Wendy's 2015 Annual Report Download - page 14

As President, Mr. Penegor will maintain his current responsibilities for finance, restaurant development,
information technology and international, and will assume responsibility for operations, which will continue to be led
by Executive Vice President and Chief Operations Officer Robert D. Wright.
We believe that over time our success has been dependent to a significant extent upon the efforts and abilities of
our senior management team. The failure by us to retain members of our senior management team in the future could
adversely affect our ability to build on the efforts we have undertaken to increase the efficiency and profitability of our
business.
Competition from other restaurant companies, or poor customer experience at Wendy’s restaurants, could hurt
our brand.
The market segments in which company-owned and franchised Wendy’s restaurants compete are highly
competitive with respect to, among other things, price, food quality and presentation, service, location, convenience,
and the nature and condition of the restaurant facility. If customers have a poor experience at a Wendy’s restaurant,
whether at a company-owned or franchised restaurant, we may experience a decrease in guest traffic. Further,
Wendy’s restaurants compete with a variety of locally-owned restaurants, as well as competitive regional and national
chains and franchises. Several of these chains compete by offering menu items that are targeted at certain consumer
groups or dietary trends. Additionally, many of our competitors have introduced lower cost, value meal menu options.
Our revenues and those of our franchisees may be hurt by this product and price competition.
Moreover, new companies, including operators outside the quick-service restaurant industry, may enter our
market areas and target our customer base. For example, additional competitive pressures for prepared food purchases
have come from deli sections and in-store cafes of a number of major grocery store chains, as well as from convenience
stores and casual dining outlets. Such competitors may have, among other things, lower operating costs, better
locations, better facilities, better management, better products, more effective marketing and more efficient
operations. Many of our competitors have substantially greater financial, marketing, personnel and other resources
than we do, which may allow them to react to changes in pricing and marketing strategies in the quick-service
restaurant industry better than we can. Many of our competitors spend significantly more on advertising and
marketing than we do, which may give them a competitive advantage through higher levels of brand awareness among
consumers. All such competition may adversely affect our revenues and profits by reducing revenues of
company-owned restaurants and royalty revenue from franchised restaurants.
Changes in consumer tastes and preferences, and in discretionary consumer spending, could result in a decline in
sales at company-owned restaurants and in the royalties that we receive from franchisees.
The quick-service restaurant industry is often affected by changes in consumer tastes, national, regional and
local economic conditions, discretionary spending priorities, demographic trends, traffic patterns and the type,
number and location of competing restaurants. Our success depends to a significant extent on discretionary consumer
spending, which is influenced by general economic conditions and the availability of discretionary income.
Accordingly, we may experience declines in sales during economic downturns. Any material decline in the amount of
discretionary spending or a decline in consumer food-away-from-home spending could hurt our revenues, results of
operations, business and financial condition.
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.
Disruptions in the national and global economies may adversely impact our revenues, results of operations,
business and financial condition.
Disruptions in the national and global economies could result in higher unemployment rates and declines in
consumer confidence and spending. If such disruptions occur, 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.
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