John Barker – SVP and Chief Communications Officer
Roland Smith – President and CEO
Steve Hare – SVP and CFO
Matt DiFrisco – Oppenheimer
Stephen Carlson – UBS
John Glass – Morgan Stanley
Neil [ph] – Goldman Sachs
Sara Senatore – Sanford Bernstein
Michael Gallo – C.L. King
Jeffrey Bernstein – Barclays Capital
Wendy’s/Arby’s Group, Inc. (WEN) Q4 2009 Earnings Call March 4, 2010 11:00 AM ET
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 Steve Hare, Chief Financial Officer. (Operator instructions)
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 web cast is accompanied by a PowerPoint presentation, which can be found on our Investor Relations page, our corporate website that is wendysarbys.com. For those of you listening by the phone, be sure to make sure that you select the appropriate web cast player option from our website to ensure that the slides and the audio are in sync.
The agenda for today’s conference call, the web cast 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 earnings release. There’s 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 nonrecurring 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. We also provided selected financial highlights for each brand today. You have same store sales, revenues, overall 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, 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 measures 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 afternoon 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 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 costs savings through the integration, and we are 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 innovation, 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 & (inaudible) 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 would like to highlight results from our fourth quarter. We are pleased with our fourth quarter EBITDA results. Adjusted EBITDA was $103.3 million, an increase of 38.9% versus year ago results. It is 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 everyday value platform late in the fourth quarter. Although with only minimal advertising until January, and I will update you on the positive impact of this platform in just a few minutes.
Now I would like to share fourth quarter and 2009 performance highlights of both Wendy's and Arby's. At Wendy's, although fourth-quarter systemwide same-store sales were down 3%, we believe this was among the strongest sales performance in the industry. It is also important to point out that we were rolling our strongest quarter of 2008, which was up 3.7%. In December, when we introduced the $2.99 Deluxe Value Meals, we saw a 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 cost, as well as price increases.
For the full year 2009, Wendy's North America systemwide 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 to 180 basis points.
For the full year, commodity costs 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 [ph], 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 paying higher bonuses to GMs and store level personnel than last year.
And as I stated a few minutes ago, we are well over half way through our three-year target of expanding Wendy's margins by 500 basis points, and I'm confident that we can reach our goal.
At Arby's, systemwide 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 deleveraging, 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 systemwide 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 will 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 would 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 would 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 companywide 401(k) plan.
Additionally cost of sale 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 to $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 through underperforming Arby's and Wendy's restaurants. Facilities relocation and corporate restructuring expense of $2.1 million was primarily related to severance cost, 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. The 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 relocation severance charges of $2.1 million, pension withdrawal expense of $5 million, and the benefit of vacation policy and G&A end cost of sales of $3.3 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 reloc and corporate restructuring expense of $11 million primarily related to severance costs 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 offering, 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 ready 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 us look at EBITDA by brands. We manage and report on two business segments. The operation and franchising of Wendy's restaurants and Arby's restaurants respectively.
On slide 17 we have provided the adjusted EBITDA by brands 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 cost 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 2008 baseline G&A $488 million for comparison purposes. To calculate 2009 G&A savings, let us start 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 flow 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 derisk 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 12 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 on March 15 to stockholders of record on March 1.
Now I would 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 impacts restaurant industry sales across all parts [ph].
Now I would like to discuss consumer confidence. Consumer confidence fell to a 10 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 continued 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 2% to 3% increase in our commodity basket in 2010 with higher cost primarily in the second half of the year.
In addition, we plan to increase capital expenditures to approximately $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 middle 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 in 2010.
And now let me turn your back over to Roland to discuss our plans for the brands.
Thanks Steve. First, I would 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 have 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 lineup. The new Bacon & Blue hamburger features fresh never frozen beef, 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 are also very excited about several new high-quality products that we have recently developed, some of which you will see later this year. But for obvious competitive reasons we are not comfortable talking about them yet. We are also investing in a strategic pricing initiative that we believe will drive both same-store sales and margins. Historically, Wendy's priced on a national basis, and over the past several years we have 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 will 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 previously stated, we made excellent progress in reducing food, labor and controllable costs, and we significantly exceeded our margin improvement targets 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 improvements by another 90 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, the 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 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-saving opportunities, while maintaining the food quality that has been a hallmark of our brand. Recently the QSCC announced John Inwright [ph], as its first president. John led YUM! 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 into 2 to 4 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 (inaudible) 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 (inaudible) exterior and interior designs are the result of ongoing consumer research. These designs create an impressive further feel 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 (inaudible) 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 like to move on to Arby's. As you all know, we recently announced that I have assumed the intermin role as president of Arby's, and I will lead the turnaround of the Arby's brand. A search is currently under way 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 brands, improving advertising effectiveness, revitalizing product innovation, and finally investing in a significant remodeling program.
