Dave Poplar - Vice President of Investor Relations, The Wendy's Co. Emil J.

Brolick - President, Chief Executive Officer & Director Todd A. Penegor - Chief Financial Officer & Senior Vice President

Matthew James DiFrisco - Guggenheim Securities LLC Joseph Terrence Buckley - Bank of America Merrill Lynch John Glass - Morgan Stanley & Co. LLC Will Slabaugh - Stephens, Inc.

Jeffrey Andrew Bernstein - Barclays Capital, Inc. Jeff D.

Farmer - Wells Fargo Securities LLC Keith R. Siegner - UBS Securities LLC Jason West - Credit Suisse Securities (USA) LLC (Broker) Sara H.

Senatore - Sanford C. Bernstein & Co.

LLC Michael W. Gallo - C.L.

King & Associates, Inc. Gregory Lum - Goldman Sachs & Co.

Gregory Robert Badishkanian - Citigroup Global Markets, Inc. (Broker) David S.

Palmer - RBC Capital Markets LLC Jake Bartlett - SunTrust Robinson Humphrey, Inc. John William Ivankoe - JPMorgan Securities LLC

Thank you, and good morning, everyone. Our conference call today will start with comments from our President and Chief Executive Officer, Emil Brolick; followed by our Chief Financial Officer, Todd Penegor, who will review our results and outlook.

After that, we will open up the phone line for questions. Today's conference call and webcast includes a PowerPoint presentation, which is available on the Investors section of our website, www.aboutwendys.com.

Before we begin, please take note of the Safe Harbor statement that appears at the end our earnings release. This disclosure reminds investors that certain information we may discuss today is forward-looking.

Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also, some of the comments today will reference non-GAAP financial measures, such as adjusted EBITDA, adjusted EBITDA margin, and adjusted earnings per share.

Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure. And with that, I will now turn the call over to our President and Chief Executive Officer, Emil Brolick.

Thank you, David, and good morning. We are very pleased to report strong third quarter results, which reflects the benefit of our brand transformation efforts and a strengthened economic model.

We are carefully migrating The Wendy's Company to a model of higher royalty and rental income, expanding margins, and more robust free cash flow, and the benefits are evident in our excellent results and long-term outlook. Our strong third quarter results demonstrate the positive impact of our transition to a predominantly franchised model, with royalties and rental income contributing a higher amount of earnings.

Our year-over-year restaurant operating margin increased 330 basis points from 15.5% to 18.8%, which is indicative of the improvements we have made in our restaurant-level economic model. We have also been able to increase the year-over-year earnings contribution from company-operated restaurants by 11% even with ownership of 153 fewer restaurants relative to last year.

Based on our strong year-to-date operating results, including the momentum of sequentially strengthening two-year same-restaurant sales trends during the third quarter along with the early results from our 4 for $4 promotion, we now expect our 2015 same-restaurant sales, adjusted EBITDA and adjusted EPS at the high end of our previously issued ranges. Our evolving economic model, along with our brand transformation efforts have positioned us well for strong future average unit volumes, margins and earnings per share and free cash flow growth.

Our Image Activation initiative continues to contemporize our brand and lift our average unit volumes with a goal of $2 million AUVs by 2020. Our system optimization initiative is making us more efficient and effective in driving growth as we add new re-imaging and development commitments with each new market that we sell.

As evidenced by our improvement in operating margin, we are running a much more profitable restaurant. We have improved our consistency with a more balanced marketing approach, and we are seeing solid early results from our 4 for $4 promotion.

We are on pace in 2015 to hit our highest new restaurant development numbers in nearly 10 years, and we are on track to achieve our 2020 goals as Todd will discuss. Our promotional calendar for the third quarter predominantly featured higher-end marketing messages, while we executed tests of various price-value bundle deals.

During the quarter, North American system same-restaurant sales increased 3.1%. Same-restaurant sales increased 3.3% at North American franchised-operated restaurants, and same-restaurant sales increased 1.7% at North American company-operated restaurants.

On a two-year basis, North American system same-restaurant sales increased 3.8%. Same-restaurant sales increased 3.8% at North American franchised-operated restaurants, and same-restaurant sales increased 3.7% at North American company-operated restaurants.

It was also encouraging to see that our monthly two-year same-restaurant sales trend increased sequentially throughout the third quarter. We continue to have high confidence in our balanced approach to our marketing calendar, comprised of core products, limited time offers, and price value messages.

We've been pleased with the results from our core product promotions such as the Baconator, our July promotion, which provided us the opportunity to emphasize our inherent brand equities. Freshness and customized sandwiches made when ordered, which are some of the equities that had differentiated Wendy's since our founding in 1969.

And I'm happy to report that we are now seeing solid progress with our price value promotion as the 4 for $4 promotion that we introduced in October is delivering solid results and, together with our third quarter results, has given us the confidence to narrow our outlook for same-restaurant sales to the high end of our previously issued guidance. Speaking of our 4 for $4 promotion, we are very happy with the early results, and we are meeting a consumer need for compelling value with a high-quality unique offering.

Our goal with this promotion is to complement our high-end messages with a program that will drive profitable customer count growth and we are very encouraged by the customer count growth we are experiencing. We expect that this will be the first of several value bundles that you will see us use in concert with high-end core and LTO messages.

Yet, we understand that differentiation must extend beyond our food and include a unique consumer facing technology experience. Our customer self-order kiosks and new mobile ordering app in roll-out markets allow customers to choose and order their meals at their leisure.

However, rather than asking our customers to try to predict their arrival time as most brands do, we use the customer's phone as the trigger that tells us that they have arrived, so we can prepare their food fresh. With our unique to the industry beacon technology, our customers do not even need to take their phones out of their pockets to pay.

In addition, we are in trials with the payment method CurrentC, which uses similar technology. This lets customers pay using their mobile phone inside the restaurant and integrates offers and coupons directly into the process.

And at the pickup window, it doesn't require our customers to hand over their phone and multiple customers in the same car can each pay separately. We continue to believe in and remain committed to our cut-above brand position.

It's the natural position for The Wendy's brand, leverages our quality and innovation heritage and most importantly, it's not a position that our traditional quick-serve restaurants can claim. Since day one, Wendy's has stood for fresh, great tasting food.

When Dave Thomas founded Wendy's, he served hamburgers made fresh with never-frozen beef and he wanted all sandwiches made fresh when customers order them. As we have evolved and strengthened our brand position, so too have we evolved and strengthened our business model.

