Wendy's Co (WEN) 0 Q0 法說會逐字稿

Good morning, everyone, and welcome to Wendy's-Arby's Group's fourth quarter and full-year 2009 conference call.

Our hosts today are John Barker, Chief Communications Officer, Roland Smith, President and Chief Executive Officer, and Stephen Hare, Chief Financial Officer.

At this time, all participants have been placed on a listen-only mode.

The floor will be open for questions and comments following the presentation.

I would now like to turn the call over to John Barker.

You may begin, sir.

Thanks.

Good morning, everyone.

Today's conference call and webcast is accompanied by a PowerPoint presentation which can be found on our Investor Relations page on our corporate website.

That's www.wendysarbys.com.

For those of you listening by phone, be sure to make sure that you select the appropriate webcast player option from our website to ensure that the slides and the audio are in sync.

The agenda for today's conference call and the webcast will begin with remarks from our President and CEO, Roland Smith, who will discuss a business overview and our fourth quarter and full-year 2009 highlights.

Then our Chief Financial Officer, Steve Hare, will review financial results in greater detail.

Steve will provide a financial outlook for 2010, and Roland will update you on initiatives to drive performance at our brands before we open up the line for questions.

Our main focus on today's call will be to discuss our financial performance, as well as our plans to grow the business profitably and generate shareholder value.

I'd like to take a moment to summarize what is included in the financial statements which are attached to today's earning release.

There is a P&L with consolidated fourth quarter and full-year 2009 results.

Please note that the results for the full-year 2008 reflect Triarc for the full year and results of Wendy's only from the date of the merger on September 29, 2008.

You need to understand this difference when looking at the comparisons between 2009 and 2008, as they are not meaningful.

Also included with today's news release are key balance sheet items and a table that shows for the fourth quarter and full-year 2009, EBITDA -- a reconciliation of EBITDA to the reported net income or loss, and adjusted EBITDA, which excludes integration-related and non-recurring items.

In addition there is a comparison to the pro forma results for full-year 2008.

The pro forma results are as if the merger with Wendy's occurred at the beginning of 2008.

A complete P&L on a pro forma basis for each quarter of 2008 is available on the Investor Relations section of our website.

Also provided, we also provided selected financial highlights for each brand today.

You have same store sales, revenues, four-wall EBITDA, margin percent, and the total number of restaurants at quarter-end.

In addition, we filed our Form 10-K this morning.

Now before we begin, I'd like to refer you for just a minute to the Safe Harbor statement that is attached to today's release.

Certain information that we may discuss today regarding future performance such as financial goals, plans, and development is forward-looking.

Various factors could affect the Company's results and cause those results to differ materially from those expressed in our forward-looking statements.

Some of those factors are referenced in the Safe Harbor statement that is attached to the news release.

Also, some of the comments today will reference non-GAAP financial measure such as earnings before interest, taxes, depreciation, and amortization.

Investors should review our reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure.

Now let me turn the call over to Roland.

Good morning, everyone.

And thanks for joining us today.

First, I'd like to take a few minutes to highlight the results from 2009.

I'm very pleased to report that in 2009 we made significant progress.

We produced strong earnings growth in an extremely challenging economic climate, and adjusted EBITDA growth was 16%, as compared to our pro forma results in 2008.

We made outstanding progress in Wendy's Company-operated restaurant margins and improved 330 basis points in 2009 which was significantly ahead of our target, 160 basis points to 180 basis points of improvement for the year.

After only one year, we are well over halfway to 500 basis points of improvement, which we plan to achieve by the end of 2011.

We produced significant cost savings throughout, through the integration, and we're ahead of schedule on our G&A savings goal of $60 million on an annualized basis by the end of 2011.

We repositioned the Wendy's brand and introduced our new Wendy's advertising campaign, You Know When It's Real.

We strengthened our focus on product innovations and provided our customers with exciting new premium products.

At Arby's, we introduced a premium sandwich line called Roastburger, which included the All American, Bacon & Blue, and Bacon Cheddar sandwiches.

And at Wendy's, we introduced Boneless Wings, the Bacon Deluxe Cheeseburger, and Spicy Chicken Nuggets.

We also introduced more effective value strategies at both brands.

We formed a new purchasing co-op at Wendy's to focus on cost savings for the entire system and ensure high product quality.

And finally, we enhanced our financial flexibility in 2009.

Our free cash flow of almost $200 million and the net proceeds from our senior notes offering, provided us with approximately $600 million of cash on the balance sheet to support strategic growth initiatives.

In 2010, we will continue to build on these accomplishments to drive sales and achieve our EBITDA growth targets.

Now, I'd like to highlight results from our fourth quarter.

We're pleased with our fourth quarter EBITDA results.

Adjusted EBITDA was $103.3 million, an increase of 38.9% versus year-ago results.

It's important to point out that 2009 included an extra week in the fourth quarter, as compared to 2008.

And Steve Hare will highlight the impact of this extra week on the fourth quarter results in just a few minutes.

At Wendy's, we improved Company-operated EBITDA margins by 420 basis points, compared to the same quarter a year ago.

At Arby's, we were disappointed with our sales and margin performance in the quarter.

Same store sales and margins decreased, impacted by significant discounting by our competitors.

To improve sales and traffic, Arby's began to roll out a new Every Day Value platform late in the fourth quarter, although with only minimal advertising until January.

And I'll update you on the positive impact of this platform in just a few minutes.

Now I'd like to share fourth quarter and 2009 performance highlights for both Wendy's and Arby's.

At Wendy's, although fourth quarter system -- system-wide, same store sales were down 3%, we believe this was among the strongest sales performance in the industry.

It's also important to point out that we were rolling over our strongest quarter of 2008, which was up 3.7%.

In December, when we introduced the $2.99 Deluxe Value Meal, we saw significant improvement in same store sales which continued into January.

Wendy's Company-operated restaurant margin was 15.9% for the fourth quarter, reflecting a 420 basis point increase.

A little less than half of this improvement was driven by lower commodity costs, and the remainder was driven by operational improvements in labor, controllable, and food costs, as well as price increases.

For the full-year 2009, Wendy's North America system-wide, same store sales were essentially flat, which we believe was among the best in the industry for the year.

Our margin improvement for the year was a strong 330 basis points, well ahead of our target for the year of 160 basis points to 180 basis points.

For the full-year, commodity cost had no net impact, as higher costs in the first half were balanced by lower costs in the second half of the year.

A little more than half of the margin improvement was from food and paper, including the benefit of price increases, with the remaining coming principally from controllable costs and labor.

