How much does a wendys franchise owner make a year

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Wendy’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Wendy’s franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Wendy’s franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Wendy’s outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Wendy’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, high, and low gross sales for the 350 company-owned and 5,241 franchised Wendy’s Restaurants that had at least 53 weeks of consecutive sales as of January 3, 2021

• 2020 average, median, high, and low gross sales for the 239 non-traditional franchised Wendy’s Restaurants (transportation, fuel, food court, and military) that had at least 53 weeks of consecutive sales as of January 3, 2021

• 2020 average, median, high, and low gross sales, cost of sales, gross profit, other operating expenses, rent, and restaurant EBITDA for the 336 traditional company-owned Wendy’s Restaurants that had at least 53 weeks of consecutive sales as of January 3, 2021

Section I – Background Information

14 Things You Need to Know About the Wendy’s Franchise

Announces Advancement of Corporate Responsibility Efforts and New Goals

1.  In late April 2021, Wendy’s released its 2020 Corporate Responsibility Report detailing the progress made across its three key focus areas of Food, People, and Footprint. Within the report, Wendy’s shared the outcomes of its recent materiality assessment of Environmental, Social, and Governance (ESG) topics, along with several new goals relevant to Wendy’s Good Done Right platform and strategy.

2.  Todd Penegor, president and CEO of Wendy’s, said, “Everything we do revolves around our vision of becoming the world’s most thriving and beloved restaurant brand. Throughout 2020, our teams remained focused on taking care of our customers and the Wendy’s family while making a positive, lasting difference in the broader communities we serve. I’m proud of the progress we’ve made against our Good Done Right strategy and excited about the new goals we’re sharing publicly today.”

3.  For the first time, Wendy’s is recognizing leading reporting standards such as the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) and those frameworks can be found in the matrices table at the end of the report. Wendy’s is also sharing how its material impacts align with the globally recognized UN Sustainable Development Goals. Later in 2021, Wendy’s also reported to the CDP for Climate for the first time.

4.  Liliana Esposito, chief corporate affairs and sustainability officer of Wendy’s, added, “Wendy’s is committed to transparency throughout our corporate responsibility journey. That’s why we are communicating and benchmarking our progress against globally recognized reporting frameworks, such as SASB and the UN Sustainable Development Goals. We will continue to drive momentum on material topics and will regularly report our progress.”

5.  As further described in the 2020 Corporate Responsibility Report, Wendy’s new goals include:

• Food: Responsibly source Wendy’s top 10 priority food categories by 2030. Building on the company’s long-standing work to responsibly source its ingredients, Wendy’s is now formalizing its approach by developing environmental and social criteria, which are informed by a lifecycle assessment of priority food categories, Wendy’s Animal Care Standards Program, a human rights risk assessment, and through collaboration with key supply chain partners. The top 10 priority food categories, determined by spend and impact, include products such as beef, chicken, pork, dairy, eggs, produce, and beverages.

• People: Increase the representation of underrepresented populations among company leadership and management, as well as the diversity of Wendy’s franchisees. Specific areas of focus include increasing representation of those who identify as female and persons of color, as well as driving an inclusive mindset and culture at all levels of the organization.

• Footprint: Sustainably source 100% of customer-facing packaging by 2026. To accomplish this goal, over the next five years, Wendy’s will optimize customer-facing packaging and transition to sustainable options including items that: have higher recycled content; use fewer raw materials; adhere to an established restricted substances list; are recyclable, compostable, or reusable; and are sourced from areas that do not contribute to deforestation.

• Footprint: Benchmark, track, and reduce Wendy’s Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions and set a science-based target by the end of 2023.

Launches Initiative to Recruit Franchisees from Underrepresented Populations

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6.  At the end of February 2022, Wendy’s announced a new franchise recruitment initiative, “Own Your Opportunity,” that will create franchising pathways for underrepresented populations, specifically among women and people of color. According to Todd Penegor, president and CEO of Wendy’s, “To be the best Wendy’s we can be, we must make available opportunities for everyone who wants to grow with us. The Wendy’s brand truly thrives when our System reflects the diversity of our customers and restaurant teams, and when our franchisees are highly engaged and growing together with us.”