A key benefit of our system optimization initiative is the enhanced quality of earnings we have generated by producing a more stable earnings stream. In 2017, the first full year after we expect to complete the third phase of system optimization, our business model will look significantly different and will provide the foundation for accelerated growth in earnings per share and free cash flow.

As shown in our growth pyramid, our system optimization and financial management initiatives are the instruments critical to evolving this economic model. As our business model evolves, creating shareholder value will depend upon growing our system.

The leverage that will drive this include global growth, using technology to enhance brand access, new restaurant development, and same-restaurant sales growth driven by image activation, great marketing, and operations focused on delighting every customer. These are the fundamental growth drivers and they are the focus of our 2020 goals which will take the brand successfully into the next decade and create significant value for our franchisees and our shareholders.

Before I turn the call over to Todd, I want to take a minute to discuss the leadership transition that we announced last month. As you know, I'm planning to retire from my current role with The Wendy's Company at the end of May.

And we expect that Todd will assume the President and CEO role at that time. The early stages of the transition between Todd and me have proceeded very well.

The Wendy's system and I cannot be more confident in Todd, along with our highly-qualified leadership team. And I firmly believe that the best days are still ahead of The Wendy's brand.

And now, here is Todd.

Thank you, Emil. I will start with the financial highlights from the third quarter.

North America system same-restaurant sales increased 3.1% during the third quarter, while same-restaurant sales increased 1.7% at North America company-operated restaurants. Higher sales at reimaged Image Activation restaurants contributed approximately 110 basis points to company-operated same-restaurant sales results.

Our average unit volumes also increased more than our same-restaurant sales growth would indicate due to the number of reimaged restaurants that were out of our comp base during the quarter. North American company-operated restaurant margin was 18.8% in the third quarter of 2015, compared to 15.5% in the third quarter of 2014.

The 330 basis point increase was the result of higher same-restaurant sales, the positive impact from our Image Activation program and lower commodity costs. General and administrative expense was $63.7 million in the third quarter of 2015, compared to $65.2 million in the third quarter of 2014.

The 2.3% decrease resulted primarily from lower share based compensation expense, partly offset by higher incentive compensation. The decrease also reflects the positive impact of the company's system optimization initiative and resource realignment plan announced in 2014.

Adjusted EBITDA from continuing operations was $99.7 million in the third quarter of 2015, an 11.4% increase compared to the third quarter 2014 adjusted EBITDA from continuing operations of $89.5 million. We delivered this strong growth even with the year-over-year reduction of 153 company-operated restaurants.

Adjusted EBITDA margin was 21.5% in the third quarter of 2015, compared to 18% in the third quarter of 2014. The 350-basis-point improvement reflects the positive impact of the second phase of our system optimization initiative.

Adjusted earnings per share from continuing operations were $0.09 in the third quarter of 2015, compared to $0.07 in the third quarter of 2014. Let's take a look at our adjusted EBITDA bridge for the quarter.

Remember that our comparable 2014 third quarter results of $94.1 million exclude about $1 million in pre-tax gains, primarily from the sale of restaurants, and about $4 million in bakery EBITDA, which we are now reporting as discontinued operations. Off this adjusted EBITDA base of $89.5 million, we realized an $11.3 million benefit from Image Activation, $5.3 million in core EBITDA growth, $3.4 million in higher royalties, franchise fees, and net rental income driven by our system optimization initiative, and $1.5 million in G&A savings.

Partly offsetting these increases was nearly $10 million in lost EBITDA from the restaurants we sold during our system optimization initiative. As we announced in February, the third phase of system optimization is the 540 domestic restaurants that we plan to sell during 2015 and 2016.

We now expect to sell 225 restaurants in 2015, and 315 restaurants in 2016. In addition, on an ongoing basis, we will be facilitating franchise-to-franchise restaurant transfers to ensure restaurants are consistently in the hands of strong operators who have demonstrated a commitment to growth.

Going forward, as part of our ongoing system optimization strategy, we intend to buy and sell restaurants to act as a catalyst for growth by further evolving our franchisee base to ensure a focus on new restaurant development and Image Activation. As we have stated, we are committed to maintaining an ownership level of about 5% of the total system going forward.

In 2015, we expect The Wendy's system to open 80 new restaurants, which will be the highest number in the past eight years. And The Wendy's system remains on target to hit our goal of 450 reimages this year.

We expect to have reimaged approximately 22% of our system restaurants by the end of this year. We also remain on track with our goal to reimage at least 60% of our North American system-wide restaurants by the end of 2020.

Last week, we announced that our board of directors has authorized a 9% increase in our quarterly dividend rates from $0.055 per share to $0.06 per share, effective with our December dividend. Year-to-date, we have returned approximately $1.1 billion to shareholders through dividends and repurchases, including our recently completed $165 million accelerated share repurchase transaction.

We have now repurchased nearly 100 million shares in 2015. As part of our $1.4 billion share repurchase authorization, we expect to utilize the remaining $400 million to repurchase shares by the end of 2016, as funds become available from the sale of company-operated restaurants.

Based on our operating results through early November, including solid early results from our 4 for $4 promotion, we now expect our 2015 same-restaurant sales at the high end of our previously issued range of 2% to 2.5%. We also expect that we will continue to see AUVs grow faster than our same-restaurant sales in the fourth quarter due to the number of reimaged restaurants that are out of the comparable sales base.

In addition, we are increasing our 2015 outlook for adjusted EBITDA from continuing operations to the high end of our previously issued range of $385 million to $390 million. This represents growth of about 9% compared to our 2014 adjusted EBITDA results, which exclude the EBITDA contribution attributable to our bakery operations.

And, finally, we are also increasing our outlook for 2015 adjusted earnings per share from continuing operations to the high end of our previously issued range of $0.31 to $0.33. This includes the absorption of approximately $0.01 per share of incremental net negative full year impact, primarily from interest related to our debt refinancing, partly offset by the benefit of our share repurchase efforts.

And, finally, we continue to expect to achieve the following system goals by the end of 2020, which all focus on partnering with our franchisees to improve the restaurant economic model. Average unit sales volumes of $2 million, restaurant margins of 20%, a sales-to-investment ratio of 1.3 times plus for new restaurants, restaurant development growth of 1,000 new North American restaurants excluding closures, the reimaging of 60% of our North American total system restaurants.