This operational improvement including the negative impact of approximately 40 basis points from payer -- paying higher bonuses to GMs and store level personnel than last year.

And as I stated a few minutes ago, we are well over halfway to our three-year target of expanding Wendy's margins by 500 basis points, and I am confident that we can reach our goal.

At Arby's, system-wide, same store sales decreased 11% in the fourth quarter as competitors continued heavy discounting.

Customers responded positively to the quality and variety of our $5.01 combo offerings in October and November, and this promotion mixed in the high teens.

However, it did not drive incremental traffic.

In December, we began expanding our Dollar Value Menu, which we had been testing for almost a year to additional markets, and we were encouraged by both the traffic and same store sales improvements.

Arby's generated a 14.2% restaurant margin in the fourth quarter, reflecting sales to leveraging, partially offset by favorable commodity costs, and a one-time benefit from a vacation policy standardization of approximately 150 basis points, which Steve will review in greater detail in a minute.

At Arby's, North America system- wide, same store sales decreased 9.1% for the full-year 2009.

Sales at Arby's were significantly impacted by the weak economy, heavy competitor discounting, and our lack of a value menu offering.

Company-operated restaurant margin decreased 220 basis points in 2009, primarily due to sales deleveraging.

I'll talk more about the Arby's brand later, but let me assure you that we are very focused on a detailed plan to turn around the transactions and sales declines, and we are optimistic about our new Dollar Value Menu and other initiatives we have identified to drive traffic and sales.

Now I'd like to turn it over to Steve Hare to discuss fourth quarter and full-year 2009 results in greater detail.

Steve?

Thanks, Roland, and good morning.

I'd like to update you on our fourth quarter and full-year 2009 consolidated P&L and give you a snapshot of our brand profitability.

I will also provide a review of our capitalization and cash flow for 2009, and I will update you on our stock repurchase program and dividends.

And finally, I will review our financial outlook as part of our overview for 2010.

Slide 13 highlights the fourth quarter results and the special expense items in the quarter.

Consolidated revenues were $901 million during the fourth quarter of 2009.

Cost of sales was $682 million, or 84.9% of sales, and reflected continued improvement in Wendy's restaurant margins, partially offset by a decline in Arby's margins.

Included in our cost of sales was an expense related to the termination of our bakery pension plan, which we have since replaced with our Company-wide 401(k) plan.

Additionally, cost of sales included a one-time benefit of $3.9 million from vacation policy standardization.

Arby's previously used an anniversary approach, and Wendy's used a calendar year approach to calculating vacation days and expense.

We chose to standardize the policies across the Company, using the calendar method, which is simpler to administer, and resulted in a one-time benefit in cost of sales as well as G&A.

As a one-time benefit, we have excluded this gain from adjusted EBITDA.

G&A expense was approximately $132.2 million, including $5.4 million of merger-related integration costs, and $15.5 million related to our start-up financing of the Wendy's co-op.

Partially offset by a benefit of $3.3 million from vacation policy standardization.

Depreciation and amortization was approximately $47 million and has remained relatively consistent throughout the year.

Impairment charges of $51 million related to the write down of fixed assets for underperforming Arby's and Wendy's restaurants.

Facilities, relocation, and corporate restructuring expense of $2.1 million was primarily related to severance costs in connection with the Wendy's merger.

As of the end of the fourth quarter, we have substantially completed these transition expenses.

Interest expense was approximately $37 million for the quarter and was similar to the prior quarter.

Tax rate for the fourth quarter was 71% and provided an unusually large benefit to the quarter, primarily due to the one-time impact of the dissolution of Wendy's captive insurance company, which enabled us to utilize previously unrecorded state NOL credits.

Loss from continuing operations was $14.7 million, or $0.03 per share, which includes after-tax, net special charges of $44.5 million, or $0.10 a share.

Roland highlighted our adjusted EBITDA for the fourth quarter earlier.

A table on slide 14 summarizes the adjustments to EBITDA, including those I discussed on the previous slide.

Merger-related integration costs and G&A of $5.4 million, start-up funding costs of $15.5 million for the Wendy's purchasing co-op, facilities relocations' severance charges of $2.1 million, pension withdrawal expense of $5 million, and the benefit of vacation policy standardization and G&A and cost of sales of $3.3 million and $3.9 million respectively.

Adjusted EBITDA was $103.3 million and represented a 38.9% growth rate over the fourth quarter of last year, including an additional week in the 2009 quarter.

The additional week of EBITDA approximated $14 million.

Excluding this amount for comparison purposes, adjusted EBITDA grew almost 21%.

Slide 15 highlights the full-year 2009 results and the special expense items for the year.

Consolidated revenues were $3.6 billion during 2009.

Cost of sales was $2.7 billion, or 85.3% of sales, and reflected continued improvement in Wendy's restaurant margins, partially offset by a decline in Arby's margins.

G&A expense was approximately $453 million, including $16.6 million of merger-related integration costs, and $15.5 million of co-op start-up expense, offset by vacation benefit of $3.3 million.

On a comparable basis to 2008, we exceeded our merger-related target for G&A savings, which I will review in more detail in a minute.

Impairment charges were $82.1 million, primarily related to the write down of fixed assets for underperforming Arby's and Wendy's restaurants.

Facilities relo and corporate restructuring expense of $11 million, primarily related to severance cost in connection with the Wendy's merger.

Interest expense was approximately $127 million for the year and reflected increased interest expense related to our 2009 second quarter note offerings, partially offset by the reduction of bank debt, with a portion of the proceeds.

We also benefited from entering into fixed to floating interest rate swaps, hedging about one quarter of our total debt.

Since August of 2009, we have saved approximately $3 million of interest expense from executing these swaps.

Tax rate for 2009 was affected by the state NOL benefit I discussed earlier from the dissolution of our captive insurance company.

We would anticipate returning to a more normal tax rate in 2010 of 38% to 40%.

Net income from continuing operations was $3.5 million, or $0.01 per share, which includes after-tax, special charges of $84.7 million, or $0.18 per share.

The table on slide 16 summarizes the adjustments to EBITDA for the year, which primarily includes merger-related integration costs in 2009 and non-recurring expenses I have already discussed, as well as predecessor Wendy's merger-related special committee charges in 2008.

Adjusted EBITDA was $425.2 million and represented a 15.9% growth rate over last year including the extra week in 2009.

Now, let's look at EBITDA by brand.

We manage and report on two business segment.

The operation and franchising of Wendy's restaurants and Arby's restaurants, respectively.

On slide 17, we have provided the adjusted EBITDA by brand segment.

Wendy's represented about 82% of our adjusted EBITDA in 2009.