7.  In 2021, Wendy’s announced new goals to advance the company’s corporate responsibility platform, “Good Done Right.” Included was a goal to increase representation of underrepresented populations among leadership and management, as well as diversity of franchisees. Wendy’s believes over time, the Own Your Opportunity initiative will help advance this goal by providing more pathways for all, including diverse franchisees who want to join the Wendy’s family.

8.  To jumpstart Own Your Opportunity, Wendy’s has:

• Created more competitive liquidity and net worth requirements for all new franchise applicants.

• Expanded economic opportunities for new franchisees working together with its three preferred U.S. financial lenders – City National Bank, Huntington National Bank, and Wintrust Franchise Finance.

• Supported First Women’s Bank, the only women-founded, women-owned, and women-led commercial bank in the U.S. with a strategic focus on serving the women’s economy, by becoming a Mission Partner. This partnership underscores the company’s continued commitment to bridging the gender gap in lending and empowering women entrepreneurs.

• Created a build-to-suit development fund to help fuel growth in underdeveloped trade areas, where Wendy’s secures and builds restaurant locations and hands over turnkey solutions to franchisees. Priority will be given to those franchisee candidates who cannot otherwise access the required capital for new restaurant development.

• Introduced new innovative restaurant formats, which can help enable ownership in the Wendy’s system with a lower initial financial commitment.

• Conducted franchise surveys and held various focus group discussions and business reviews to help identify tools and resources most beneficial in helping existing franchisees thrive and grow.

9.  Abigail Pringle, president of international markets and chief development officer of Wendy’s, added, “We believe that increasing diversity of thought and experience will bring new ideas and innovations to Wendy’s, which will help us continue to grow together for decades to come. When you become a Wendy’s franchisee, you own more than a great restaurant – you Own Your Opportunity, with a path to prosper and the prospect to lead within a thriving and beloved restaurant brand.”

Company History

10.  Wendy’s was founded in 1969 by Dave Thomas in Columbus, Ohio. Thomas wanted to create his own “old-fashioned” hamburgers after eating at Kewpee Hamburgers in his hometown of Kalamazoo, Michigan. Kewpee served square hamburgers and thick malt shakes – these items would become Wendy’s signature offerings. Thomas named his new restaurant after his youngest daughter, Melinda Lou “Wendy” Thomas, and he modeled the brand’s logo, a little red-headed girl, after his daughter.

11.  The first Wendy’s was a success and a year later, Thomas added a second location that featured a “pick-up window.” This was the first modern drive-thru in the world. Building on his success, Thomas started franchising Wendy’s in 1972. The chain quickly grew around the United States and in 1975, the first international location opened in Canada. By the end of the decade, there were more than 1,000 Wendy’s locations in operation.

12.  Over the next few decades, Wendy’s continued to expand around the world. The brand also expanded its menu and added signature items that are still around today, including chili and baked potatoes. In 1995, Wendy’s acquired Tim Hortons, a Canadian baked goods and coffee chain. Wendy’s sold off Tim Hortons about a decade later in 2006. Two years later, Wendy’s merged with Triarc Companies Inc., the parent company of Arby’s, and formed The Wendy’s/Arby Group.

13.  The company changed its name to The Wendy’s Company in 2011 and it still oversees Wendy’s – the company sold off its stake in Arby’s in 2018. During all of these changes, Wendy’s continued its global expansion. Today, there are Wendy’s restaurants all around the world.

Entrepreneur’s Franchise 500

14.  Wendy’s did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Wendy’s franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Detailed information on Wendy’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  5,432
• Outlets at the End of the Year:  5,457
• Net Change:  +25

2019

• Outlets at the Start of the Year:  5,457
• Outlets at the End of the Year:  5,495
• Net Change:  +38

2020

• Outlets at the Start of the Year:  5,495
• Outlets at the End of the Year:  5,520
• Net Change:  +25

Company-Owned

2018

• Outlets at the Start of the Year:  337
• Outlets at the End of the Year:  353
• Net Change:  +16

2019

• Outlets at the Start of the Year:  353
• Outlets at the End of the Year:  357
• Net Change:  +4

2020

• Outlets at the Start of the Year:  357
• Outlets at the End of the Year:  361
• Net Change:  +4

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

Part 1 – U.S. Average Gross Sales for the Period December 30, 2019 to January 3, 2021 (Fiscal Year 2020)

• As of the end of fiscal year 2020 (December 30, 2019 through January 3, 2021) (“Fiscal Year 2020”), excluding Wendy’s Restaurants located in U.S. Territories, there were 361 domestic Wendy’s Company Restaurants, and 5,520 domestic Wendy’s Franchised Restaurants.