In addition, we continue to execute our strategy which will result in accelerated EPS growth and strong free cash flow in the future. And with that, I will now turn the call back over to Dave.

Thank you, Todd. Please note we will be returning scheduled calls with the sell-side for the remainder of the day.

And if you need to reach us, please e-mail me at [email protected] or leave a message at 614-764-3311, and we will get back to you as soon as we can. Before we open up the phone line for questions, I'd like to review some upcoming events on our Investor Relations calendar.

On Thursday, November 12, our senior management team will host an Image Activation Market Visit at our headquarters in Dublin, sponsored by Jeff Bernstein and Barclays. On Wednesday, November 18, Greg Lemenchick and I will attend the Morgan Stanley Conference in New York along with Gavin Waugh, our Treasurer.

On Wednesday, December 9, Greg and I will attend the Wedbush Conference in Santa Monica and the following week, on December 16 and 17, Greg and I will attend a two-day Roadshow on Montreal and Toronto with Mike Gallo and C.L. King.

If you are interested in meeting with us at any of these events, please contact your respective sell-side analyst or equity sales contact at the host firm. And finally, on Tuesday, February 9, we plan to host our 2016 Investor Day, here in Dublin.

There we will issue our preliminary 2015 earnings release and 2016 outlook. Please hold the dates and we will get back to you with more details soon.

And now, we are ready to take your questions. Thank you and (18:43)

I was wondering if you could talk a little bit about price that you saw in the quarter at the system, and how your system looks to take price heading into 2016 with the various regional wage inflation and wage pressures that are coming when the calendar turns? Thank you.

Hey Matt, this is Todd. Good morning.

On price as we had said at the beginning of the year, we are estimating commodity increases of about 4% for our commodity basket. As we've said in the past, we had the franchise community take a little bit more pricing than we had taken.

The good news is commodities have softened to a full year impact of approximately flat and as we look into 2016, we'll look at opportunistically where there are opportunities to take price. But we're really focused on really driving our growth through customer count and more transactions within our restaurants, as well as continuing to make sure that we get the variety of offerings to drive the mix improvement.

So, let the consumer make the choice rather than continuing to price up on our individual products.

Okay. Thank you.

Hi. Thank you.

Good morning. I just wanted to verify the math that the full-year same-store sales guidance implies a fourth-quarter comp of about 3, up about 3 (20:32) on company stores?

So, say the question again Joe. We didn't hear the last portion of the question for it.

Yeah. I'm just trying to verify that the full year guidance.

What the full year guidance implies for the fourth quarter same-store sales number?

Yeah. If you think about where we are on a year-to-date basis, closing in at about 2.4 (20:59).

If you think about the full year, it would have us slightly ahead of where we've been running year-to-date.

Okay. And then, can you talk a little bit about the dynamics in the 4 for $4 offer?

That seems pretty aggressive. I guess I'm curious on the margin at the store level.

And then, also, the trade-off that you'll see in traffic versus check, I would assume just how that dynamic is working in your early results.

Joe, this is Emil. Good morning.

So, this was a program – actually, along with several other programs that we tested late in the third quarter, I think, as we mentioned to you on the last call. And of course, when we look at a program like this, we look at the impact up and down the entire P&L.

And into test market as we are now seeing, there is a strong traffic driving our perspective. A small impact upon check, but because of the kind of volume increases you're seeing, you're leveraging your entire P&L.

So it's a very profitable program for us. So, it's achieving what we wanted.

As I messaged in my comments, you have a unique item in Junior Bacon Cheeseburger at a very attractive price. And so, consumers are responding very nicely and we're seeing a lot of loyalties to the program.

And what – and one more...

It wasn't just...

Go ahead.

No, it wasn't investment in our food cost but to Emil's point, we're really looking at what's the total profit contribution at the restaurant level as you drive more transactions and incremental transactions into our restaurants.

Maybe one more question, can you talk about how extensive the self-order kiosks are and how extensive the mobile app adoption is?

Yeah. So from a customer self-order kiosk perspective, it's only in a handful of restaurants right now.

And we're really waiting to make sure that we had our Wendy's 2.0 app fully up and running before we went faster on that within our restaurants because we wanted to have a similar customer experience to what we're doing on the mobile order and mobile payment front. From a mobile order and mobile pay, as you know, Joe, we continue to rollout a common PoS.

The goal is to have a common PoS system in place by the end of 2016. Probably about 75% of the system up on a common PoS system by the end of the first quarter.

That will allow us to roll mobile order, mobile pay market-by-market when ready. And right now, we have a test in over 100 sites today across Columbus, Phoenix, Austin and Portland.

We are rolling out the app 2.0, which is a better customer experience the way that's been established, which will complement the total user experience. We are continuing to roll out offers to drive loyalty, and these are tailored offers based on customer preferences as we bring these programs to life in the individual markets.

And then, in Columbus and the surrounding area, we have a 30-company test, really leveraging the CurrentC, mobile wallet and mobile pay initiative. And we feel very good that the partners that are part of CurrentC are full-bore in this market also.

Okay. That's helpful.

Thank you.

Thanks very much. Emil, I wanted to start with a bigger-picture question.

As someone who has seen this industry through many cycles, what happens when the largest player in the industry – or when one of the big three, let's say -- starts to see significant change in their same-store sales trajectory? Historically, you could almost look at the three and say, one is gaining, one is losing share, and one is staying the same.

So, as McDonald's is notably getting better recently, is that dynamic still in place in your view? Or is there – customers have diffused into other categories or other segments, so it is not as predictable as in the past?

How do you see this next chapter sort of playing out in this space?

Yeah. John, as we look at this, one of the things we feel that brand relevance is really the key in determining your sales and your customer impact.

And we certainly, as we look at our business, are not counting on other people struggling for us to be successful. And if you go back also in the history of The Wendy's brand, when we went through a period of time where we had virtually 13 or 14 consecutive years of positive same-restaurant sales and same-restaurant traffic growth.

We had several of those large players also performing well during that period of time. So we remain quite confident in our business and particularly with the progress recently made on the price value front, which we've shared consistently over the past couple of quarters.

This was the biggest Achilles' heel that we were having, and we feel that we certainly have made a very important step forward in addressing that. So we're really quite optimistic about the future.

And the question was not necessarily about you not losing share, but does one have to lose share? In other words, is it sort of a foregone conclusion that somebody has got to lose share?

Or can the category – is it capable of actually expanding and absorbing incremental sales?

