Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Investor Day (June 2012)
28 slides from Wendy's Company (the)'s investor day presentation, Jun 28, 2012
Slide 1: Steve Hare, Chief Financial Officer
Exhibit 99.5 STEVE HARE CHIEF FINANCIAL OFFICER
Slide 2: System Optimization, Financial Management, Global Growth, Image Activation
System Optimization Financial Management Global Growth Image / Experience Activation North America Same-Store Sales Growth Restaurant Utilization & Daypart Expansion New Restaurant Development
Slide 3: Wendy's Previous Remodels Were Not "A Cut Above"
WENDY’S PREVIOUS REMODELS WERE NOT “A CUT ABOVE” Minimal sales lift Did not revitalize brand or create competitive advantage
Slide 4: Image Activation Expected Benefits
Image Activation Expected Benefits BRAND REVITALIZATION “A CUT ABOVE” IMPROVE UNIT ECONOMICS ATTRACTIVE RETURNS FOUNDATION FOR FUTURE GROWTH
Slide 5: Wendy's Image Activation Outlook
The Wendy’s Company Wendy’s Image Activation Outlook
Slide 6: Company Reimages Company Image Activation Outlook
50 COMPANY REIMAGES COMPANY IMAGE ACTIVATION OUTLOOK 2011 (A) COMPANY REIMAGES Prototype 2012 (E) Tier I Production Design Existing Restaurants Estimates based on Company’s current outlook
Slide 7: 2012: Tier I Production Design
2012: TIER I PRODUCTION DESIGN By AUV ($ in millions) By Market Cities in the U.S. and Canada Tier I reimages across various AUVs and markets
Slide 8: Company Image Activation Outlook: 100+ Company Reimages
COMPANY IMAGE ACTIVATION OUTLOOK 100+ COMPANY REIMAGES 2011 (A) 2012 (E) COMPANY REIMAGES Existing Restaurants 2013 (E) Prototype Tier I Production Design Tier I-II-III Production Design COMPANY REIMAGES Estimates based on Company’s current outlook
Slide 9: Company Image Activation Targets
COMPANY IMAGE ACTIVATION TARGETS Estimates based on Company’s current outlook; Excludes maintenance and other costs INVESTMENT SALES LIFT The Wendy’s Company Developing tiered investment strategy to optimize returns Tier I $650K to 700K +25% Tier II $500K +15% Tier III $300K +5% Company creating pro
Slide 10: Image Activation Tiers
IMAGE ACTIVATION TIERS AUV REAL ESTATE TRADE AREA The Wendy’s Company 10 Restaurant Mapping Criteria Tier I Above Average Prime High Growth Tier II Average Favorable Limited Growth Tier III Below Average Average Stable
Slide 11: Company Image Activation Outlook: 20+ New Builds
COMPANY IMAGE ACTIVATION OUTLOOK 17 NEW BUILDS 20+ NEW BUILDS 2012 (E) 2013 (E) New Builds Estimates based on Company’s current outlook; 20 total new builds in 2012 20 TOTAL
Slide 12: Company Image Activation Will Accelerate
Company Image Activation Will Accelerate 50% of company restaurants Image Activated by end of 2015 (approx. 750 restaurants) 2011 2015 Cumulative Image Activation Cap Ex: $440 to 500M (2013 to 2015) Estimates based on Company’s current outlook
Slide 13: 2012 Capital Expenditures
2012 CAPITAL EXPENDITURES Annual Base Cap Ex before Image Activation: $100 million $225 million total Includes $80 million for Image Activation Includes $45 million for one-time POS hardware upgrade and other items Estimates based on Company’s current outlook
Slide 14: Expect Annual Positive Free Cash Flow 2013-2015
Expect Annual Positive Free Cash Flow 2013-2015 ANNUAL CAP EX Base: $100 million Avg. Image Activation: $145 to $165 million TOTAL: $245 to $265 million Estimates based on Company’s current outlook
Slide 15: Financial Flexibility to Fund Growth Initiatives