The table at the bottom of the page reconciles segment operating profit to EBITDA.

And then adjusts for the various non-recurring items and merger-related expenses.

Now, I'd like to talk about G&A.

Slide 18 provides you with the methodology to calculate the G&A savings we realized in 2009.

As a starting point, our pro forma combined G&A for 2008 was $455 million.

To provide a basis for comparing a run rate G&A level against 2009, you need to first subtract integration costs of $2 million.

Second, add back $29 million for performance-based bonuses that were not paid in 2008.

And third, adjust for merger-related synergies that were achieved in the fourth quarter of 2008 of $6 million.

These adjustments in total provide a 2008 baseline G&A of $488 million for comparison purposes.

To calculate 2009 G&A savings, let's start with with our full-year G&A as reported of $453 million.

Add back the $3 million, one-time benefit from our vacation policy standardization and net bonuses of $6 million that were not paid in 2009.

Subtract integration costs, pension withdrawal expense, and the effect of the 53rd week in G&A for a 2009 comparable G&A run rate of $426 million.

This roll-forward produces total G&A savings of $62 million compared with the 2008 baseline G&A.

That demonstrates that we have achieved our target of $60 million of savings significantly ahead of schedule.

We will continue to look for additional G&A savings opportunities in 2010.

Now, I'd like to talk about our cash flow for 2009.

Slide 19 summarizes our cash flow for 2009.

Cash from operations was $299 million and includes net income of $5 million, depreciation and amortization of $190 million, and other non-cash items of $104 million.

One cash source for us is the utilization of available net operating loss carry-forwards for federal income tax purposes.

Our total cash taxes, primarily at the state level and in Canada, are approximately $15 million.

We expect a similar result in 2010.

Capital expenditures were $102 million.

This reflected a disciplined management approach to resource allocation in response to the economic environment.

Net cash generated from operations was $197 million.

Net financing proceeds primarily included proceeds from the second quarter note offering, net of debt payments and financing costs to generate $397 million of additional cash.

And we returned $101 million in capital to our stockholders in the form of stock buybacks and cash dividends.

In total, cash increased by $502 million during 2009 for an ending cash balance of $592 million.

This strong cash generation and position provides us with significant financial flexibility going forward to fund our strategic growth initiatives and stock buyback program or to further de-risk our balance sheet.

Now let's look at our debt capitalization.

At the end of the fourth quarter, we had total debt of approximately $1.5 billion and net debt of about $931 million.

Based on our 2009 adjusted EBITDA, our total debt multiple is 3.6 times.

Our net debt multiple is 2.2 times.

We believe our financial leverage is moderate and will continue to improve as we produce higher EBITDA levels and positive cash flow.

Now, let me talk about some recent board actions.

Since the Board of Directors authorized a stock repurchase program in 2009, we have repurchased 26.1 million shares of common stock for about $120 million as of February 12th of this year at an average price of $4.61.

Our total authorization for common stock repurchase is $200 million, which will remain in effect through January 2, 2011, and will allow the Company to make repurchases as market conditions warrant.

Our stock repurchase program reflects the Board's and management's confidence in the long-term prospects of the Company.

The Board also declared a cash dividend for the first quarter of $0.015 per share, or approximately $7 million.

This dividend will be payable March 15th to stockholders of record on March one.

And now I'd like to review the details of our financial outlook for 2010.

Let me begin with an overview of some key economic factors that impact our Company and the QSR industry as a whole.

Unemployment has a significant effect on sales in the restaurant industry and has remained high throughout all of 2009.

The most recent unemployment rate reported in January was 9.7%.

Additionally, there were significant job losses earlier in the year, and there has been no significant job creation for more than two years.

Less people employed negatively impact restaurant industry sales across all day parts.

Now, I'd like to discuss consumer confidence.

Consumer confidence fell to a ten-month low in February.

While this index has recovered somewhat from the low last March, we are well below the level of 95, which indicates a healthy economy.

Lack of consumer confidence tends to reduce consumer spending including food purchases away from home.

Consumers continue to pay down debt and savings rates have increased over the past year.

Both trends have put downward pressure on spending for consumer goods and eating out.

With this economic background likely to continue into much of 2010, let me highlight our financial outlook for the year.

In 2010, we anticipate continued weak economic conditions due to high unemployment and low consumer confidence.

Some economists predict that conditions will begin to improve in the second half of the year.

Now, I would like to highlight our key expectations for 2010.

We expect positive same store sales and further margin expansion at Wendy's.

We also expect negative same store sales at Arby's but improving on a year-over-year basis.

We anticipate a 2% to 3% increase in our commodity basket in 2010 with higher costs primarily in the second half of the year.

In addition, we plan to increase capital expenditures to about $165 million in 2010, up from about $102 million in 2009 which will include 12 new Wendy's units and 100 remodeled units each for Wendy's and Arby's.

We expect adjusted EBITDA growth in the low to mid-single digits for 2010.

This excludes the effect of the 53rd week in 2009 of approximately $14 million and approximately $9 million in incremental investment spending to expand Wendy's breakfast menu into additional locations during 2010.

And now, let me turn you back over to Roland to discuss our plans for the brands.

Thanks, Steve.

First, I'd like to update you on the Wendy's brand.

For 2010, we are focused on five key initiatives at the Wendy's brand.

Driving positive same store sales, continued margin improvement, optimizing the Wendy's purchasing co-operative, relaunching our breakfast program and expanding it into additional markets, and executing a significant remodeling program.

Wendy's continued to focus on value in January with the promotion of our new $0.99 Spicy Chicken Nuggets.

And as I've already mentioned, we saw a significant improvement in North America, Company-operated, same store sales in January which rose to 0.3%.

Unfortunately as you all know, exceptionally severe weather and snow in the central and eastern portions of the US have negatively impacted February sales trends at Wendy's and throughout the industry.

In February, we reintroduced our popular Premium Fish Sandwich.

Also in February, we introduced a new premium hamburger, the Bacon & Blue, that reinforces Wendy's quality position and brings news to our premium hamburger line-up.

The new Bacon & Blue hamburger features fresh, never frozen beef, real blue cheese crumbles, seasoned sauteed onions, fresh lettuce and tomato, and premium Applewood smoked bacon.

During March and through Easter, we are advertising our Premium Fish Sandwich Wednesday through Friday and advertising the Bacon & Blue hamburger throughout the week.

The Wendy's Real Quality, Fresh brand positioning that we launched last year continues to be the foundation that drives our product innovation, including the launch of Boneless Wings, Bacon Deluxe Cheeseburger, Bacon & Blue, extensions of our Frosty brand, and new value products.