I definitely believe it is. And remember, John, that quick-serve restaurants now are 79% of all the traffic.

And what we continue to see is mid-tier restaurants, as well as casual dining continues to lose share, okay. So, the low end, if you picture QSR as low end, it's almost hard to say that because it's such a massive thing, with 79% of all the traffic.

But I think you're going to continue to see a quick-serve restaurant which includes, of course, the new QSRs continue to build share over time because they absolutely do the best job of providing value to consumers, providing consumers convenience. And those are the two biggest things that are driving the business.

And as I mentioned, we really, really like the position we hold of this cut-above position because we're providing people new QSR quality at a QSR price, and we think that that's a very, very powerful position. So I think you can have a number of people growing in this business.

The other thing I'll point out is that right now, there is some very positive things happening from a consumer perspective. Of course, you've got unemployment dropping, the government projects that household pay is going to jump about 4.5% this year.

You've got declining gasoline prices, you've got home equity levels at the same levels they were pre-Great Recession. And so there's a lot of positives out there, and even mortgage debt services at a 34-year low.

So I think there's a very nice dynamic that exists currently.

Got you. And, Todd, just one specific question on the quarter, how much of the restaurant-level margin expansion was just due to the re-franchising, and how much of this reflective, really, of the system margins getting better?

Yes. So you remember, if you think about the margin expansion year-on-year, it's really a function of just selling the Canadian restaurants.

So those are roughly 130 restaurants that we sold last year. That was only about 20 basis points to the contribution.

The big contributor was Image Activations. Remember last year, we were really ramping up on a lot of IA activity, we had a lot of closure weeks in the third quarter of last year, now we're getting the benefit of all those newly reimaged restaurants, which is a nice tailwind on margin expansion, but in the base that we would expect to see to continue to go forward, and then to a lesser extent, we had some favorable mix, and some of the commodities good news that has helped.

But the teams continue to do a great job managing all of our controllable expenses within the restaurants that we operate.

Thank you.

And congrats to Emil and Todd on the transition. I wanted to ask first about the 4 for $4, if you had mentioned anything about the attachment rates you're seeing along with that; how the consumer is using it – if it is just simply a 4 for $4 transaction, or if along with that you are seeing the average ticket not drop from that.

And then secondarily, you mentioned this may not be the only additional value platform that you launch. I wondered if you could go into any more detail around that.

Yeah. Well, actually the experience we're having is quite nicely because we track not just the level of sales of our smaller hamburger patties, but also the level of unit sales of our large hamburger patties as well.

And it's interesting to note that if you look at it pre-period to this promotion versus the most current period, we actually have the large patties running up as well. And so, it appears that a lot of what we're seeing in terms of the 4 by $4 promotion as being incremental.

And certainly, that was our sense in the test market. So we're getting confirmation with this as well.

So, very encouraging. The check impact is very consistent, again, with what we saw in the test market.

So we're not seeing anything here that has surprised us. I mentioned the other promotions because we've been consistent in saying that when we look at our marketing messages, we think it's important to have a balance of high-end messages which would be our core products and our limited-time-only offers with a consistent pattern underneath that of a price value message.

So, you can expect in finishing this year as well as in looking to 2016 that that will be the format that we use. And we want to make sure that we have a, I'll call it a pipeline of these messages so if one would start to tail-off in its impact and run a, I'll call it a natural cycle, that we would have the opportunity to come back with something to follow-on on that.

Great, thank you. One quick follow-up, if I could – just a clarification on a comment made earlier.

Could you repeat what you said the same-store sales impact was of stores coming out of the comp base to be reimaged?

We didn't have a specific comment, Will, on how much faster AUVs we're growing relative to same-restaurant sales. I think if you look at last year's K, AUVs were running ahead of same-restaurant sales on a full-year basis.

You can use that as a proxy at this stage. You get to see full visibility of that when the K comes out here at the end of the year.

But during the quarter, as we had less and less restaurants that we operated, approximately 850 restaurants within Q3, about 20% of our restaurants were out of the comp base in the third quarter. So, it's a function of all of those IAs that we did last year in the third quarter that are now coming out as they lap year ago activity as well as the continued Image Activation activity that we're doing in this year's third quarter.

Got it. Thanks, guys.

Great. Thank you very much.

Two questions, just one following-up on the comp growth. It seems like this year we'll be hitting that 2.5% number.

I'm just wondering, as we now kind of embark on 2016 and beyond, where I think your long-term targets kick in for that – I think it is now 2.25% to 3% comp guidance going forward, just because it has been so difficult to achieve that consistently in the past, I'm just wondering, especially as the Image Activation benefits ease and whatnot, your confidence on your ability to achieve that? And, I guess, qualitatively whether or not – how important those – that comp number is or how critical that is to achieve the EBITDA and EPS targets if, for whatever reason, comps were to fall below that range.

Just trying to get a sense for the relative importance.

Yeah. No.

Good question, Jeff. As we think about 2016, growing in that 2.25% to 3% range is an element of driving our EBITDA growth into the future and really helping support the accelerated EPS and cash flow commitments that we've made into the future.

Now that said, we've been growing as a system in that mid 2% to 2.5% range the last couple of years. And you got to remember, we still got a lot of Image Activation activity that will come going forward from a system.

So, we'll start to see that tailwind. It was about 30 basis points of tailwind to the franchised same-restaurant sales growth in this quarter.

So, we'd expect to see a nice tailwind from that for the next couple of years as they continue to reimage 10% of the restaurants every single year. And then the other piece that really plays well that will take some time to get into the same-restaurant sales comp base is the 1,000 new restaurants that we are committing to build.

And those 1,000 new restaurants, we've talked about this in the past, as we open new restaurants, with their opening significantly higher at average AUVs of about $1.9 million and then start to have some nice growth off of that base. So, that will be comparable after opening to the same-restaurant sales growth that we've guided to but does create a nice profit contribution for the economic model for the franchisees, which allow them to continue to reinvest back into restaurants to support future growth.

Understood. And then just as a follow-up on the question earlier regarding the quest (34:45) outlook going forward.

You gave a lot of color on commodities in terms of the basket being flattish in 2015. I'm just wondering if you can provide any color on where beef is within that, and perhaps your initial thoughts directionally on what 2016 might look like?

I don't know if you – well, obviously, you do beef more on the spot market, so maybe that's hard to tell. But I'm just kind of trying to figure out the initial outlook on the commodities.