Now I would 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 is an alternative to traditional fast foods. According to our customer tracking studies, only Subway and Wendy's have higher quality rating among major QSR sandwich chains. And Arby's quality perception is much better than McDonalds, Taco Bell, and Burger King. This quality positioning has enabled Arby's to generate 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 in everyday value menu, we have 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. This low value rating is the primary barrier to driving transactions and sales at Arby's. Therefore to better compete for value conscious customers, we introduce $5.01 combos in October featuring five sandwiches with curly fries and a drink. The $5.01 combos mix high in high teens, but they did not drive incremental transactions as our competitors 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 2500 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, our same-store sales improved to negative 3.9%.
Severe weather and snow in the central and eastern portions of the US have 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 systemwide 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 1, 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 poorly 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 this system at 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 would 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 from 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 8000 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 middle single digits, and we expect to return to mid-teens adjusted EBITDA growth in 2011.
Now I will turn back over to John.
Thanks Roland. We like to open up the call for questions now. We have a large number of participants on the call and web cast. 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.
Matt DiFrisco - Oppenheimer
Thank you. I guess, 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?
Matt DiFrisco - Oppenheimer
Exactly, sorry. Yes.
From the 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.
Matt DiFrisco - Oppenheimer
Okay, and then also looking at the outlook for what you're doing right now as a comp basis, the improvement at Arby's, is the brand also, are you having cost savings that were you don't need positive same-store sales to hold margins or see the margin, directionally your margin contractions is not happening as much even though the comps were not that great on the company owned side, but if you get in – 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 has 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 you know, improve our margins as we go forward.
Matt DiFrisco - Oppenheimer
Okay, and then the last question is for keeping that $9 million that you are tagging for breakfast investment, that is the only 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.
Matt DiFrisco - Oppenheimer
Okay. Thank you very much.
Your next question comes from David Palmer of UBS.
Stephen Carlson - UBS
Yes, hi, Stephen Carlson here for David Palmer. Just, could you talk a little bit about what's some of your early learnings have been, since you've taken more direct control over Arby's, and are there any insights there that are making you more optimistic about gaining sales traction, thanks.
Yes, Stephen I certainly can. You know, I've been significantly involved in the brand for the last 60 days as I mentioned, and I'll just highlight a couple of 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 result standpoint today was the significant low rating that Arby's received from the standpoint of worth what you pay for. 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 kind of raised the price of poker, so to speak with this value menu price war.
And so a key learning is that we are going to need to complete 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 you know, 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, because we knew that that would certainly not have beneficial same-store sales results. And so we're excited about the opportunity to launch our national, or launch our dollar menu value nationally. I mentioned we're going to do that in April, and we're going to back that up with some significant national TV advertising.
So I think value is clearly one of the key learnings. Secondly, we know that we have to complete from a share voice standpoint, and to do that as I mentioned we have gotten our franchise systems 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, you know, allow us to compete more effectively for our customers. We also think we need to make sure that our advertising works as hard for us as possible.
It needs to continue to you know, kind of talk about our brand positioning in a very clearly, while we talk about value and we think that the new advertising that we are 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 as you know, it is to drive receipt. We think we need to continue to balance this value positioning that we will cement in the consumers’ mind this year with high product you know, offerings and we began significant improvement in our new product development and testing process.
We're going to get some new products in test you know, very quickly and we're excited about you know, kind of using that to kind of 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’ve 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 close to 100% penetration to 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.
John Glass - Morgan Stanley
Hi, thanks. I first just wanted to clarify your EBITDA guidance. It seems that you are suggesting that EBITDA will probably contract by you know, 2% to 4% next year, the numbers I get is $410 million to $420 million, excluding next week and including the incremental costs and breakfast. Is that math right?