We're also very excited about several new high quality products that we have recently developed some of which we'll see later this year.

But for obvious competitive reasons, we're not comfortable talking about them yet.

We've also -- we're also investing in a strategic pricing initiative that we believe will drive both same store sales and margins.

Historically, Wendy's is priced on a national basis, and over the past several years, we've moved to regional pricing.

We have engaged a leading national consulting firm to help us build a strategy and pricing model that will allow us to price on a store by store basis.

Many of our competitors have successfully implemented a similar strategy.

We'll complete the work over the next six months, and the majority of the benefit from this initiative will be in 2011 and beyond.

As I've previously stated, we made excellent progress in reducing food, labor, and controllable costs, and we significantly exceeded our margin improvement target of 160 basis points to 180 basis points with our full-year 2009 margin improvement of 330 basis points.

Our goal in 2010 is to continue margin improvement by another 90 basis points to 110 basis points, excluding the impact of incremental investment spending to expand breakfast.

We remain confident in our ability to improve Wendy's margins by a total of 500 basis points by the end of 2011.

In 2009, we accelerated operational improvements and more than doubled the number of A and B level, or well-operated stores from 32% of the system in the first quarter of 2008 to 68% by the fourth quarter of 2009.

We will continue to focus on improving the customer experience in 2010 and further increase the number of A and B level stores.

Working closely with Wendy's franchise system, we formed a national supply chain co-op for the Wendy's brand at the end of 2009.

The supply -- the quality supply chain co-op, or QSCC, assumed responsibility for managing food, related product purchases, and distribution services for the Wendy's system in the US and Canada on January 4, 2010.

The co-op enables the Wendy's system to pursue cost savings opportunities while maintaining the food quality that has been a hallmark of our brand.

Recently, the QSCC announced John [Enright] as its first president.

John led Young Brands purchasing co-op for many years and has tremendous experience in the QSR segment.

Going forward, we are planning to form a third co-op made up of members from both Arby's and Wendy's co-ops to focus on negotiating better prices for our entire system of 10,000 restaurants.

For example, recently Wendy's and Arby's got together and negotiated a new contract for plastic disposable gloves for all 10,000 restaurants.

The outcome was a savings of over $3.5 million for our combined systems.

This year, we plan to introduce our newly developed breakfast menu into three existing test markets, and then expand it to two to four additional Company and franchise markets later in the year.

We plan to invest an incremental $9 million later in 2010, primarily for additional advertising with the majority of the benefit to sales in 2011 and beyond.

Our [USP] for breakfast will be consistent with Wendy's Real Quality Fresh brand positioning that we launched in 2009.

You can see some of our new breakfast products pictured on this slide, such as a Toasted Artisan Muffin Egg Sandwich with bacon or sausage, a Grilled Panini Egg Sandwich with our thick-cut Applewood smoked bacon, skin-on roasted potatoes, fresh fruit, a delicious warm oatmeal breakfast bar, and a Premium specialty coffee made specifically for Wendy's.

We are very excited about this new breakfast menu, and we plan to test and further refine our breakfast program in 2010 with a goal of launching breakfast nationwide in late 2011.

Our new curve and tower exterior and interior designs are the results of ongoing consumer research.

These designs create an impressive curb appeal that welcomes customers and provides ambience that enhances the eating experience.

As of the end of 2009, we had completed more than 90 Company store remodels using the curve and tower designs, and overall, we are seeing increased sales and cash flow in remodeled stores.

For 2010, we plan to remodel 100 Company-owned restaurants at Wendy's, and we are encouraging our franchisees to do the same.

Now, I'd like to move onto Arby's.

As you all know, we recently announced that I've assumed the interim role as President of Arby's, and I'll lead the turnaround of the Arby's brand.

A search is is currently underway for a new president of Arby's, and the response to our recruiting efforts has been encouraging.

Over the past 60 days, we have established a turnaround plan to re-energize Arby's and rebuild customer traffic and same store sales.

Our initiatives include -- nationally expanding Arby's new dollar value menu, significantly increasing our share of voice by utilizing more national TV advertising, reconnecting with our customers by validating our brand positioning and relaunching the Arby's brand, improving advertising effectiveness, revitalizing product innovations, and finally, investing in a significant remodeling program.

Now I'd like to tell you more about some of these initiatives in more specificity.

Arby's unique selling proposition revolves around high quality, slow roasted, and freshly sliced roast beef sandwiches, and a menu that's an alternative to traditional fast food.

According to our customer tracking studies, only Subway and Wendy's have higher quality ratings among major QSR sandwich chains, and Arby's quality perception is much better than McDonald's, Taco Bell, and Burger King.

This quality positioning has enabled Arby's to generate a significantly higher check average than most of our competitors.

However, over the past year as the economy has weakened and unemployment has soared, our QSR competitors have moved to heavy discounting and started a value menu price war.

Because Arby's has lacked an every day value menu, we've not been able to compete effectively in this environment, and we have lost a significant number of transactions and sales.

As you can see by the brand tracking study on this slide, customers recently rated Arby's lowest on 'worth what you pay for it'.

This low value rating is the primary barrier to driving transactions and sales at Arby's.

Therefore, to better compete for the value-conscious customers, we introduced $5.01 combos in October featuring five sandwiches with curly fries and a drink.

The $5.01 combos mixed high in the high teens, but they did not drive incremental transactions as our competitor continued to intensify their value offerings.

In 2009, we also began testing a new dollar value menu in several markets and expanded it to additional markets in December.

The results were encouraging, and we further expanded the dollar value menu to more than 2,500 stores in January.

January same store sales improved significantly compared to the fourth quarter of 2009 to negative 7.2%.

More importantly, in the last three weeks of January, after starting local television advertising for the dollar value menu, Arby's same store sales improved to negative 3.9%.

Severe weather and snow in the central and eastern portions of the US have had had a significant negative impact on February sales trends for Arby's, and we will be rolling over our strongest 2009 monthly comps in March.

However, we remain optimistic about the dollar value menu and plan a system-wide expansion in April with national television advertising.

An important part of Arby's turnaround is improving our media efficiency and advertising effectiveness.

For 2010, we are planning to increase national advertising media versus 2009.

This is important because national advertising is 30% to 40% more efficient than local.

I'm very pleased that our franchise system has approved a national media rate increase from 1.2% to 2.5% effective April first which will fund this increased national advertising.

Also this month, we are launching a new advertising campaign that incorporates a split screen with local Arby's customers talking passionately about why they love our food while our products and promotions are featured pictorially at the same time.

And as I mentioned, we will launch the dollar value menu with this new advertising nationally in April.