FINANCIAL FLEXIBILITY TO FUND GROWTH INITIATIVES Q1 cash balance $418 million Expect $25 million annual interest savings from refinancing Expect enhanced Image Activation operating cash flow to help fund future Cap Ex Priority continues to be strategic reinvestment
Slide 16: Franchise Financial Model
This model is presented for illustrative purposes only based on limited test experience to date. The Wendy’s Company Franchise Financial Model
Slide 17: Franchise Image Activation
FRANCHISE IMAGE ACTIVATION Selected Wendy’s Franchisee Restaurants: 14 AUV: $1.525M Image Activation Strategic Scenario 7 Tier I reimages over three years Remaining 7 restaurants would be evaluated for potential Image Activation or relocation Tier I Franchise Financial Model
Slide 18: Franchise Image Activation: Key Model Assumptions
(1) Excludes maintenance and other costs ($50K-$200K per restaurant). Does not represent actual results. TIER I REIMAGES COST PER RESTAURANT TOTAL INVESTMENT SALES LIFT PROFIT FLOW-THRU FRANCHISE IMAGE ACTIVATION The Wendy’s Company (1) Key Model Assumptions $650K $4.55 M 25% 30%
Slide 19: Preliminary Financing Terms
PRELIMINARY FINANCING TERMS 70% loan-to-value 30% equity contribution from franchisee 7% interest rate 10-year amortization period Available to credit-qualified franchisees
Slide 20: Image Activation Targeted Sales Growth
IMAGE ACTIVATION TARGETED SALES GROWTH ($ in thousands) 2012 2013 2014 2015 2016 CAGR 7.6% Net Sales – without Image $21,564 $21,779 $21,997 $22,217 $22,439 Incremental Image Sales Tier I – 2 reimages 1,031 1,134 Tier I – 3 reimages 1,120 1,248 1,381 Tier I – 2 reimages Total Net Sales – with Image
Slide 21: Profitability & Credit Profile Improve
PROFITABILITY & CREDIT PROFILE IMPROVE Operating Profit Lease-Adjusted Leverage $4.4 M Based upon model assumptions for selected franchisee $5.8 M 2016 2012 2016 2012 6.4 x 4.4 x
Slide 22: Image Activation Can Provide Attractive Returns
IMAGE ACTIVATION CAN PROVIDE ATTRACTIVE RETURNS Based on model assumptions for selected franchisee (1) ROI is incremental operating profit divided by cost. Return on Investment (1) 18% Return on Franchisee Equity Investment ($1.4 M) 48% The Wendy’s Company
Slide 23: Franchisee Support
The Wendy’s Company Franchisee Support
Slide 24: Concentrated Franchise System Facilitates Image Activation
Concentrated Franchise System Facilitates Image Activation 11+ Restaurants 28% / 102 1-10 Restaurants 72% / 270 78% / 3,577 22% / 995 Total # of U.S. Franchisees = 372 FRANCHISEES RESTAURANTS 78% of restaurants owned by 28% of franchisees
Slide 25: Building Franchisee Support
BUILDING FRANCHISEE SUPPORT The Wendy’s Company Detailed introduction of program at Wendy’s Spring Franchisee Meetings Select early adopters to open new & reimaged restaurants in 2012 Plan to communicate finalized financing terms Working with franchisees to build pipeline for 2013
Slide 26: System Optimization
The Wendy’s Company System Optimization
Slide 27: More Efficient Operating Model
More Efficient Operating Model System Optimization Will Accelerate Image Activation Market Planning Holistic System Approach Focus Resources on Reinvestment Accelerate Future Growth Maximize Long-Term Free Cash Flow Franchisee Transfers G&A Efficiencies Closing Restaurants Buying & Selling Restauran
Slide 28: Summary
SUMMARY Execution of these strategies positions us to deliver on our long-term growth outlook Image Activation changes customer perception of Wendy’s: Revitalizes the Brand Delivers on “A Cut Above” Sets the stage for improved system financial performance Enables future growth from marketing and pro