Wendy's Co

(1)Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of March 29, 2026, the results of our operations for the three months ended March 29, 2026 and March 30, 2025 and cash flows for the three months ended March 29, 2026 and March 30, 2025. The results of operations for the three months ended March 29, 2026 are not necessarily indicative of the results to be expected for the full 2026 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025 (the “Form 10-K”).

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 17 for further information.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three-month periods presented herein contain 13 weeks. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

(2)Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,759 and $84,426, respectively, as of March 29, 2026, and $10,540 and $87,956, respectively, as of December 28, 2025.

Significant changes in deferred franchise fees are as follows:

Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

(a)Represents franchise fees expected to be recognized for the remainder of 2026, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

(3)Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. The Company also leases restaurant, office and transportation equipment. As of March 29, 2026, the nature of restaurants operated by the Company and its franchisees was as follows:

Company as Lessee

The components of lease cost are as follows:

(a)Includes expenses for executory costs of $10,539 and $10,394 for the three months ended March 29, 2026 and March 30, 2025, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $30,040 and $30,652 for the three months ended March 29, 2026 and March 30, 2025, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,887 and $6,941 for the three months ended March 29, 2026 and March 30, 2025, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Company as Lessor

The components of lease income are as follows:

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $42,200 and $42,784 recognized during the three months ended March 29, 2026 and March 30, 2025, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,411 and $10,197 for the three months ended March 29, 2026 and March 30, 2025, respectively.

(4)Investments

Equity Method Investment

Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). The Company has significant influence over this investee. Such investment is accounted for using the equity method, under which our results of operations include our share of the income of the investee in “Other operating income, net.”

Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements:

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

Other Investments in Equity Securities

During the three months ended March 30, 2025, the Company recorded an impairment charge of $1,718 for the difference between the estimated fair value and the carrying value of an investment in equity securities. As a result, the carrying value of the investment waszero as of March 30, 2025.

(5) Long-Term Debt

Long-term debt consisted of the following:

Other Long-Term Debt

Wendy’s U.S. advertising fund has a revolving line of credit of $15,000, which was established to support the Company’s advertising fund operations and bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.25%. Borrowings under the line of credit are guaranteed by Wendy’s. During the three months ended March 29, 2026, the Company borrowed and repaid $11,500 under the revolving line of credit, then subsequently borrowed and repaid $3,600 under the revolving line of credit. As a result, as of March 29, 2026, the Company hadno outstanding borrowings under the revolving line of credit.

(6)Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

(a)The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which is based on observable price changes in orderly transactions for a similar investment of the same issuer.

(b)The fair values were based on quoted market prices in markets that are not considered active markets.

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

Non-Recurring Fair Value Measurements

Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.

Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) the deterioration in operating performance of certain Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance. Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 12 for further information on impairment of our long-lived assets.

(7)Income Taxes

The Company’s effective tax rate for the three months ended March 29, 2026 and March 30, 2025 was 33.5% and 28.6%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the three months ended March 29, 2026 primarily due to state income taxes, share-based compensation and the tax effects of our foreign operations.

(8)Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

Basic net income per share for the three months ended March 29, 2026 and March 30, 2025 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 11,926 and 8,288 for the three months ended March 29, 2026, and March 30, 2025, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(9)Stockholders’ Equity

Dividends

During the first quarter of 2026 and 2025, the Company paid dividends per share of $.14 and $.25, respectively.

Repurchases of Common Stock

In January 2023, our Board of Directors authorized a repurchase program for up to $500,000 of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”). During the three months ended March 29, 2026, no shares were repurchased under the January 2023 Authorization. As of March 29, 2026, the Company had $35,000 of availability remaining under the January 2023 Authorization.

During the three months ended March 30, 2025, the Company repurchased 8,182 shares under the January 2023 Authorization with an aggregate purchase price of $124,070, of which $1,401 was accrued as of March 30, 2025, and excluding excise tax of $1,214 and commissions of $115.

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:

(10)System Optimization (Gains) Losses, Net

The Company optimizes the Wendy’s system by facilitating Franchise Flips, evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees and, at times, closing certain underperforming restaurants, to further strengthen the franchisee base, support franchisee economics and drive new restaurant development. During the three months ended March 29, 2026, the Company facilitated 41 Franchise Flips. During the three months ended March 30, 2025, the Company didnot facilitate any Franchise Flips. Additionally, during the three months ended March 29, 2026 and March 30, 2025, the Company completed the sale ofthree andtwo Company-operated restaurants to franchisees, respectively.

Gains and losses recognized on dispositions are recorded to “System optimization (gains) losses, net” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs.” All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

(a)During the three months ended March 29, 2026, the Company received net cash proceeds of $1,804 related to the sale of three Company-operated restaurants as part of the Company’s strategic build to suit development fund. These proceeds are included within operating activities in the Company’s condensed consolidated statements of cash flows.

(b)Net assets sold consisted primarily of equipment.

(c)During the three months ended March 29, 2026, the Company received net cash proceeds of $2,796, primarily from the sale of surplus and other properties.