And I guess the same thing for labor. I don't know if you'd give a basket of what your inflation was this year, and what you would expect your inflation basket for labor to be next year as well.

Yeah, Jeff. On both fronts we'll provide a lot more insight as we provide guidance at the February 9 Analyst Day.

As you had commented, we buy beef three months out, so we are buying into the first quarter right now. And the trends are favorable as you see in the industry and you see the reports.

So, the trend is our friend at the moment on beef. On the labor side, we'll give specifics as a subset of our guidance and it really is this management of local market by local market, minimum wage inflation that we're seeing as well as the competitive landscape.

As talent is tight to secure, there are adjustments that we're making market-by-market, but we have all of that contemplated in our long-range guidance, and we'll give you guys a lot more flavor on that on February 9.

But is it fair to say you think the franchisees are fairly well-balanced? You are not seeing any knee-jerk reaction in terms of getting more aggressive on price, just with fear of that minimum wage kicking in?

Yeah. That is the fair comment, Jeff.

I think we watched them get aggressive on price when they thought commodities were going to be up about 4% going into 2015. Now that things have moderated, they've been very selective on price.

Clearly, if you see an escalation of wages in a particular market you may have to take a little bit of price to offset it. You can never fully offset some of the inflation that you see on the wage front in some of the markets.

But, I think we're having a very balanced approach. The franchise community really understands that bringing in more customers more often is the key to driving their economic model and the more that we can create that total experience in the restaurant the better off that the economics are going to be for all of us.

Yeah. And Jeff, I'll just mention something.

If you would look at the total restaurant industry for the past four quarters, you would see that traffic is up during those four quarters on average, just a little under 1%. You would also see that total sales are up about 3.1%.

My point is that you're not seeing dramatic increases in checkout there. Obviously, the difference between the sales and the traffic out there.

So, I think people are being very disciplined and as we've consistently messaged that we have to find ways to offset cost increases which, by the way, is one of the reasons why technology is so important to us.

Understood. Thank you.

Just following-up on 4 for $4, recognizing that you only have a few weeks of the 4 for $4 sales results out there, have you seen some of the Right Price Right Size menu customers trade up to 4 for $4? Or have some of the higher-priced combo meal customers traded down 4 for $4?

So the heart of the question here is just going back to – I think what you guys experienced with the W burger a few years ago, just in terms of some of those higher-priced customers trading down to the mid-tier product as opposed to lower-priced customers trading up to the mid-tier. So any color there would be helpful.

Yeah. We are definitely not seeing anything like what we saw with the W because, as I mentioned, when we look at our larger patty sizes, they are actually running ahead of where they were on a pre-period.

So, we're very pleased to see that trend. We also had shared, Jeff, that over a period of time, we've seen across the industry and not just with Wendy's that consumers seem to be moving away from traditional value menus.

And so we saw mix on those items, over a-period of time softening up. And the consumers seem to be more interested in these bundled meals.

And as we mentioned on our last call that it was that $4 to $6 check range, and particularly at lunch, where we particularly saw the most important dynamic here. And we truly feel that this 4 for $4 promotion very – in the initial four weeks, we just entered the fourth week of this.

But what we're seeing is a very positive picture.

All right. And then, just a follow-up on that.

I understand the importance of the bundled meal, and how the consumers shifting towards that. But this is a limited time offer for you guys.

So what's your view on the importance of mixing this up every five, six, seven, eight weeks, whatever it is? What does your data tell you on that?

How long should we expect to see 4 for $4 as a limited time offer? And expect something similar but different in coming quarters?

Yes. Well, this is our fourth week on this.

And so, our insights on some of the things are limited to the timeframe that we've had that on. But what I do want to reinforce is the fact that we are – you are going to see us consistently with a balanced message out there of high-end messaging comprised of either a core message or a limited-time-only product supported underneath by a price value message.

Now, will that always be a 4 by $4? I will not share that with you.

But there will be a price value message underneath that. And I think that's the most important thing to take away from this.

And I think that's also how we address – help address check because with the higher-end items, we have the opportunity to – as Todd pointed out, have consumers make selections by themselves of items that will provide that. So, we feel that one, two punch of high-end and price-value is going to serve us well for the remainder of this year and through 2016.

All right. Thank you for the thoughts.

At this past February's Analyst Day, we talked about the changing definition of quality. And considering your approach to quality, how important it is – I mean, quality is your recipe.

What progress have you made on maybe thinking through the food quality and how that is messaged to the consumer? A lot of other brands have come out with announcements about adjustments to ingredients or sourcing.

Where do you stand in that process, and what has changed since February? Thanks.

Sure. Well, Keith, we've continued to work on that since we've had conversations with you in February.

We mentioned that we hadn't test and still haven't test a grilled chicken sandwich that is raised without antibiotics. We also mentioned to you that we have a black bean burger that has been in test and continues to remain under evaluation.

So, we definitely look at the sourcing issue as something that is a long-term issue that has to be addressed. It's not something that we see as temporary as it's going away.

And we're very keenly aware of this. We also have shared that the quality of our core products, our core hamburgers, our core chicken sandwiches are very important.

And you will see us continually do things to assure that we not only just maintain but build upon the quality position that has always been so important to Wendy's because we recognize that when your brand position is cut-above, okay, you better deliver against that quality message. So, we're highly sensitive to this.

And then, Todd, maybe just a quick one for you. With a lot of system optimization about to happen, say, in the next five quarters now, can you talk about that, where the interest is coming from?

Is there going to be – is there any change in, say, small groups or large groups taking chunks of this? Have terms been changing at all?

Maybe what kind of multiples are you receiving for these businesses? Any details on that would be really helpful for how we should think about that.

Thanks.

Yeah, Keith. As we think about the interest and see the interest in the System Optimization 3 initiative, clearly different than SO2 where we had a lot of smaller franchisees in Canada, all existing franchisees that we were able to scale up.

So, that was a good play for those existing franchisees to help their economic models in Canada and to support long-term growth. If we move to System Optimization 3 across the U.S., we have opportunities on both fronts.

We've got about 25 to 30 transactions as we sell the 200 or 540 restaurants in total. So, the way that the books have been carved up, there are opportunities for the smaller franchisee to scale up if they so choose by taking a portion of the market.

There's opportunities for the larger franchisees to take entire markets if they so choose. And most of the activity is really focused on existing franchisees, but I wouldn't be surprised if we see one or two new people into the system by the time this thing is all said and done.

