Wendy's 2010 Annual Report Download - page 16

The following table sets forth the number of Arby’s restaurants at the beginning and end of each year from
2008 to 2010:
2010 2009 2008
Restaurants open at beginning of period ..................... 3,718 3,756 3,688
Restaurants opened during period .......................... 44 59 127
Restaurants closed during period ........................... (113) (97) (59)
Restaurants open at end of period .......................... 3,649 3,718 3,756
During the period from December 31, 2007, through January 2, 2011, 230 Arby’s restaurants were opened and
269 generally underperforming Arby’s restaurants were closed.
Operations
In addition to various slow-roasted roast beef sandwiches, Arby’s offers an extensive menu of chicken, turkey
and ham sandwiches, snack items and salads, including its Market Fresh®line of premium sandwiches and fresh
salads made with premium ingredients, and Toasted Subs. In 2010, Arby’s implemented its everyday value menu. In
addition, the restaurants sell a variety of promotional products on a limited basis.
Free-standing Arby’s restaurants generally include a pick-up window in addition to a dining room. The
percentage of sales at company-owned Arby’s restaurants through the pick-up window was 58.2%, 57.2%, and 57.7%
in 2010, 2009, and 2008 respectively.
Generally, Arby’s does not sell food or supplies to Arby’s franchisees.
Raw Materials and Purchasing
As of January 2, 2011, 3 independent meat processors (5 total production facilities) supplied all of Arby’s beef
for roasting in the United States. Franchise operators are required to obtain beef for roasting from these approved
suppliers.
Arby’s and its franchisees have not experienced any material shortages of food, equipment, fixtures or other
products that are necessary to maintain restaurant operations. Arby’s anticipates no such shortages of products and
believes that alternate suppliers are available.
ARCOP negotiates contracts with approved suppliers on behalf of Arby’s and Arby’s franchisees. Suppliers to
the Arby’s system must comply with USDA and FDA regulations governing the manufacture, packaging, storage,
distribution and sale of all food and packaging products. Generally, franchisees may obtain other products, including
food, ingredients, paper goods, equipment and signs, from any source that meets Arby’s specifications and
approval. Through ARCOP, Arby’s and Arby’s franchisees purchase food, beverage, proprietary paper and operating
supplies under national contracts with pricing based upon total system volume.
During the 2010 second quarter, ARCOP and QSCC, in consultation with Wendy’s/Arby’s Restaurants,
established the SSG. SSG was formed to manage and operate purchasing programs which combine the purchasing
power of both Wendy’s and Arby’s company-owned and franchised restaurants to create buying efficiencies for certain
non-perishable goods, equipment and services.
In order to facilitate the orderly transition of this purchasing function for the Companies’ North America
operations, Wendy’s/Arby’s Restaurants transferred certain contracts, assets and certain Wendy’s/Arby’s Restaurants
purchasing employees to SSG in the second quarter of 2010. Wendy’s/Arby’s Restaurants had committed to pay
approximately $5.2 million of SSG expenses, which was expensed in 2010 and was to be paid over a 24 month period
through March 2012. We paid payments of $2.0 million in 2010.
Should a sale of Arby’s occur as discussed in “The Arby’s Restaurant System” herein, under the change of
control provisions in the agreement that established SSG, the activities of the SSG would be wound up. In the wind
up process, the assets, personnel and functions of SSG would be transferred to QSCC and ARCOP as such parties
and Wendy’s/Arby’s Restaurants agree. In contemplation of a possible sale, the parties are in discussion regarding the
dissolution of SSG and transferring SSG’s assets, personnel and functions to QSCC and ARCOP.
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