241,584	$ 226,477

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Leases Properties Leased to Third Parties (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 30, 2018
Property, Plant and Equipment
Properties	$ 992,302	$ 1,023,267
Assets Leased to Others
Property, Plant and Equipment
Land	281,650
Buildings and improvements	311,104
Restaurant equipment	2,251
Property, plant and equipment leased to others, gross	595,005
Accumulated depreciation and amortization	(149,931)
Properties	$ 445,074

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Transactions with Related Parties (Details) - TimWen - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jul. 01, 2018
Related Party Transaction
TimWen lease expense	$ 8,140	$ 6,504
General and administrative
Related Party Transaction
Related Party Transaction, Other Revenues from Transactions with Related Party	$ 103	$ 108

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Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Property Lease Guarantee
Guarantor Obligations
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 68,953

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Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Guarantor Obligations
Letters of Credit Outstanding, Amount	$ 25,086

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Guarantees and Other Commitments and Contingencies Beverage Agreements (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Long-term Purchase Commitment
Purchase Obligation, Purchases During Period	$ 5,481
Purchase Obligation, Remainder of Fiscal Year	5,400
Purchase Obligation, Due in Second Year	11,600
Purchase Obligation, Due in Third Year	12,100
Purchase Obligation, Due in Fourth Year	13,000
Purchase Obligation, Due in Fifth Year	$ 13,700

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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	$ 28,636,000