• In March 2020, Wendy’s Restaurants initiated a breakfast daypart menu. The results shared below do not represent a full year of breakfast daypart sales under Wendy’s current menu for this reason.

• Prior to that time, a limited number of Company Restaurants and Franchised Restaurants were participating in Wendy’s new breakfast daypart menu, some of which had been selling a prior iteration of Wendy’s breakfast menu prior to implementing the new menu.

• The average gross sales of these Restaurants are not set out in this Item separately due to the small sample size of these Restaurants, their geographical concentration/variation, and because these Restaurants’ new breakfast daypart menu sales were generated without any national media or advertising placements regarding their breakfast menu items.

• As used in this Item, “Gross Sales” is defined as all income less: taxes, refunds, and amounts from coupon or discount programs.

• The Restaurant sales volumes for Franchised Restaurants are based on a combination of weekly sales data submitted by Wendy’s franchisees, as well as automated data generated by the Restaurant point of sale system. Wendy’s has not independently verified that these reports were true and correct.

• Wendy’s only includes Restaurants which had at least 53 weeks of consecutive sales within the past 12 months.

• In Part 1, 11 Company Restaurants and 279 Franchise Restaurants are excluded as they had less than 53 consecutive weeks of sales. Of these Restaurants, during Fiscal Year 2020, there were 2 Restaurants owned by one or more affiliates of Wendy’s that closed permanently and 67 Restaurants owned by Wendy’s Franchisees that closed permanently. No Restaurants closed after being open less than 12 months.

Company-Owned Restaurants

• Number of Restaurants:  350
• Average Annual Gross Sales:  $2,027,283
• Median Annual Gross Sales:  $2,008,496
• Range of Annual Gross Sales:  $721,928 to $3,752,972
• Number and Percent of Restaurants at or Above Average:  168 (48.0%)

Franchise-Owned Restaurants

• Number of Restaurants:  5,241
• Average Annual Gross Sales:  $1,750,838
• Median Annual Gross Sales:  $1,668,908
• Range of Annual Gross Sales:  $411,237 to $5,099,354
• Number and Percent of Restaurants at or Above Average:  2,294 (43.8%)

Part 2 – U.S. Average Gross Sales for Non-Traditional Franchised Restaurants Only for the Period December 30, 2019 to January 3, 2021 (Fiscal Year 2020)

• Non-Traditional Company sites are not included as the sample size is insufficient.

• Transportation includes airports, train stations, bus stations, and ferry stations. In Fiscal Year 2020, all Transportation sites are airports.

• Fuel includes gas/c-store combinations, highway service plazas, and travel centers/truck stops.

• Food Courts span hospitals, malls, and universities/colleges.

• Military is inclusive of sites at military bases.

Transportation

• Number of Restaurants:  11
• Average Annual Gross Sales:  $1,608,399
• Median Annual Gross Sales:  $1,378,519
• Range of Annual Gross Sales:  $838,622 to $3,680,515
• Number and Percent of Restaurants at or Above Average:  4 (36.4%)

Fuel

• Number of Restaurants:  215
• Average Annual Gross Sales:  $1,774,637
• Median Annual Gross Sales:  $1,708,052
• Range of Annual Gross Sales:  $646,134 to $3,611,128
• Number and Percent of Restaurants at or Above Average:  95 (44.2%)

Food Cout

• Number of Restaurants:  5
• Average Annual Gross Sales:  $1,051,097
• Median Annual Gross Sales:  $895,343
• Range of Annual Gross Sales:  $665,028 to $1,558,918
• Number and Percent of Restaurants at or Above Average:  2 (40.0%)