At Arby's, we have continued to see stronger sales and margin performance from our Pinnacle image restaurants, which represent about half of the system.

In 2010, we are launching a three-year remodeling program, with a goal of having 75% of the system as Pinnacle image restaurants by the end of 2012.

In key priority markets where we have a concentration of Arby's restaurants, such as Minneapolis, Atlanta, and Indianapolis, we plan to have close to 100% of the restaurants in the Pinnacle image by the end of 2012.

This year, we plan to remodel 100 Arby's Company-owned restaurants, and we anticipate investing approximately $75 million to $100 million over the three years of this remodeling program.

Now I'd like to talk for a moment about international.

In 2009, we completed a comprehensive analysis of the international markets and began aggressively working to expand our international business, and we ended the year with contractual commitments for more than 300 restaurants.

This included development agreements to re-enter the market in Singapore with the Kopitiam Group and build dual-branded restaurants in the Middle East and North Africa with Al Jammaz Group.

In 2010, we are targeting additional development agreements for a total of 400 new restaurants.

To accomplish this, we anticipate expanding in existing markets, entering four new countries, and plan to identify a new partner in Japan.

And we expect franchisees to open approximately 35 to 45 new units, including our first international, dual-branded unit, planned to open in Dubai in Q2.

Longer term, we see the potential for a total of 8,000 restaurants outside of North America as international becomes a major part of our business.

So in summary, for 2010, we are committed to investing in future growth.

Specifically in the areas of Wendy's breakfast, remodeling at both brands, and international.

We plan to drive positive same store sales and restaurant margin improvements at Wendy's.

We are focused on the turnaround of Arby's and improving same store sales.

We will continue to identify and benefit from additional G&A efficiencies.

We will leverage the purchasing power of both brands, and finally, we plan to generate annual adjusted EBITDA growth in the low to mid-single digits.

And we expect to return to mid-teens adjusted EBITDA growth in 2011.

Now, I'd turn it back over to John.

Thanks Roland.

We would like to open up the call for questions now.

We have a large number of participants on the call, as well as the webcast.

So we ask if you have a question -- try to limit those so we can get everybody in.

Operator, we would like you now to open the lines for questions.

(Operator Instructions) Your first question comes from Matt DiFrisco of Oppenheimer.

Thank you.

Can you address behind the 2010 outlook and EBITDA outlook, what type of growth you expect from the franchisees of both Arby's and Wendy's?

Or is it a year of contraction again for the brands?

Are you asking from a unit standpoint?

Exactly.

Yes.

Sorry.

From a unit standpoint, both at Wendy's and Arby's as we presented in our 10-Q this morning, we don't expect contraction or expansion to have a significant impact on our results.

Okay.

And then also, looking at the outlook for -- or what you're doing right now as a comp basis the improvement at Arby's.

Is the brand also -- are you having cost savings there where you don't need positive same store sales to hold margins?

Or see the margin -- directionally, your margin contraction is not happening as much even though the comps were not that great at the Company-owned side.

But if you sustain these current comp trends, are you able to sustain margins?

Or do you need positive comps at Arby's?

As you know, Arby's has historically had very significant high margins at the store level.

And as I mentioned in my comments today, a significant amount of our margin reduction has been deleveraging based on our sales trends.

The good news is that we expect our sales trends to improve in 2010.

And with that improvement, we expect that we'll be able to improve our margins as we go forward.

Okay.

And then the last question is, just bookkeeping.

That $9 million that you're tagging for breakfast investment?

That is purely all marketing and ad dollars?

No, the predominant of it is in advertising dollars, but there is some of the dollars also that will go into further consumer testing so that we can validate the new products that I mentioned to you today.

Okay.

Thank you very much.

You're welcome.

Your next question comes from David Palmer of UBS.

Yes, hello.

Stefan Carlson here for David Palmer.

Could you talk a little about what some of your early learnings have been since you've taken more direct control over at Arby's?

And are there any insights there that are making you more optimistic about gaining sales traction?

Thanks.

Yes, Stefan, I certainly can.

I've been significantly involved in the brand for the last 60 days as I mentioned.

I'll just highlight a couple things that we have learned that we think are significant to the improvement.

Probably the most significant thing, as I shared with you from a results standpoint today, was the significant low rating that Arby's received from the standpoint of worth what you pay for it.

We believe that's the major barrier to turning around the transactions and the sales decline at Arby's.

And certainly, that has been exacerbated over the last year or so.

As our high check average that we've always enjoyed seems even higher to consumers, as many of them are out of work and disposable income has declined.

And our competitors have significantly raised the price of poker, so to speak, with this value menu price war.

A key learning is that we are going to need to compete compete in this dollar value menu kind of area of our business.

Fortunately, we began testing that a little over a year ago.

We built that menu so that we could live with the margins that it would produce.

We just didn't take our products that we currently were selling at full price and discount them because we knew that that would certainly not have beneficial same store sales results.

And so we are excited about the opportunity to launch our national -- launch our dollar menu value nationally.

I mentioned we're going to do that in April.

We're going to back that up with some significant national TV advertising.

So I think value is clearly one the key learnings.

Secondly, we know that we have to compete from a share voice standpoint, and to do that, as I mentioned, we have gotten our franchise system to vote to increase our national advertising contribution from 1.2% to 2.5%.

This additional contribution will allow us to expand the amount of national advertising which will improve our share of voice versus the past and also allow us to compete more effectively for customers.

We also think we need to make sure that our advertising works as hard for us as possible.

It needs to continue to talk about our brand positioning very clearly while we talk about value, and we think that the new advertising that we're about to put on air here in March and begin to expand in April and beyond is a significant improvement and will connect with our customers and do what marketing is really supposed to do -- drive trial.

And then, operations' job is, as you know, to drive repeat.

We think we need to continue to balance this value positioning that we will cement in the consumer's mind this year with high product offerings.

And we began significant improvement into our new product development and testing process.

We're going to get some new products and test very quickly, and we're excited about using that to relaunch the brand to the consumer in the fourth quarter.

And finally, as we all know, it's important to make sure that the facility is inviting.

And it competes with the competition, and so that's why we have started a significant remodeling program.

Remodeling 100 stores this year to a Pinnacle design which we know from past experience is well liked and performs better than our older designs at Arby's.

And over a period of three years, as I mentioned, we expect our key markets to be at close to 100% penetration of Pinnacle and the remainder of our markets to be at around 75%.

So those are the key learnings and those are our key initiatives in 2010.

Do we have another question?

Your next question comes from John Glass of Morgan Stanley.

Hello.

Thanks.

