System Optimization Gains, Net

3 Months Ended

Mar. 31, 2024

System Optimization

System optimization gains, net

System Optimization Gains, Net

System Optimization Losses (Gains), Net

The Company’s system optimization initiative included 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 March 31, 2024, Company-operated restaurant ownership was approximately 5% of the total system. While the Company has no plans to move its ownership away from approximately 5% of the total system, 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 three months ended March 31, 2024, the Company facilitated 11 Franchise Flips. During the three months ended April 2, 2023, the Company did not facilitate any Franchise Flips. No Company-operated restaurants were sold to or purchased from franchisees during the three months ended March 31, 2024 or April 2, 2023.

Gains and losses recognized on dispositions are recorded to “System optimization losses (gains), 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 4. All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

As part of our system optimization initiative, the Company recorded a (loss) gain on sales of surplus and other properties of $(127) and $5 during the three months ended March 31, 2024 and April 2, 2023, respectively. The Company received net cash proceeds from the sales of $26 and $287 during the three months ended March 31, 2024 and April 2, 2023, respectively.

Assets Held for Sale

As of March 31, 2024 and December 31, 2023, the Company had assets held for sale of $2,678 and $2,689, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”