Military

• Number of Restaurants:  8
• Average Annual Gross Sales:  $1,822,282
• Median Annual Gross Sales:  $1,672,321
• Range of Annual Gross Sales:  $467,680 to $4,065,592
• Number and Percent of Restaurants at or Above Average:  3 (37.5%)

Part 3 – Historic Sales, Costs of Sales, Selected Expenses, and Profits for Traditional Company Restaurants

• The table below provides the following categories of historical financial information for the Fiscal Year 2020 for the 336 Traditional Company Restaurants that were open and in continuous operation for at least 53 weeks as of January 3, 2021 (“Traditional Company-Owned”): (a) Gross Sales; (b) Cost of Sales; (c) Gross Profit; (d) Other Operating Expenses; (e) EBITDA before Rent; (f) Rent; and (g) EBITDA after Rent.

• Wendy’s only includes Restaurants which had at least 53 weeks of consecutive sales within the past 12 months.

• In Part 3, 11 Company Restaurants are excluded as they had less than 53 consecutive weeks of sales. Of these Restaurants, during Fiscal Year 2020, there were 2 Restaurants owned by one or more affiliates of Wendy’s that closed permanently. No Restaurants closed after being open less than 12 months.

Gross Sales

• Average:  $2,028,018
• Median:  $2,007,242
• Range:  $833,123 to $3,602,249
• Number and Percent of Restaurants at or Above Average:  159 (47.3%)

Cost of Sales

• Average:  $647,905
• Median:  $638,938
• Range:  $263,104 to $1,161,910
• Number and Percent of Restaurants at or Above Average:  158 (47.0%)

Gross Profit

• Average:  $1,380,113
• Median:  $1,357,845
• Range:  $570,019 to $2,440,339
• Number and Percent of Restaurants at or Above Average:  153 (45.5%)

Other Operating Expenses

• Average:  $1,002,987
• Median:  $971,394
• Range:  $684,728 to $1,668,823
• Number and Percent of Restaurants at or Above Average:  140 (41.7%)

Restaurant EBITDA Before Rent

• Average:  $377,126
• Median:  $370,401
• Range:  -$114,708 to $1,089,786
• Number and Percent of Restaurants at or Above Average:  164 (48.8%)

Rent

• Average:  $58,638
• Median:  $52,065
• Range:  -$46,438 to $297,492
• Number and Percent of Restaurants at or Above Average:  160 (47.6%)

Restaurant EBITDA After Rent

• Average:  $318,488
• Median:  $316,539
• Range:  -$238,520 to $1,089,786
• Number and Percent of Restaurants at or Above Average:  166 (49.4%)

Additional Operating Expenses for Franchised Restaurants

• Royalty (4% of Gross Sales):  $81,121

• “Cost of Sales” includes restaurant level food and paper expenses, but does not include any unallocated costs/benefits related to beverage rebates.

• “Gross Profits” means “Gross Sales” minus “Cost of Sales.”

• “Other Operating Expenses” includes the following costs: labor, payroll taxes, advertising fees, promotion, outside services, operating supplies, maintenance and repair, utilities, office supplies, legal and accounting fees, insurance, real estate and personal property taxes, business operating licenses, non-product income or expense, and worker’s compensation.

• “Other Operating Expenses” as used in this table does not include any unallocated costs/benefits related to Company Restaurant employee bonus, management training salaries, and other restaurant support costs.

• “Other Operating Expenses” also does not include any amounts related to rent, depreciation and amortization, interest, and income taxes.

• Franchised Restaurants are also required to pay Royalty Fees that Company Restaurants do not have to pay. Royalty amounts generally comprise 4% of Gross Sales for Traditional Restaurants, but may be impacted by various incentive offerings.

• The occupancy costs paid will vary significantly depending on location. Traditional Company Restaurants operate at sites owned by Wendy’s and sites leased by Wendy’s from third parties. Of the 336 Company Restaurants analyzed, 135 are on property owned by Wendy’s affiliates.

• “EBITDA after Rent” means earnings before interest, taxes, depreciation, and amortization, minus rent. Depreciation, amortization, and interest will vary based upon the purchase price and required investment for the specific Restaurant.

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