I first just wanted to clarify your EBITDA guidance.

It seems that you are suggesting that EBITDA will probably contract by 2% to 4% next year.

The numbers I get are $410 million to $420 million excluding the extra week and including the incremental cost from breakfast.

Is that math right?

Yes, John.

What you -- what we're saying is you'll take the reported adjusted EBITDA this year -- for comparison purposes going forward, take out the extra week which we've -- is about $14 million.

That gives you your base, and then we're saying from that number, we'll see an increase in the low to mid-single digits.

And from our standpoint, we've got about $9 million of incremental breakfast spend that really will not produce an EBITDA benefit during the year.

Got you.

But it will -- you will result in down EBITDA.

I just want to be clear that's what your forecast is?

No, we're showing -- I'm saying we are taking an increase from that -- from the $425 million less the $14 million.

We'll see an increase over that level.

Okay.

But the number you report will be down year-over-year.

So the broader question is in 2011, you're talking about going back to mid-teens.

But a lot of -- you initially talked about the mid-teens growth -- it was a lot of the cost savings you could implement.

So you didn't really need sales improvement to get there.

And Steve, you talked today about reaching your G&A targets early, and you have talked about pulling a lot of those benefits to margins, particularly the Wendy's brand forward.

What does it require then to get mid-teens growth out of this business in 2011?

Is it more than sales?

Or are you saying you think you can actually exceed those targets in EBITDA so in a flattish sales environment, you are able to get to mid-teens again in '11.

John, let me talk about both 2010 and 2011 from a EBITDA standpoint.

First, you know from Steve's review, and you didn't need Steve's review to obviously understand this.

That the economy was really soft in 2009.

The economy, unemployment, and customer confidence remain weak in 2010, and while some of the economists are talking about that improving in the second half of the year, we are not necessarily planning for that from the standpoint of the guidance that we're providing.

Clearly in 2009, this put an awful lot of pressure on top line sales, not only on our brands, but every brand across the industry saw a similar issue.

So in 2009 as you just mentioned and as Steve certainly talked about, to compensate for this sales pressure, we overachieved those things that we talked about being able to deliver over a couple of year period which were clearly in the area of improving Wendy's margins and showing significant G&A efficiencies.

And so certainly by moving that more into 2009, we will not get as much benefit as we had planned to get in 2010.

But even with the economy in 2010, from our comments today, you know we expect positive Wendy's same store sales, and we expect that by the end of the year, that Wendy's will clearly be one of the leaders of the industry from the standpoint of how we're performing sales-wise.

We also expect that we will continue to improve our margins at Wendy's.

We have a very solid plan to turn around Arby's in 2010, but we know after 40 plus years of being a high check average brand without a value menu, that had a different value proposition, which has changed entirely in the last 18 months based on what's going on from an economy standpoint and from a competitive standpoint.

That it's going to take a little bit of time for us to get out and introduce our new dollar value menu which we're very excited about, which has tested very well, which even with just a little bit of advertising in January significantly turned around our sales trends as I talked about today.

And so we expect as we launch this in April, nationally, with all our franchisees participating with new advertising, this is going to generate a lot of excitement with our customers.

As we talked to them, not only did the chart that I showed you today talk about our issue with 'worth what you pay for it', but the number one comment that we get from our consumers sounds something like this.

We love your food.

We'd love to go and visit more often, but we can't afford to pay the price that you charge us.

And so we're fixing that for them.

And we will continue to work on a very clear value positioning with our customers.

Not only in April, but throughout the year, as we expand the advertising for this dollar value menu and also look at other value opportunities.

But that's going to take some while -- a while, as I mentioned to cement in our customer's mind.

And we believe that we will continue to improve throughout the year.

And then finally in 2010, which really answers your question about 2011, we are making a significant investment in programs and projects to ensure that we get back to what I think is a very exciting growth trend.

The Wendy's breakfast program is coming along quite nicely.

You can see from what I talked to you about today and although I didn't get into too much more detail from competitive reasons, we believe that we now have a menu that really reflects our brand positioning.

Fresh cracked eggs.

Bacon cooked from scratch.

Specialty coffee that's fantastic.

Other products that none of our other competitors have, and we're not immune to the fact that breakfast is not a simple day part to break into.

It's still almost 25% of the transactions in our industry.

And it's silly not for a brand that is strong and as well known as Wendy's not to participate and take at least a fair share.

Someone will say, yes, but McDonald's is going to stand up and work very hard to make sure that you don't take it from them.

In fact, they just launched a dollar -- big dollar breakfast menu, and we're certainly well aware of that.

But there's many other brands out there -- much weaker than Wendy's that we believe that we can take a fair share of breakfast and add significant revenue to the store which will also drive significant profitability.

The strategic pricing initiative that I mentioned to you a few moments ago is also a big opportunity that we're spending an awful lot of time in 2010.

With what's going on economically, in the amount of value that you need to have on your menu, it's very important that systematically and very carefully you understand how pricing effects elasticity.

And that's what we're spending a fair amount of money and time on right now understanding the relationships within different products between different geographies and different locations.

And again, this is not something we're inventing from scratch.

This has happened with a number of our competitors as you know, and it's really helped them significantly improve their sales.

And we believe, by the time we get the model done, and we start to implement this -- we have a lot of stores in the Wendy's brand.

That we'll get most of this benefit, obviously, in 2011 and beyond.

The remodels -- we started on already.

We think that that's also going to have a very positive impact.

But again, the majority of these will begin to happen later on in 2010.

As we get through the winner -- if we ever get through the winter -- let's all hope we do here pretty soon.

And we start to get these new stores opening, and it starts to be more inviting for customers.

It starts to put us in a better competitive situation at both of our brands.

And again, that's going to be the significant impact in 2011 and beyond.

And then finally, international is one of those things that's a little bit like compound interest.

You spend a fair amount of time and money up front, and then all of a sudden, it starts to pay back pretty nicely over a period of time.

And that's probably to be fair, not as exciting maybe from an EBITDA standpoint in 2011.

But it's certainly is more exciting as we get to later in 2011 and '12 and beyond as we start to bring to fruition some of the exciting opportunities that we are already beginning to talk about.

So that's why we believe, John, that 2010 is an investment year.

We think we have the right plans.

And we think that we will -- going to do well in the year based on the forecast that we provided you, and that 2011 will be back to an exciting growth year for us from an EBITDA standpoint.

Thank you.

Your next question comes from Steve Kron of Goldman Sachs.

Thanks.

This is Neil Portus for Steve.

Could you quantify February sales or an approximate impact from weather?

