Wendy's 2013 Annual Report Download - page 15

If company-owned and franchised restaurants are unable to adapt to changes in consumer preferences and
trends, company-owned and franchised restaurants may lose customers and the resulting revenues from
company-owned restaurants and the royalties that we receive from franchisees may decline.
The disruptions in the national and global economies may adversely impact our revenues, results of operations,
business and financial condition.
The disruptions in the national and global economies have resulted in high unemployment rates and declines in
consumer confidence and spending. If such conditions persist, they may result in significant declines in consumer
food-away-from-home spending and customer traffic in our restaurants and those of our franchisees. There can be no
assurance that government responses to the disruptions will restore consumer confidence. Ongoing disruptions in the
national and global economies may adversely impact our revenues, results of operations, business and financial
condition.
Changes in commodity costs (including beef, chicken and corn), supply, fuel, utilities, distribution and other
operating costs could harm results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in commodity costs
(including beef, chicken and corn), supply, fuel, utilities, distribution and other operating costs. Any increase in these
costs, especially beef or chicken prices, could harm operating results. In addition, our brand is susceptible to increases
in these costs as a result of other factors beyond its control, such as weather conditions, global demand, food safety
concerns, product recalls and government regulations. Additionally, prices for feed ingredients used to produce beef
and chicken could be adversely affected by changes in global weather patterns, which are inherently unpredictable,
and by federal ethanol policy. Increases in gasoline prices would result in the imposition of fuel surcharges by our
distributors, which would increase our costs. Significant increases in gasoline prices could also result in a decrease in
customer traffic at our restaurants, which could adversely affect our business. We cannot predict whether we will be
able to anticipate and react to changing food costs by adjusting our purchasing practices and menu prices, and a
failure to do so could adversely affect our operating results. In addition, we may not seek to or be able to pass along
price increases to our customers.
Shortages or interruptions in the supply or delivery of perishable food products could damage the Wendy’s brand
reputation and adversely affect our operating results.
Wendy’s and its franchisees are dependent on frequent deliveries of perishable food products that meet brand
specifications. Shortages or interruptions in the supply of perishable food products caused by unanticipated demand,
problems in production or distribution, disease or food-borne illnesses, inclement weather or other conditions could
adversely affect the availability, quality and cost of ingredients, which could lower our revenues, increase operating
costs, damage brand reputation and otherwise harm our business and the businesses of our franchisees.
Food safety events, including instances of food-borne illness (such as salmonella or E. Coli) involving Wendy’s or
its supply chain, could create negative publicity and adversely affect sales and operating results.
Food safety is a top priority, and we dedicate substantial resources to ensure that our customers enjoy safe,
quality food products. However, food safety events, including instances of food-borne illness (such as salmonella or
E. Coli), have occurred in the food industry in the past, and could occur in the future.
Food safety events could adversely affect the price and availability of beef, poultry or other meats. As a result,
Wendy’s restaurants could experience a significant increase in food costs if there are food safety events whether or not
such events involve Wendy’s restaurants or restaurants of competitors.
In addition, food safety events, whether or not involving Wendy’s, could result in negative publicity for
Wendy’s or for the industry or market segments in which we operate. Increased use of social media could create
and/or amplify the effects of negative publicity. This negative publicity, as well as any other negative publicity
concerning types of food products Wendy’s serves, may reduce demand for Wendy’s food and could result in a
decrease in guest traffic to our restaurants as consumers shift their preferences to our competitors or to other products
or food types. A decrease in guest traffic to our restaurants as a result of these health concerns or negative publicity
could result in a decline in sales and operating results at company-owned restaurants or in royalties from sales at
franchised restaurants.
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