Yahoo Finance

Ken Cook

Thanks, Kirk, and good morning, everyone.
I will start by covering our first quarter results, including an update on our operational initiatives followed by our capital deployment during the quarter. And last, I will share some comments on our outlook for the remainder of 2025.
Our first quarter financial results included adverse weather impacts early in the quarter alongside a challenged consumer environment exiting Q1. Global system-wide sales declined 1.1% on a constant currency basis driven by global same-restaurant sales, which were down 2.1%.
US same-restaurant sales were down 2.8%, driven by a decrease in traffic partially offset by a higher average check. Performance in January and February was impacted by adverse weather resulting in reduced traffic and temporary restaurant closures across the country.
As the effects of winter weather subsided, we launched our Thin Mint Frosty collaboration on February 21, which drove US SRS into positive territory as we exited February and entered March. We anticipated this trend to continue throughout March, underpinned by consistent consumer behavior.
However, as the month progressed, consumer confidence deteriorated, leading to a reduction in demand. Shifting to our international segment, The Wendy's brand continued to gain momentum around the globe, delivering systemwide sales growth of 8.9% and a 2.3% same-restaurant sales growth in the first quarter.
Systemwide sales growth was positive across all regions led by Europe and the Asia Pacific, Middle East, and Africa region. Early results from our expansion into Australia have exceeded our expectations and are another proof point of our ability to execute on our globally great, locally even better strategy.
Our Canadian business also grew year over year, in line with our expectations as we have amplified our fresh, famous food messaging for our 100% Canadian sourced fresh, never frozen beef. Our localized supply chain in the country also includes domestically sourced produce and frosty ingredients, minimizing the direct impact from tariffs to our Canadian restaurants.
Shifting to margin. Global company restaurant margin was 14.3% for the first quarter, and US company operated restaurant margin was 14.8%, a contraction of 50 basis points year over year. The change in US company operated restaurant margin was driven by sales deleveraging, higher commodity cost, and wage rate inflation.
These were partially offset by higher labor productivity compared to the prior year. Let me provide some color on the operational initiatives that Kirk discussed. We have continued to deploy fresh AI to the system and are now at 168 locations throughout the US.
And we remain on track to hit our target of more than 500 by the end of the year. Through the end of the first quarter, we are encouraged by the continuous improvement in the platform driven by both enhancements that we've introduced to the system and learning from additional customer interactions.
We are excited to leverage this platform on a larger scale to improve restaurant productivity and the customer experience. At our Investor Day, we talked about the importance of helping our franchisees enhance their profitability.
One of the ways we're doing this is implementing a system to collect franchisee profit and loss statements on a monthly basis at the restaurant level. This tool enables proactive partnership to leverage insights and perform benchmarking of restaurants with similar demographic and economic profiles to share learnings across the system.
We have completed on boarding and training for the franchisees who are in the process of uploading financials into the system. Feedback has been positive, and I look forward to sharing more about franchisee performance and additional earnings from this initiative later in the year.
Early progress on these initiatives give us confidence that we are on the right path to improving productivity and enhancing restaurant level economics for both company-owned and franchisee locations.
Moving to the P&L. Total adjusted revenue was $423.1 million, a decrease of $6.7 million due to lower company operated restaurant sales and lower franchise royalty revenue, partially offset by an increase in franchise fees.
Adjusted EBITDA was $124.5 million, a decrease of $3.3 million resulting primarily from lower adjusted revenue and a $4.4 million increase in G&A expense. This was in line with our expectations and driven in part by the investments to support our technology and operational initiatives. These items were partially offset by a $3 million increase in other operating income and a $2.3 million decrease in company advertising expense.
Adjusted earnings was $0.20 per share, a decrease of $0.03 from the prior year, driven by a decrease in other income, lower adjusted EBITDA, and a higher effective tax rate. These were partially offset by fewer shares outstanding as a result of our share repurchase program.