Also, as the competitive environment become more rational, and what does your marketing schedule look like for value versus premium messaging at both Wendy's and Arby's.

Thank you.

Neil, I will start with the last question.

At both brands, we are clear that we are going to need to pulse value and premium products throughout the year, and again for competitive reasons, I'm not going to go beyond that because I certainly don't want to highlight when and how we're going to do things to our competitors that will use it to their advantage.

From the standpoint of February, as you've probably heard from every single brand as they've talked about results, the central and the east portions of the country have had more severe weather.

And in some states, record snowfall, which has clearly kept people out of our stores.

And so as I mentioned, it's had a negative impact on same store sales.

However, we don't talk about that typically on a month by month basis.

So we're not going to quantify that.

We'll give you more update on that as we report our first quarter numbers here in the next couple of months.

Third question?

Which is?

Competitive environment.

Oh, sorry.

Thank you.

Sorry, Neil.

Yes, the competitive environment I will tell you has not slowed down a whole lot.

We continue to see significant discounting by all our competitors.

And probably as aggressive as I've seen it throughout most of 2009.

As you know, because you've read about it as have we, it sounds like Burger King is going to move off their dollar double cheeseburger which certainly is going to have an impact on their own sales, I would expect.

And I would also expect that they'll try to replace that with something else that's a value message.

Because I think it's pretty clear in this economy, in this unemployment situation, you need to have a strong value position, or you'll lose the bottom end of your consumer base.

Next question?

Your next question comes from Sara Senatore of Sanford Bernstein.

Hello, can you hear me?

Yes.

Okay.

Great.

Thanks.

I'm on a cell.

So I have a big picture question.

It sounds like a lot of what you are doing, as you pointed out, echoed elsewhere.

Everybody is doing remodeling or re-imaging.

There's a lot of -- certainly, value is pervasive.

The pricing, architecture is changing, and even breakfast is obviously attracting a lot of interest.

So big picture, should we assume that the business going forward is probably going to be less attractive overall for everybody?

Higher investment spending, lower margins -- it doesn't sound like a great recipe for return.

So I just wanted to get your thoughts on how to think about the industry?

Well, Sara, I don't know that I can give you guidance on what you should think about our competitors.

But I can certainly give you a little bit of insight on how we see it.

Certainly, this is the most difficult marketing situation that I think any of us have seen in our careers from the standpoint of what's going on in the food industry.

That being said, I don't see that it gets worse than 2009.

As we mentioned, we think it will be continued to be soft in the first part of 2010.

Many of the economists are talking about improvement in the later part of 2010.

And some of the weaker brands, I think, will struggle as this continues.

However, from where we sit, two brands that have very strong positioning from the standpoint of quality products.

We believe as the economy begins to improve, and we get the benefit of some of the initiatives in the investments that we've spoken about today.

That we're going to be able to take full advantage of, of the market returning to a more normal situation, and us growing probably more quickly than many of the other brands.

So from that standpoint, I think that we are probably a pretty interesting and a pretty inviting stock from that standpoint.

Assuming that you don't think that the economy is going to melt down any further than it has which I don't think that anyone would suggest that that's going to be the case.

And Sara, what I would also say is in terms of your comment around the higher CapEx.

For us, in terms of our guidance for next year, we are ramping up Capex.

Not because we think that indicates weakening fundamental, we think it's a vote in the future.

We want to play a little offense.

While we certainly expect the economy to continue to be pretty soft here, we think it's time to make a significant investment in both brands that we think will have an attractive payoff in the future.

So it's a matter of while we were very disciplined in our CapEx in 2009, I think we have found a number of strategic growth opportunities that we think are worth spending on this year.

Steve, and I would just build on that a little bit.

I think the brands that are looking at the current situation and saying, you know what, in all chaos there's great opportunity which I have built a long career on, and are going to do the right things.

They're going to come out of this much, much stronger than the brands that are trying to hunker down and wait through it.

And that's why we have chosen to provide some significant investments in both of our brands.

Because again as I said, as the economy starts to strengthen -- as Arby's starts to get a better positioning from a value standpoint.

I think both of our brands will respond with significant same store sales, and margins will expand accordingly.

Thank you.

Your next question comes from Michael Gallo of CL King.

Hello.

Good morning.

Good morning, Michael.

My question is on the Arby's side of the business.

You have rolled out now here in January, the value menu.

I was wondering if you can provide us any color on what you've seen in terms of traffic versus ticket?

To what degree it's cannibalized other products versus driven new traffic, and what kind of margin impact, if any, it's had on the results?

Thank you.

Sure.

Michael, I'll be happy to address that.

Let me first of all, say that in January, it was not a national rollout.

We rolled it out to about 2,500 of our stores, and as I mentioned earlier -- while we had some advertising to introduce it to our customers, it was local advertising.

And quite honestly, some of it was minimized by the fact that when one of the weeks we had some significant, negative weather.

What we're seeing, however, is a significant increase in transactions as consumers realize that they can come into Arby's, and they can get products for much less expensive than what they've used to.

From a usage standpoint, we've been pleasantly surprised.

Most of our customers are not coming in and just buying three items for $0.99 or three items for $1.

Most of our customers, quite honestly, are walking out with a check averages around $5.50, which kind of averages what the industry is.

And that's because they're using this as an add-on or a build-on, or they buy more than just three items.

And so, that's having a positive impact.

From a check standpoint, certainly we've seen some check erosion.

Because you know our average check is typically higher than $5.50.

However, as I mentioned, transactions have more than made up for the check erosion.

So same store sales have improved dramatically over the trends.

Over just that three-week period in January as I mentioned where we had some local advertising in our Company stores, we saw the trends to improve to minus 3.9%, which is very encouraging.

From a margin standpoint, clearly it has some impact on our margins.

It's been roughly about 500 basis points or 0.5 point.

But we believe that the sales improvement -- 50 basis points.

They're all looking at me like I'm crazy.

50 basis points or 0.5 point.

But we believe that is clearly covered by the increase in sales that this program generates.

So net-net, we're excited about it, and we think it's going to continue to drive sales and profitability.

And then just a follow-up question to that.

Obviously, you're emphasizing value now as you launch that.

It seems like -- well, one of the things that's been I would say missing but not as strong as some of your competitors, has been some new product innovation at the Arby's brand.

And I think we go back to really since the launch of Market Fresh.

We haven't been able really to sustain any meaningful innovation or new lines that have driven a lot of new customers.

I was wondering if you could speak to what we should expect to see on relaunch of Market Fresh, relaunch of the chicken products which I think you tried a few years ago but didn't really.

Haven't been able to build much traction, or just some other areas where you think things can be improved.

