Segment Information (Notes)

12 Months Ended

Jan. 01, 2023

Segment Reporting [Abstract]

Segment Information

Segment InformationThe Company is comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Wendy’s International includes the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our TimWen real estate joint venture. In addition, Global Real Estate & Development earns fees from facilitating Franchise Flips and providing other development-related services to franchisees. The Company measures segment profit using segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”). Segment adjusted EBITDA excludes certain unallocated general and administrative expenses and other items that vary from period to period without correlation to the Company’s core operating performance. When the Company’s chief operating decision maker reviews balance sheet information, it is at a consolidated level. The accounting policies of the Company’s segments are the same as those described in Note 1.

Revenues by segment are as follows:

	Year Ended
	2022		2021		2020
Wendy’s U.S.	$	1,750,242	$	1,567,496	$	1,431,382
Wendy’s International	106,705		86,369		65,642
Global Real Estate & Development	238,558		243,133		236,801
Total revenues	$	2,095,505	$	1,896,998	$	1,733,825

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

	Year Ended
	2022		2021		2020
Wendy’s U.S. (a)	$	480,498	$	450,117	$	393,314
Wendy’s International (b)	30,432		27,386		20,119
Global Real Estate & Development	108,700		106,113		100,731
Total segment profit	619,630		583,616		514,164
Unallocated franchise support and other costs	(742)		(753)		—
Advertising funds (deficit) surplus	(8,325)		2,770		2,904
Unallocated general and administrative (c)	(130,103)		(116,273)		(94,256)
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below)	(133,414)		(125,540)		(132,775)
Amortization of cloud computing arrangements	(2,394)		—		—
System optimization gains, net	6,779		33,545		3,148
Reorganization and realignment costs	(698)		(8,548)		(16,030)
Impairment of long-lived assets	(6,420)		(2,251)		(8,037)
Unallocated other operating income, net	9,001		394		190
Interest expense, net	(122,319)		(109,185)		(117,737)
Loss on early extinguishment of debt	—		(17,917)		—
Investment income (loss), net	2,107		39		(225)
Other income, net	10,403		681		1,449
Income before income taxes	$	243,505	$	240,578	$	152,795

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(a)Wendy’s U.S. includes advertising funds expense of $11,000, $25,000 and $14,600 for 2022, 2021 and 2020, respectively, related to the Company funding of incremental advertising.

(b)Wendy’s International includes advertising fund expense of $4,116 for 2022 related to the Company’s funding of incremental advertising. In addition, Wendy’s International includes other international-related advertising deficit of $1,099 for 2022.

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

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

	Year Ended
	2022		2021		2020
Wendy’s International	$	—	$	—	$	(417)
Global Real Estate & Development	9,422		11,203		6,513
Total net income of equity method investments	$	9,422	$	11,203	$	6,096