From a multiple perspective, we've consistently talked about ongoing five to six multiples. Again, even if we sell these restaurants.

These multiples are on the higher end of that range. As we have higher performing restaurants, we continue to look for some of the benefits of the margin expansion that the franchisees would pick up when they buy these restaurants.

So, they are full multiples. But it is not a price war as we said in the past.

It's really about how do you differentiate offers around commitments to accelerating reimaging, commitments to new development moving forward. But we do feel very, very good that we're putting ourselves in a system to support accelerated growth into the future as we work through the System Optimization 3 initiative.

The other piece that I would comment on, Jeff, is there's a lot of ongoing system optimization. And when I say that there's a lot of franchise-to-franchise transactions that continue to happen.

We're seeing that activity pick up in the back half of this year. We'd expect it to continue over the next couple of years.

And it's really a function of our franchise base, as they continue to look at their opportunity to monetize after many, many years being in the system. There's a lot of interest in The Wendy's brand, multiples are strong, and it's a great opportunity for them to move on.

And what we want to do is continue to be in the middle of those transactions where we can, to really help facilitate getting those restaurants into the hands of continued great operators and folks that are really focused on long-term growth for the system.

Thank you.

I guess going back to the quarter and the comps, you said it sort of accelerated on a two-year through the quarter. I remember on the last call, you guys took a bit more of a cautious tone, I thought, on the back half, and as well as on the Image Activation impact going forward.

Just wondering if something changed on that front through the quarter. I believe the 4 for $4 did not really launch until after the quarter.

So just maybe if you could talk about what sort of started working in your favor through the quarter around the franchise side? Was it more macro?

Or was there some promotional items that really helped? That will be helpful, thanks.

Yeah. I guess, two comments as you think about guiding to the high range of the 2% to 2.5%.

One, as you recall, we only had the premium message on during the third quarter, and we are still in test across all of our bundled promotions. And I think as the bundled promotion has started to perform, it is performing to the expectations that we had hoped it would, and it gives us more confidence to put the statement out there that we're going to grow at the high end of the range.

The other thing that happened during the course of the third quarter, and where we're probably a little more cautious on the tailwind from IA, because we had a lot of refresh activity. So, remember this is the reimaging of restaurants for $1.4 million or below AUVs, spending roughly $250,000 on those restaurants.

And we've taken a very conservative approach to what we would have thought the list would be for a refresh option. And during the course of the third quarter, we actually saw a much better list than we had anticipated.

So, very encouraged about what refresh can bring for those lower AUV restaurants moving forward. But it's still in its early innings, and we really got to see is it just an initial pop or is it a sustainable growth proposition for some of those lower AUV restaurants, then we'll be in a position to update you more on the performance of that option at Analyst Day in February.

Okay, that is helpful. And I guess just one other big-picture question on the industry.

It sounds like the QSR industry is in a pretty good place right now with the consumer. But we are starting to see food costs come down.

I would imagine you are seeing deflation right now, it sounds like. If you want to comment on that, that would be helpful going into the rest of the year.

But do you expect the industry to become more value promotional, as you guys are making some investments, you said, in food costs here with the 4 for $4? Do you think that is going to become more the norm across the industry, or do you think the labor environment is going to really prevent people from getting aggressive on that front?

That would be helpful. Thanks.

Yeah. Let me comment on the value piece of this and then I'll ask Todd to comment on the deflation dimension of this.

If you really look back at the industry over the past several years, I don't think there's been a period of time that anybody would point to it and say that there hasn't been an important role for price value in the business. I think what you're seeing and perhaps why it is more noticeable, that it's evolving from being an emphasis upon individual items at are very low price, or a value menu that for so many years played a dominant role.

And in the last, I'd say, 18 months or so, more of these bundled meals have come into play with the consumer. And so, I think that that's receiving more attention.

But I think we can fully expect in a business this size that price-value will always play an important role to consumers, particularly when you look at average household income at about $53,000 a year. And being fairly constant over a 16-year period of time.

So, price value is important to a certain group of consumers. But one of the reasons that we feel so good about our future is the quality of our products and how successful we have been, and I would say, fairly uniquely with the high-end messages.

And now, to be able to marry that up with the price-value message, we think that that's a nice combination to have, so. Todd?

And circling back to the commodities, we have been blessed to see some deflation. In the third quarter, our commodity basket was down about 1.5% on total food cost.

Beef and chicken was still inflationary year-on-year but that was offset by bacon, cheese, frosty, frying oil. And we continue to see that into the fourth quarter.

So, if you think about where our full year guidance is at approximately flat. We are seeing commodity – our total commodity basket, total food cost down about 2.5% to 3% in the fourth quarter this year.

And in the fourth quarter, we would actually see beef start to turn as deflationary year-on-year with the continued trends that we've seen on beef buying.

Great. Thanks a lot.

Very much. I just – I guess a quick follow-up on that and then on the Image Activation, and then maybe a little bit more on the technology piece.

So just on the IA, because it was ended up being a bigger contribution than I think you had expected or guided to, I guess I was a bit surprised that company comps maybe a bit better. So if you could just – again, I think it sounds like you feel very confident in what you have in store in 4Q.

But I guess it seemed to me that 3Q actually might've been a little bit lighter than you were expecting. So that was just the follow-up.

And then I wanted to ask about technology in the context of cost savings. Can you talk a little bit about what kind of digital mix you might think you need to start to see – offsets any labor inflation?

And also, do you need to have more labor in the back of the house? It sounds like particularly with beacon technology, because you are not asking customers to know when they will get there, you could end up with more bursty traffic than you might have expected.

So just those two, please.

Yes. Certainly, Sara.

So, on the first question around IA and the contributions in the third quarter, same-restaurant sales came in about on our expectations of where we thought we would be in the third quarter, so consistent with the guidance that we had provided. I think as we look at the comp in the third quarter, it really is a function of having so many of our well-performing restaurants out of the comp base.

So, if you look at AUV growth, growing much faster than comp sales growth, that's why we feel good that we continue to see the benefits of not only nice initial lifts from Image Activation, but that continued performance that we have sustainable long-term lifts for our ultramodern standard designs of 10%-plus moving forward. So, that is encouraging.

From a technology perspective, you got to think about our restaurants and the capacity in our restaurants. And we've had customer count challenges over many years, and we have capacity to continue to bring more customers into our restaurant with the existing labor that we have in place.