Yes, John, what we're saying is you take the reported adjusted EBITDA this year, I think for comparison purposes going forward take out the extra week, which is about $40 million. That gives you your base and that we are saying from that number we'll see an increase in the low to mid-single-digits, and from our standpoint, you know, we've got about $9 million of incremental breakfast spend that really will not produce an EBITDA benefit during the year.
John Glass - Morgan Stanley
Got you, but it will result in down EBITDA, I just want to be clear. That's what your forecast is.
Well, no, we're showing – I'm saying, we're taking an increase from that you know, from the $425 million less the $14 million. We'll see an increase over that level.
John Glass - Morgan Stanley
Okay, but the number you report will be down year-over-year? The broader question is in 2011, you're talking about going back to mid teens, but you know, lot of – you initially talked about the mid teens growth that 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 talked about putting a lot of those benefits to margins, particularly to Wendy's brand forward. So what does it require then to get mid teens growth out of this business in 2011? Is it more than sales or you're saying you think you can actually exceed those targets in EBITDA and see you know, in the flattish sales environment you're able to get to mid teens again in ‘11.
John, let me talk about both 2010 and 2011 from an EBITDA standpoint. First, you know, from Steve's review and you didn't need Steve's review obviously to understand this that you know, the economy was really soft in 2009. The economy, unemployment and customer confidence remained weak in 2010, and while some of the economists talk about that improving in the second half of the year. You know, we're not necessarily planning for that from a standpoint of a guidance that we are providing.
Clearly, in 2009 this put an awful lot of pressure on top line sales not only in our brands, but every brand across the industry saw you know, kind of you know, 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, you know, being able to deliver over a couple 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 and we also, you know, expect it 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 you know, kind of 40 plus years of being you know, the 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 are very excited about, which is 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, you know, participating with new advertising this is going to generate a lot of excitement with our customers. As we talk to them, not only did the chart that I showed you today talk about you know, kind of our issue with worth what you pay for, but the number one you know, comment that we get from our consumer is John something like this, we love your food, we 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 you know, at a very clear value position 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, you know, kind of value opportunities. But that's going to take 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, you know, we are making a significant investment in programs and projects to ensure that we get back to what I think is a very exciting you know, 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 go into much more detail from competitive reasons, we believe that we now have a menu that really reflects our brand positioning, you know, fresh cracked eggs, bacon cooked from scratch, specialty coffee that's fantastic, other products that none of our competitors you know, have.
We're not you know, immune to the fact that you know, breakfast is not a simple part to break into, but it's still, you know, almost 25% of the transactions in our industry and it is certainly not for a brand that is strong and is well-known as Wendy's not to participate and take at least a fair share, and you know, someone will say yes, but you know, McDonald's is going to stand up and work very hard to make sure that if you don't you know, kind of take it from them.
In fact, you know, they just launched a dollar you know, kind of big dollar, you know, kind of breakfast menu, and, you know, we are 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 the fair share of breakfast and add significant revenue you know, kind of 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 are spending an awful lot of time in 2010 with what's going on economically, and the amount of value that you need to have on your menu is very important, systematically and very carefully you understand how pricing affects elasticity, and that's where we're spending a fair amount of money and in time on right now understanding you know, the relationships between different products, between different geographies in different locations.
And again, you know, this is not something we are investing from scratch. This has happened with a number of our competitors as you know, and it's really you know, helped them significantly improve their sales, and we believe by the time we get the model done and we start to implement this, you know, we have a lot of stores in the Wendy's brand that we'll get most of his 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, you know, as we get through the winter, if we ever get through the winter.
Let's all hope we do here pretty soon and you know, we start to get these new stores opening that starts to kind of be more inviting for customers that starts to put us in a better competitive situation at both of our brands, and again that's going to be you know, kind of a significant impact in 2011 and beyond, and then you know, finally, you know, internationalist is, you know, one of those things. It's a little bit like compound interest.