For example, toasted subs which I think were done a couple years ago didn't quite grow the way you thought they'd be.

Just help me out on what we should expect to see from Arby's getting back from an innovation standpoint?

Thank you.

Michael, I think you make a very good point from the standpoint of product innovation.

Any brand, certainly in our space, which is all about high quality food, needs to continue to innovate and provide new products so that consumers are interested in coming in and participating.

So you've got to balance that new product innovation with value as I mentioned we're doing.

Certainly, one of the biggest launches in the Wendy's -- I'm sorry, the Arby's history, was Market Fresh a number of years ago.

I don't know any other brands that have actually successfully launched a whole new line of products like Market Fresh.

So I think that is a significant unusual thing.

That being said, last March, we introduced a line of sandwiches called Roastburgers that has continued to mix very well.

I would say that's a very successful introduction in our brand.

Where we've lost our traffic and sales, Michael, has been in the area of the lower end consumer that's looking to come in for more of a value.

I do think we will continue to balance that.

You mentioned the chicken, which is something we are clearly working on.

You mentioned Market Fresh, which is also clearly something we're working on.

But again, for competitive reasons, I'd like to not go into more detail because doing that will give our competitors a heads-up on some of the new and exciting product innovation launches that we do plan for Arby's later on this year.

The bottom line conclusion from that is we should expect so see some new product innovations from Arby's later this year.

Absolutely.

It's a hallmark of how businesses -- our brands continue to be interesting to the consumer.

Thank you.

I think we have time for one more question.

Your next question comes from Jeffery Bernstein of Barclays Capital.

Great, thank you.

One person, perhaps two questions.

Just first, the specifics in terms of the remodels.

It sounds like a more significant push this year and next.

I'm just wondering -- the remodels you've already done -- it sounds like they drove improved results.

I'm wondering whether there is any details in terms of the cost per unit or the comp lift you were seeing in tests?

Any color on either brand just to give comfort around the 100 new that you're doing at both brands and the franchisee push to a similar level?

Jeff, let me try to a address that.

I think on the Wendy's side, we've had a pretty good track record there when we look at the remodels as a whole -- that we've seen where we've gone in and freshened the exterior and interiors of the buildings that we've seen as a group that those sales and margins tend to improve.

And provide a reasonable return on the investment.

A typical cost of a remodel on the Wendy's side can go as low as $100,000, but more likely I think going ahead, where we see it have more of a significant impact is when you spend about $250,000 a unit.

On the Arby's side, again we really are kicking up and launching a market-by-market program to try to get to the 75% Pinnacle image.

The results, as we stratify them -- there is a pretty significant difference in profitability and sales performance of the Pinnacle image restaurants we have in the Arby's system versus some of the older models.

And so, we do believe we'll get an attractive return on that investment if we can get our system to look more consistently -- especially market-by-market where we have good penetration that we think we can get a good return.

Again, the investment we're looking there would probably be $250,000 to maybe $300,000 per unit on the Arby's side.

Okay.

Just more broadly speaking in terms of 2009 being a very strong year in terms of achieving a good portion of your three-year targets -- 2010 more of an investment year.

I'm just wondering now that you are ahead on both G&A and margins, is there anything that you've discovered on either end that should lead us to believe that those targets can now far being exceeded?

Or should we just expect the still -- the not much more than $60 million in G& A and not much more than the 500 basis points in margin.

And therefore, a much slower ramp on the back half?

I'll address those both, Jeffrey, one at a time.

From a G&A standpoint, we consistently look at ways where we can significantly improve our G&A, and I think, quite honestly, as we continue to build stores and expand our penetration, that G&A will become more and more efficient.

We do think that there are some additional savings that we can enjoy, but we've gotten certainly the majority of that in 2009 as we pointed out.

From a margin standpoint, we were over 300 basis points.

That's well over half our way to 500.

I hope that gives you a sense of confidence that we actually understand how to improve margins in the stores.

Specifically in light of the fact that -- that 330 that we reported for 2009 had no commodity impact because the commodities were more expensive in the first half and less expensive in the second half.

I don't think -- no earth-shattering learnings.

We pretty much knew what it took to drive margins from the standpoint of the right metrics, the right tools, the right bonus plans, and the right focus from the standpoint of how our store managers went about the process of making that come to fruition.

I give them all and full credit for the significant improvement that they've made.

And probably even as impressively while doing that, we have improved the level of Company operations significantly from, as I mentioned, about 38% of our stores being A and B, when we took this on -- to well over 60% being A and B by the end of 2009.

So we feel very good about our ability to operate stores.

Our ability to continue margin expansion as we go forward -- is there upside to the 500 basis points?

Absolutely.

I think that upside is in two forms.

The first is, as we grow sales -- we come out of this economic environment, we certainly think that that will expand margins because the drop to the bottom line -- certainly with companies like we've proven that know how to manage the bottom line, will probably be quicker.

And secondly, as we get the benefit of both our purchasing cooperative and also the third cooperative that we put -- are putting into place.

We believe that there will be savings there that we have not baked into the 500 points that will allow us to enjoy improvements beyond that as those things start to come to fruition.

Great.

Thank you.

You're welcome.

Thank you all for participating today, and thank you for your questions.

Let me just conclude with a brief overview, and in that overview what I'd like to remind you is -- last time, or last year this time, as we were talking with you, we made five key commitments.

We said we were going to improve Wendy's Company store operating margins.

We said we were going to achieve significant G&A savings at the parent Company.

We said that we were going to to re-energize the Wendy's brand.

We said that we were going to form a Wendy's purchasing cooperative, and probably most importantly, we said that we were going to achieve mid-teens adjusted EBITDA growth.

I'm very pleased to relay that we achieved or we overachieved on all five of these commitments.

I'm very proud of what the team has been able to do over the last year.

And maybe more importantly, we look forward to delivering on our commitments in this same way in 2010 and 2011 and beyond.

Thanks again for your time today.

Look forward to speaking to you all in person.

Just one last thing I'd like to share with everybody, just a little housekeeping.

We will post these slide on our website so you will have a chance to take a look at those more closely afterward.

We ask you to take a look at that in conjunction with our 10-K that was filed this morning in the release.

Steve Hare, Kay Sharpton, and myself have a number of follow-up calls with several of the analysts this afternoon.

But we will be available tomorrow as well.

And then lastly, next week, Roland and Steve will be presenting at the BofA conference in New York.

And the following week, Steve Hare will be presenting at the JPMorgan conference.

So, we will hope to see you on the road.

Thank you.

Thank you.

This concludes your conference.

You may now disconnect.