And what we're really trying to do is make sure that we bring those customers in, unlock productivity, unlock throughput. So, from a consumer-facing technology perspective, we are already well prepared to really leverage our existing labor from a front-of-the-house perspective.

Our ongoing opportunity in the back-of-the-house is what other manual tasks can we continue to leverage and digitize over time, when you think about things like scheduling and temperature controls. And we're continuing to focus on those things in the back of the house.

So, we do think this is really an opportunity to better leverage our existing cost structure and shift labor around within our restaurant. To the extent that we have more folks doing customer self-order or mobile order, we can spend more time servicing the customer from a food delivery and from a total hospitality model, and we think that's important to create a great experience and to keep those customers coming back time and again.

What the digital mix needs to ultimately become to really make the economics work? We can talk more about that in the February Analyst Day.

Too early to comment because we're still in the real infant stages with only 100 restaurants. And we have to continue to drive awareness to the consumer to drive up usage to really see what the total opportunity may be from managing the economics at the restaurant level.

Thank you.

Hi. Good morning.

Just a quick follow-up. First, on the slight push-out in number of re-franchised transactions that you plan to have this year versus next year, I was wondering if you could put any more color on that, whether that is just timing related.

And then, also, the reduction in 2015 CapEx from the prior guidance doesn't seem to be timing oriented, because it looks like 2016 CapEx guidance was not changed. So I was wondering if you could put some context on what the difference was there.

Thanks.

Yes. So Mike, on the first question, originally, we thought we would do about 280 SO 3 sales during the course of this year.

We're now looking at doing about 225. Purely timing.

So, some of the transactions are shifting into January and February of next year. And what we're really trying to do is pace and sequence, not only the System Optimization 3 initiatives but the ongoing System Optimization initiatives, the franchise-to-franchise sales which we get in the middle to help facilitate.

So, we have to pace and sequence all of that from not only an internal workload perspective, but to make sure that we optimize the handouts to our operations teams as we work to turn over these restaurants. So, we feel very, very good that the interest is extremely strong for the book of the entire restaurants, and we're very confident that during 2016 we'll have all of these restaurants sold, and in the hands of great operators really focused for the long-term growth of the system.

In regards to 2016, we did call down CapEx again a little bit this year. I think it's really a function of some of the investment that we have in our technology initiatives.

A little bit of it is timing, just shifting into 2016, but as we think about 2016, with the different mix of IAs that we're doing from a company perspective. Refresh, ultramodern, it was all still being able to be managed within that total cost bucket.

And we are getting more efficient with our technology spend as we ramp up our 90-degree labs, which has really been focused to bring to life consumer-facing technology in a fast-paced manner.

Thank you.

Good morning. This is actually Greg Lum on for Karen today.

The 18.8% margin in this quarter actually puts you pretty close to the 20% target you laid out for 2020? Is there some seasonality in that number, or one-time around worker's comp that helped it?

Or is it on-plan versus how you are thinking about the margin progression? Are you guys finding any more savings or finding them faster?

Just trying to get a sense for whether that 20% is almost looking conservative now.

No, I think, Greg, it is an ongoing journey to the 20%. And one of the challenges that we're going to have to continue to manage with all the great work that we do is labor inflation moving forward.

So, it is going to take some heavy lifting to continue to drive ourselves to the system average of 20%. But nothing that would be one-time in our 18.8% within the quarter.

It is a function of Image Activation with lapping over the closure weeks from a year ago, but importantly, seeing the nice lifts and flow-throughs from those restaurants. We do have that carryover menu price that we would've had from last year that continues to help.

We're seeing favorable mix. Commodity is going in a right direction.

And we are getting some of the benefits that we talked about a little bit earlier for selling the restaurants north of the border in Canada. That has helped contribute a bit to the margin.

We said about 20 basis points. And we have closed some restaurants.

So we're in a net closure position year-to-date. Trade areas have moved away from us.

Really, in the spirit of building a stronger system, we want to make sure that our restaurants are positioned for growth into the future. And we had nice tailwind, about 30 basis points from closed restaurants within the quarter which all contributed, but nothing that would be one time in nature, Greg.

Thank you.

Hi. So, momentum has been very solid, and you guys seem pretty upbeat on your outlook.

But I'm wondering, should we plan on any change in strategy or execution as part of the transition from Emil to Todd? Or is this going to be pretty consistent as we go forward?

Good question, Greg. It will be very consistent, right?

I've been working side by side with Emil for two-and-a-half years now, clearly committed to our growth pyramid and our recipe to win. I think the focus just continues to evolve a little bit as we move forward.

And it's still all consistent with those strategic tenants who've done a lot of work on the top of the growth pyramid and still have a lot of work to do to complete system optimization and ongoing system optimization. We got our capital structure in a very good spot to support growth for the future.

The focus really comes down to now, how can we continue to drive same-restaurant sales growth across our restaurants, how do we drive towards 1,000 gross restaurants that we want to open across North America, and how does international become a much bigger piece of our growth algorithm going forward. And that's going to take some time and work.

But we feel like we got a good strategy in place going narrow and deep that will pay fruits over time. And we'll update everybody more in February as we talked about in the past on International.

But it was really putting the spotlight on different elements of the growth pyramid based on where we are in our journey.

Thank you.

Good morning. Are there any signs of the development pipeline filling up and unit growth potentially accelerating in the coming quarters and years as a result of this improving profitability or the new box prototypes you've been talking about?

Yeah, David. We are continuing to be committed to driving our sales-to-investment ratio to 1.3 times plus.

And we are very pleased that we're going to open 80 new restaurants this year, and that's even before improving the economic model. We talked about at Analyst Day that that would ramp up to about 110 new restaurants next year.

That would have been in Abigail's presentation last year. And we continue to make sure that we've got different designs, small footprint designs, things that we could potentially do in line, trying to get to non-traditional locations to stimulate all of that growth.

So, we feel good that we're providing the tools to the franchise community to continue to drive growth. And we also are getting the commitments so as part of System Optimization 1, 2 and 3, there have been commitments made to development over the next five years.

And we sold about 1,100 restaurants. We got commitments from those folks to do another 20% to 30% of new development off of their restaurant bases.

And as we continue to do ongoing System Optimization where we get in the middle of the deals, there are development commitments that get attached to buying and flipping restaurants. So, that will help stimulate growth into the future, as well as what we want to do with the dollars that we have up in Canada still to continue to drive and stimulate growth in Canada with the Build-to-Suit program.

