Wendy's 2008 Annual Report Download - page 12

Overview
Wendy’s is primarily engaged in the business of operating, developing and franchising a system of
distinctive quick-service restaurants serving high quality food. At December 28, 2008, there were 6,630
Wendy’s restaurants in operation in the United States and in 21 foreign countries and U.S. territories. Of these
restaurants, 1,406 were operated by Wendy’s and 5,224 by a total of 469 franchisees. See “Item 2. Properties”
for a listing of the number of Company-owned and franchised locations in the United States and in foreign
countries and U.S. territories.
The revenues from our restaurant business are derived from four principal sources: (1) sales at company-
owned restaurants; (2) sales of bakery items and kid’s meal promotional items to franchisees (3) franchise
royalties received from all Wendy’s franchised restaurants; and (4) up-front franchise fees from restaurant
operators for each new unit opened
Wendy’s Restaurants
During 2008, Wendy’s opened 15 new restaurants and closed 16 generally underperforming restaurants.
In addition, Wendy’s disposed of 7 existing restaurants to its franchisees. During 2008, Wendy’s franchisees
opened 82 new restaurants and closed 96 generally underperforming restaurants. You should read the
information contained in “Item 1A. Risk Factors—Our restaurant business is significantly dependent on new
restaurant openings, which may be affected by factors beyond our control.”
The following table sets forth the number of Wendy’s restaurants at the beginning and end of each year
from 2006 to 2008:
2008 2007 2006
Restaurants open at beginning of period...................... 6,645 6,673 6,746
Restaurants opened during period............................ 97 92 122
Restaurants closed during period. ............................ (112) (120) (195)
Restaurants open at end of period ........................... 6,630 6,645 6,673
During the period from January 2, 2006, through December 28, 2008, 311 Wendy’s restaurants were
opened and 427 generally underperforming Wendy’s restaurants were closed.
Operations
Each Wendy’s restaurant offers a relatively standard menu featuring hamburgers and filet of chicken
breast sandwiches and wraps, which are prepared to order with the customer’s choice of condiments. Wendy’s
menu also includes chicken nuggets, chili, baked and French fried potatoes, freshly prepared salads, soft drinks,
milk, Frostydesserts, floats and kids meals. In addition, the restaurants sell a variety of promotional
products on a limited basis.
Wendy’s strives to maintain quality and uniformity throughout all restaurants by publishing detailed
specifications for food products, preparation and service, by continual in-service training of employees,
restaurant reviews and by field visits from Wendy’s supervisors. In the case of franchisees, field visits are made
by Wendy’s personnel who review operations, including quality, service and cleanliness and make
recommendations to assist in compliance with Wendy’s specifications.
Generally, Wendy’s does not sell food or supplies, other than sandwich buns and kids’ meal toys, to its
franchisees. However, Wendy’s has arranged for volume purchases of many food and supply products. Under
the purchasing arrangements, independent distributors purchase certain products directly from approved
suppliers and then store and sell them to local company and franchised restaurants. These programs help assure
availability of products and provide quantity discounts, quality control and efficient distribution. These
advantages are available both to Wendy’s and to its franchisees.
The New Bakery Co. of Ohio, Inc. (“Bakery”), a wholly-owned subsidiary of Wendy’s, is a producer of
buns for some Wendy’s restaurants, and to a lesser extent for outside parties. At December 28, 2008, the
Bakery supplied 666 restaurants operated by Wendy’s and 2,377 restaurants operated by franchisees. The
Bakery also manufactures and sells some products to customers in the grocery and food service businesses.
See Note 30 of the Financial Statements and Supplementary Data included in Item 8 herein, for financial
information attributable to certain geographical areas.
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