You know, you spend a fair amount of time and money you know, upfront and then all of a sudden you know, it starts to pay back you know, pretty nicely over a period of time, and that's probably to be fair, you know, kind of not as exciting maybe you know from an EBITDA standpoint in 2011, but it certainly is more exciting as we get later in 2011 and 2012 and beyond as we start to bring to fruition some of the exciting opportunities that we already beginning to talk about. So that's what we believe John that, you know, 2010 is an investment year. We think we have the right plan, and we think that we will you know, kind of do well in the year based on the forecast that we provided you, and the 2011 will be back to an exciting growth year for us from an EBITDA standpoint.
John Glass - Morgan Stanley
Your next question comes from Steven Kron of Goldman Sachs.
Neil – Goldman Sachs
Thanks. This is Neil [ph] for Steven. Could you quantify February sales and approximate impact from weather. Also has the competitive environment become more rationale and what does your marketing schedule look like for value versus premium messaging at both Wendy's and Arby's. Thank you.
Well, Neil, I will start with the last question. At both brands, we are clear that we are going to need to post 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 probably heard from every single brand as they talked about results, you know, the central and the east portions of the country have had, you know, kind of a more severe weather, and in some states, you know, record snowfalls which is you know, kind of kept people out of our stores. And so as I mentioned it has had a negative impact on same-store sales, however, we don't talk about that typically on a month by month basis, and 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.
Neil – Goldman Sachs
Neil – Goldman Sachs
Neil – Goldman Sachs
I am 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 is as aggressive as I seen it you know, 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 is a value message, because I think it's pretty clear in this economy and 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.
Sara Senatore - Sanford Bernstein
Can you hear me?
Sara Senatore - Sanford Bernstein
Okay, great. So, I have a sort of big picture question. It sounds like lot of what you are doing, as you echoed [ph] so everybody is sort of giving or modeling there is a lot of – certainly value is pervasive, you know, 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, I mean, overall for everybody. Higher investment spending, lower margins, it doesn't sound like a great recipe for returns. So I just want to get your thoughts on how you think about the industry.
Well, Sara, I don't know that I could give you guidance on what you should think about our competitors, but I can certainly give you a little bit of an 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 me mentioned, we think it will continue to be soft in the first part of 2010. Many of the economists are talking about you know, improvement in the later part of 2010, and some of the weaker brands I think will struggle as this continues.
However, from where we set two brands that have very strong positionings from the standpoint of quality products, we believe as the economy begins to improve, and we get the benefit of some of the initiatives and the investments that we spoken about today that we're going to be able to take, you know, full advantage of the market kind of returning to a more normal situation, and thus growing probably more quickly than many of the other brands and 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 anyone would suggest that that's going to be the case.
And Sara, what I would also say is in terms of your comments 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 a 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 disappointed 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 kind of 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 is great opportunity which I built you know, kind of a long career on, and do – it is going to do the right things. We're going to come out of this you know much, much stronger than the brands that are trying to hunker down and just kind of wait through it, and that's why, you know, 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 you know, 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.
Sara Senatore - Sanford Bernstein
Your next question comes from Michael Gallo of C.L. King.
Michael Gallo - C.L. King
Hi good morning. 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 could provide us any color on what you've seen in terms of traffic versus ticket to what degree it has cannibalized other products versus driven new traffic and what kind of margin impact if any it has had on the results. Thank you.
Sure Michael. I'd be happy to address that. Let me first of all say that in January it was not a national roll out. We have 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 you know, when one of the weeks we had some significant you know, kind of negative weather. What we're seeing however, is a significant increase in transactions as consumers kind of realize that they can come into Arby's, and they can get products that are much less expensive than what they have 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 a dollar. Most of our customers quite honestly are walking out with a check average 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 where they buy more than just three items and so you know, that's having a positive impact.
From a check standpoint, certainly we've seen some check erosions 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 and so same-store sales, you know, have improved dramatically over the trends. Over just that three week period in January as I mentioned where you know, we had some local advertising in our company stores, we saw the trends to improve to you know, minus 3.9% which is very encouraging.
From a margin standpoint, clearly it has some impact on our margins. It has been roughly about 500 basis points or half a point but we believe that the sales improvement 50 basis points. They are looking like I mean, like I'm crazy. 50 basis points or half a point, but we believe that that, you know, is clearly covered by the increase in sales that this program generates. So net-net we are excited about it and we think it's going to continue to drive sales and profitability.
