Wendy's 2009 Annual Report Download - page 49

“California Restaurant Acquisition”). The California Restaurants generated approximately $36.0 million of
sales in 2008.
In 2009 and 2008 Arby’s North America Company-owned same-store sales were impacted by the
restaurant industry trends, negative general economic trends and competitive pressures described in
“Introduction and Executive Overview—Our Business.” In addition, the 2009 Arby’s same-store sales were
negatively impacted by a decrease in the number of national advertising campaigns; however, certain aggressive
Arby’s value promotions partially mitigated this negative impact.
Franchise Revenues
2009 2008
Change
(In Millions)
Wendy’s ......................................... $228.2 $74.6
Arby’s ........................................... (6.2) (1.1)
$222.0 $73.5
The increase in franchise revenues in both 2009 and 2008 was primarily due to the Wendy’s Merger.
Wendy’s franchised restaurant sales were not significantly impacted by changes in the number of restaurants
serving breakfast in 2009. Wendy’s franchised restaurant closings include 71 restaurants in Japan which closed
at the expiration of the franchise agreement on December 31, 2009. Franchise revenues for the 53rd week in
2009 for Wendy’s and Arby’s were approximately $4.8 million and $1.3 million, respectively. The decrease in
Arby’s franchise revenues in 2009 was primarily attributable to the 9.0% decrease in same-store sales for North
America franchised restaurants. The 2008 decrease was primarily attributable to the effect of the January 2008
acquisition of the California Restaurants whereby previously franchised restaurants became Company-owned
and the 3.6% decrease in same-store sales for Arby’s franchised restaurants.
In 2009 and 2008, same-store sales of our Arby’s franchised restaurants were negatively impacted by the
same industry and economic factors mentioned above. In addition, in 2009, the franchised restaurants were
disproportionately negatively affected by less national media advertising as certain underpenetrated franchise
markets did not have sufficient local media advertising to offset the decrease in national advertising. In 2008,
however, the use of incremental national media advertising had a positive effect on the Arby’s franchised
restaurants which slightly offset the negative impact of the industry and economic factors discussed above.
Asset Management and Related Fees
As a result of the Deerfield Sale on December 21, 2007, there were no asset management and related fees
in 2009 or 2008. Our asset management and related fees in 2007 were generated entirely from the
management of CDOs and Funds by Deerfield.
Restaurant Margin
Amount Change Amount Change Amount
2009 2008 2007
Wendy’s................................ 14.9% N/A 11.7%(a) N/A N/A
Arby’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9% (2.2)ppt 16.1% (3.6)ppt 19.7%
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6% (0.2)ppt 14.7% (5.0)ppt 19.7%
(a) The 2008 Wendy’s restaurant margin includes only the 2008 fourth quarter.
The percentage increase in the Wendy’s restaurant margin in 2009 as compared to the fourth quarter of
2008 was primarily attributable to improvements in labor and certain controllable costs, partially due to
ongoing operational improvements and the effect of price increases in 2009. The percentage decrease in the
Arby’s restaurant margin in 2009 as compared to 2008 was primarily attributable to the effect of the decrease
in Arby’s same-store sales without comparable reductions in fixed and semi-variable costs and the targeted
product discounting of a number of Arby’s menu items which was partially offset by decreases in commodity
costs. The impact of the 53rd week in 2009 on restaurant margin was not material for either brand.
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