Wendy's 2015 Annual Report Download - page 7

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Business Segments
The Company manages and internally reports its business geographically. The operation and franchising of
Wendy’s restaurants in North America (defined as the United States and Canada) comprises virtually all of our
current operations and represents a single reportable segment. The revenues and operating results of Wendy’s
restaurants outside of North America are not material. See Note 25 of the Financial Statements and Supplementary
Data included in Item 8 herein, for financial information attributable to our geographic areas.
The Wendy’s Restaurant System
Wendy’s is the world’s third largest quick-service restaurant company in the hamburger sandwich segment.
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 January 3, 2016, there were 6,076 Wendy’s restaurants in
operation in North America. Of these restaurants, 632 were operated by Wendy’s and 5,444 by a total of
390 franchisees. In addition, at January 3, 2016, there were 403 franchised Wendy’s restaurants in operation in
27 countries and territories other than North America. 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 United States territories.
The revenues from our restaurant business are derived from two principal sources: (1) sales at company-owned
restaurants and (2) franchise-related revenues including royalties, rents and franchise fees received from Wendy’s
franchised restaurants.
Wendy’s is also a 50% partner in a Canadian restaurant real estate joint venture with a subsidiary of Restaurant
Brands International Inc., a quick-service restaurant company that owns the Tim Hortons®brand. The joint venture
owns Wendy’s/Tim Hortons combo units in Canada. As of January 3, 2016, there were 99 Wendy’s restaurants in
operation that were owned by the joint venture. (Tim Hortons™ is a registered trademark of Tim Hortons USA
Inc.)
Wendy’s Restaurants
Wendy’s opened its first restaurant in Columbus, Ohio in 1969. During 2015, Wendy’s opened 21 new
company-owned restaurants and closed 23 generally underperforming company-owned restaurants. In addition,
Wendy’s purchased 4 restaurants from franchisees and sold 327 restaurants to franchisees. During 2015, Wendy’s
franchisees opened 88 new restaurants and closed 122 generally underperforming restaurants. The restaurants sold to
franchisees were sold as part of the system optimization initiative which is further described in “Acquisitions and
Dispositions of Wendy’s Restaurants” below.
The following table sets forth the number of Wendy’s restaurants at the beginning and end of each year from
2013 to 2015:
2015 2014 2013
Restaurants open at beginning of period ..................... 6,515 6,557 6,560
Restaurants opened during period .......................... 109 103 102
Restaurants closed during period ........................... (145) (145) (105)
Restaurants open at end of period .......................... 6,479 6,515 6,557
During the period from December 31, 2012, through January 3, 2016, 314 Wendy’s restaurants were opened
and 395 generally underperforming Wendy’s restaurants were closed.
Operations
Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring filet of
chicken breast sandwiches, which are prepared to order with the customer’s choice of condiments. Wendy’s menu also
includes chicken nuggets, chili, french fries, baked potatoes, freshly prepared salads, soft drinks, Frosty®desserts and
kids’ meals. In addition, the restaurants sell a variety of promotional products on a limited time basis. Wendy’s also
offers breakfast in some restaurants in the United States.
Free-standing Wendy’s restaurants generally include a pick-up window in addition to a dining room. The
percentage of sales at company-owned Wendy’s restaurants through the pick-up window was 65.8%, 64.7% and
64.8% in 2015, 2014 and 2013, respectively.
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