So, we do feel good that we have a lot of tools in the toolbox to continue to drive and stimulate growth and get to that 1,000 new restaurants development. Does it happen sooner rather than later?

Well, time will tell. And I think a big part of that is can we continue to improve the restaurant economic model not only from an investment perspective but a margin perspective.

And the more that we can do on both fronts, the more that we get our franchise communities that's very excited about reinvesting back in The Wendy's brand to drive growth into the future.

And one little quick follow-up; I know that's a little thing but Arby's has had quite a run lately in sales, high single-digit comps. You have, I think, still a stake in that.

Have you contemplated what that might be worth, and when and if Wendy's might ever monetize that stake?

Yeah, David. It's all in the Q.

So, we have 18.5% ownership in Arby's and we do get to see their financials, so clearly they continue to perform well. As of the third quarter, our estimated fair market value of that investment is about $170 million which is stated in the Q.

How we would ever monetize? That's more for Arby's to play out.

At some point, if they decide to do something different, I could see that we would have an opportunity to monetize and realize some of the cash but we'll have to see how that plays out over time.

Thank you.

Thanks for taking the question. I had a call about the difference between the company and the franchise same-store sales in the third quarter.

When you back out the reimage impact, it is even greater. So just maybe to go into a little more detail on that.

As well as in the fourth quarter, should we expect a similar dynamic with the franchisees outperforming?

Yeah. Jake.

Two things and we talked about it a little bit earlier. One, the franchise community has taken a little more price than we did this year.

But it's not too extensive where it's impacting customer count. So, that's one element that drives the delta.

I think the bigger delta is really this percentage of restaurants that are out of the comp base. As I said earlier, we have about 20% of our restaurants, the company-owned restaurants that are out of the comp base, so those nice performing IAs are not contributing to a tailwind at this point from a comp perspective, but they're helping our AUV growth.

From a franchise community, there's only about 4% of the restaurants that are out of the comp base. And it's really a function of them ramping up IA at this stage, which is very promising as we'll continue to see nice tailwinds from continued IA activity as we move to this 5% franchise model moving forward or 5% company-owned model moving forward.

And just to clarify on that, so is that to say that the companies that you've done the IA on were performing better than the average before you did the IA? I'm just trying to understand how taking them out drags down the average, the comps.

Yes. So, you got a couple of things that actually happen when you actually take them out of the comp.

One, they've got much higher AUVs. And if you look at the growth in those restaurants, you've got a function of two things.

You got restaurants that open last year that continue to perform well. We not only see that 10% lifts, but we see nice continued growth in year two.

But you also have very good performing restaurants that would've been in the comp base all year long that we've now shut down. So, you don't have the benefit of those restaurants as they're shut down to be reimaged.

Okay. And then, the last question on this point, the fact that you refranchised fewer stores, I think that would've impacted the IA lift.

Was that a major factor in terms of why we got the 110 basis points versus the 50 basis points to 60 basis points we were expecting that you sold less stores that were image activated?

No, Jake. That didn't have any contribution at all.

The timing and pacing we had already contemplated in as we provided guidance in the middle of the year when we took our CapEx down. We knew that some of the IA activity would already shift over to the franchise community.

The great news is we're still on track to the 450 total system reimages this year on track for 80 company – or 80 system newbuilds this year. And we do have a nice pipeline of reimage activity already set for next year.

So, the momentum continues on all that front. So that wouldn't have an impact on the same-restaurant sales lifts from my IA.

Great. And then just the last one, on the Image Activation, the pace of it, it was 10% a year, how much wiggle room is there?

Is that – that's mandated? Or could you maybe explain how that is mandated to the franchisees, and whether we could see upside or downside to that number?

Yeah. Yeah, Jake.

I won't want to comment. We'll give specific guidance in February on that.

If you think about the simple numbers, 10% a year of 6,000 restaurants across the North America says there is about 600 IAs every year. We continue to work with franchisees around the pacing and sequencing as part of the joint capital plans to make sure that they can grow in an economically viable way.

We also had made some commitments to our smaller franchisees to give them a little more time to refranchise those restaurants. So operators with less than 7 restaurants have a little bit more time and we do have still a lot of smaller franchisees in our system.

So, you'll see the continued acceleration work up towards that 600 a year number, but we'll give you the specific guidance on what 2016 looks like in a couple of months.

Great. Thank you very much.

Hi, thank you. It's John Ivankoe, actually.

When we would look at that CapEx in 2017 and 2018, it is a number that is still around of $150 million or so. And that $150 million will be on less than 400 company stores.

Obviously there has been some conversation about CapEx kind of moving around in 2015, 2016, what have you. But is it fair at this point to give a composition of what that CapEx will be in those out-years in 2017 and 2018?

Because certainly it does look very high on a per-store basis for those remaining company stores, especially since most of them, I assume, would have already had Image Activation done to them.

Yes. So, John, if you go to our guidance, it'd be a little high on the CapEx.

So, 2016, we had provided guidance this past year, $130 million to $140 million, ramping down to $75 million to $85 million of CapEx in 2017 and then we set out in 2018 about $70 million.

Todd, and the point was over those two years. I'm sorry for not clarifying that.

So $150 million over those two years, in 2017 and 2018. So, yes, I got that.

Yeah. I think we still have work to do to re-image the company restaurants that we have in our approximately 5% base.

So, we're still committed to IA-ing those during the course of 2016. As part of our commitment to continue to retain markets, we will do some new restaurant development in the markets that we're retaining.

So, you'll see some of that in the numbers over the next couple of years. And you'll see a continued investment in technology, especially consumer-facing technology to continue to support the system growth and the economic model into the future.

We are taking a hard look at all of our CapEx numbers. And as part of the guidance, we will talk about the elements and the trend.

And we continue to look at those. As we become a different model with a 5% company ownership, we'll continue to refine those CapEx calls at the February 9 meeting.

Yes. And can I ask as the final follow-up?

Will you be done with Image Activation for company stores at the end of 2016? Or do you think there is some spillover into 2017,

It would be a relatively small number that spills over into 2017. We would probably have about 85% of the company restaurants reimaged by the end of 2016.

Those remaining 15% we'll just have to really think about. Does the economic model support reimaging?

Does the refresh option play a role for those restaurants? But we'll have the bulk of all of our spend on reimaging from a company perspective done during the course of next year.

That's helpful. Thank you.