Michael Gallo - C.L. King
And then just sort of a follow-up question to that. Obviously, you're emphasizing value now as you launch that. It seems like one of the things that's been I wouldn’t say missing, but not as strong as some of your competitors has been, the new product innovation at the Arby's brand, and I think if we go back to really since the launch of market fresh. We haven't been able to really sustain any meaningful innovation in new lines that have driven a lot of new customers.
So 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 as, you know, 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 like you know, for example toasted subs, I think which were done a couple of years ago didn't quite grow the way you thought they'd be. So 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, you know, kind of a new product innovation with value as I mentioned we're doing.
Certainly, you know, one of the biggest launches in the Arby's history was market fresh a number of years ago. I don't know of 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 Roast Burgers that have continued to mix very well, and I would say that's a very successful introduction in our brand. Where we've lost our traffic in sales Michael has been in the area of the lower end consumer that's looking to come in from more of a value, but 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 are working on, but again for competitive reasons, I would like not to 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.
Michael Gallo - C.L. King
Just a follow up, conclude from that, [ph] we should expect to see some new product innovation from Arby's later this year?
Absolutely. It is a hallmark of how businesses or brands continue to be kind of interesting to the consumer.
Michael Gallo - C.L. King
I think we have time for one more question.
Your next question comes from Jeffrey Bernstein of Barclays Capital.
Jeffrey Bernstein - 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 am just wondering the remodels you have 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 are seeing in tests. Any color on either brand just to kind of give comfort around the 100 new that you are doing at both brands, and is the franchisee push at a similar level?
Jeff, let me try to address that. I think on the Wendy's side, we have had a pretty good track record there when we look at the remodels as a whole that we have seen, where we have gone in and freshened the exterior and interiors of the buildings that we have seen as a group though sales and margins tend to improve, and provide a reasonable return on the investment.
You know, 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 this 75% pinnacle image. The results as we stratify them are pretty – that 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 will get an attractive return on that investment if we can get our system to look more consistently, especially market by market where we have had good penetration that we think we can get a good return. Again, the investment we are looking there will probably be $250,000 to maybe $300,000 per unit on the Arby's side.
Jeffrey Bernstein - Barclays Capital
Okay, and then just more broadly speaking in terms of 2009 being a very strong year in terms of achieving a good portion of your three year target, 2010 more of an investment year. Just wondering, now that you are ahead on both G&A and margins, is there anything you discovered on either end that should lead us to believe that those targets can now far be exceeded or should we just expect still not much more than $60 million in G&A and not much more than 500 basis points in margins, and therefore much slower ramp on the back half?
Well, I will address those both Jeffrey, one at a time. From a G&A standpoint, and 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, the G&A will become more and more efficient, but we do think that there are some additional savings that we can enjoy, but we have gotten certainly the majority would know that in 2009 as we pointed out.
From a margin standpoint, we were over 300 basis points. That is well over half our way to 500. I hope that gives you a sense of confidence that we actually understand, you know how to improve margins in the stores, specifically in light of the fact that 330 that we reported for 2009 had no commodity impact, because you know the commodities were more expensive in the first-half and less expenses in the second half. You know, 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 kind of focus from the standpoint of how are store managers going about the process of making that come to fruition.
I give them all and full credit for the significant improvement that they have made, and probably even as impressively, while doing that we have improved the level of company operation significantly from as I mentioned about 38% of our stores being AMV [ph] when we took this on to well over 60% being AMV 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 the 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 have proven that know how to manage the bottom line will probably be more quicker. And secondly, as we get the benefit of both our purchasing cooperative, and also the third cooperative that we 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 kind of enjoy improvements beyond that as those things start to come to fruition.
Jeffrey Bernstein - Barclays Capital
Great. Thank you.
You are welcome. Thank you all for participating today, and thank you for your questions. Let me just conclude with just a brief kind of overview, and in that overview of what I 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 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 the 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 like to share with everybody is a little housekeeping. We will post these slides on our websites. You will have a chance to take a look at those more closely afterwards. We ask you to take a look at that in conjunction with our 10-K that was filed this morning and the release. And Steve Hare, (inaudible) 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 BoA conference in New York, and the following week Steve Hare will be presenting in the JP Morgan conference. So, hope to see you on the road. Thank you.
Thank you. This concludes your conference. You may now disconnect.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com. Thank you!