Assets Held for Sale

As of March 29, 2026 and December 28, 2025, the Company had assets held for sale of $21,783 and $3,696, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”

(11)Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

Organizational Redesign

In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”). Additionally, in January 2024, the Board of Directors announced the appointment of a new President and Chief Executive Officer and the departure of the Company’s previous President and Chief Executive Officer. During the three months ended March 29, 2026 and March 30, 2025, the Company recognized costs totaling $(201) and $(950), respectively, which primarily included reversals of severance accruals. The Company does not expect to incur any material additional costs under the Organizational Redesign plan.

The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:

(a)The three months ended March 29, 2026 and March 30, 2025 include reversals of severance accruals as a result of changes in estimates.

(b)Total incurred since inception primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.

As of March 29, 2026, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities.” The tables below present a rollforward of our accruals for the Organizational Redesign Plan.

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the three months ended March 29, 2026 and March 30, 2025. The Company does not expect to incur any material additional costs under these plans.

(12)Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications and (3) classifying surplus properties as held for sale.

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

(13)Supplemental Cash Flow Information

The following table includes supplemental non-cash investing and financing activities:

The following table includes a reconciliation of cash, cash equivalents and restricted cash:

(14)Guarantees and Other Commitments and Contingencies

Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $94,720 as of March 29, 2026. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of March 29, 2026. In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner. The liability recorded for our probable exposure associated with these lease guarantees was not material as of March 29, 2026.

Letters of Credit

As of March 29, 2026, the Company had outstanding letters of credit with various parties totaling $28,960. Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Variable Funding Senior Secured Notes, Class A-1. We do not expect any material loss to result from these letters of credit.

(15)Transactions with Related Parties

Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.

TimWen Lease and Management Fee Payments

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $4,763 and $4,798 under these lease agreements during the three months ended March 29, 2026 and March 30, 2025, respectively, which has been recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $59 and $56 during the three months ended March 29, 2026 and March 30, 2025, respectively, which is included as a reduction to “General and administrative.”

Transactions with Yellow Cab

Certain family members and/or affiliates of Mr. Nelson Peltz, our former Chairman and Chairman Emeritus, Mr. Peter May, our Senior Vice Chairman, and Mr. Matthew Peltz, our former Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee that, as of March 29, 2026 owned and operated 87 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab. In addition, Mr. Bradley Peltz, a director of the Company, is a Managing Director of, and holds a minority ownership interest in, Yellow Cab. During the three months ended March 29, 2026 and March 30, 2025, the Company recognized $3,827 and $3,664, respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities. In all transactions involving Yellow Cab, the Company’s standard franchisee recruiting and approval processes were followed, no modifications were made to the Company’s standard franchise agreements or related documents, and all deal terms and transaction documents were negotiated and executed on an arm’s-length basis, consistent with the Company’s comparable franchise transactions and relationships. As of March 29, 2026 and December 28, 2025, $1,336 and $1,045, respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

Transactions with AMC

Ms. Kristin Dolan, a director of the Company, serves as the Chief Executive Officer of AMC Networks Inc. (“AMC”). During the three months ended March 30, 2025, the Company purchased approximately $300 of advertising time from a subsidiary of AMC. During the three months ended March 29, 2026, no advertising time was purchased from a subsidiary of AMC. The Company’s advertising spend with AMC was made in the ordinary course of business and approved on an arm’s-length basis, consistent with the Company’s comparable advertising decisions. There wereno amounts due to AMC as of March 29, 2026 and December 28, 2025.

(16)Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when we determine it is probable that a liability has been incurred and the loss is reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims due to various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

(17) Segment Information

Wendy’s U.S. revenue, significant segment expenses and segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) are as follows:

(a)Other segment items for the three months ended March 29, 2026 primarily include professional fees. Other segment items for the three months ended March 30, 2025 primarily include lease buyout activity and professional fees.

Wendy’s International revenue, significant segment expenses and segment adjusted EBITDA are as follows:

(a)Includes advertising fund expense of $159 for the three months ended March 30, 2025 related to the Company’s funding of incremental advertising. There wasno funding of incremental advertising during the three months ended March 29, 2026. In addition, includes other international-related advertising deficit of $3 and $1,153 for the three months ended March 29, 2026 and March 30, 2025, respectively.

(b)Other segment items primarily include franchise support and other costs.

Global Real Estate & Development revenue, significant segment expenses and segment adjusted EBITDA are as follows:

(a)Other segment items primarily include equity in earnings from our TimWen joint venture, gains on sales-type leases and franchise support and other costs. Equity in earnings from our TimWen joint venture was $2,363 and $2,252 for the three months ended March 29, 2026 and March 30, 2025, respectively.

The following table reconciles profit bysegment to the Company’s consolidated income before income taxes:

(a)Includes corporate overhead costs, such as employee compensation and related benefits.

(18) New Accounting Standards

Measurement of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the Financial Accounting Standards Board (“FASB”) issued an amendment to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets for revenue arising from contracts with customers. The Company adopted this amendment during the first quarter of 2026 and has elected the practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the receivables when estimating expected credit losses. The adoption of this amendment did not have a material impact on our condensed consolidated financial statements.