Turning to free cash flow. We are updating our definition of free cash flow. As we shared last quarter, we plan to increase our investments in the Build-to-Suit program to accelerate global net unit growth. Given this planned increase, we believe changing our definition of free cash flow is beneficial to investors.
Our new definition of free cash flow is net cash provided by operating activities less capital expenditures less Build-to-Suit franchise development fund investments. Under this new definition, free cash flow was $68 million in the first quarter.
Overall, free cash flow improved by $12 million on a comparable basis to the prior year.
Moving on to capital allocation. Investing in the business is our first capital allocation priority. And during the first quarter, we invested $17.7 million in capital expenditures and $5.8 million in our Build-to-Suit program. During the first quarter, of the 74 new restaurants opened, 14 included investments from the Build-to-Suit program, half coming from the US and the other half internationally in the UK and Canada.
In addition to Build-to-Suit investments, capital expenditures included $9.9 million toward the development of new company-owned restaurants. We also invested $6.1 million towards our technology initiatives, including continued investment in our digital menu board rollout.
Our second priority is paying an attractive dividend. In line with our capital allocation policy, today, we announced our second quarter dividend payment of $0.14 per share. Our next priority is maintaining a strong balance sheet.
We ended the first quarter with over $335 million of unrestricted cash on the balance sheet and a net leverage ratio of 4.5 times. This includes the impact of the share repurchases during the first quarter. Finally, we believe cash belongs to our shareholders, and we will use share repurchases to return excess cash to shareholders.
During the first quarter, we were purchased 8.2 million shares for approximately $124 million and year-to-date through April 25 have repurchased over 12 million shares for approximately $175 million. We continue to believe an attractive opportunity exists to repurchase our shares as they remain undervalued compared to both our own history and relative to our peers.
We are continuing to buy and anticipate repurchasing up to an additional $25 million of shares in 2025. Through share repurchases and dividends, we plan to return up to $325 million of cash to shareholders in 2025, an increase of up to $40 million compared to 2024.
This return to shareholders highlights our focus on disciplined capital allocation that supports our long-term strategy.
Now let's turn to our financial outlook. On the fourth quarter call, we shared that our outlook for the year was grounded in multiple industry forecasts which modeled QSR burger traffic to be flat to down 1% for 2025. During the first quarter, QSR burger traffic was below these industry forecasts, driven by the combination of adverse winter weather in the first half of the quarter and a pullback in consumer demand.
Based on the change in consumer behavior we saw in March, we are updating our outlook for the full year 2025. Due to the high degree of uncertainty in the market, our updated outlook assumes that the current consumer environment persists throughout the remainder of the year.
Our outlook also reflects the strong programming we have for the remainder of the year, including our new Frosty Swirls and Fusions, our upcoming Takis collaboration, our 100 days of summer programming, and new collaborations in additions to our menu later in the year.
Before diving into our updated outlook, I want to reiterate that despite the challenging environment, we continue to manage the business for the long term, investing in our strategic priorities to deliver value for our customers, our franchisees, and our shareholders.
Now let's move on to the details. We are reaffirming our global net unit growth target of 2% to 3% for 2025 and are pleased with our results in the first quarter. For the full year 2025, we now expect global systemwide sales to range from down 2% to flat year over year.
US company operated restaurant margin is expected to be 15% plus or minus 50 basis points. This includes an updated commodity inflation outlook for the year of 2.5%. We expect G&A to be between $265 million and $275 million and continue to represent approximately 1.9% of system sales for the full year.
We will continue to invest in the resources and technology needed to deliver on our strategic priorities. Additionally, we will tightly manage discretionary expenses and expect incentive compensation will be lower than our initial outlook.
Adjusted EBITDA is expected to be between $530 million and $545 million. We continue to anticipate interest expense of approximately $127 million as we expect to issue $400 million of whole business securitization notes in late 2025 and use the proceeds to pay off the $400 million of debt that matures between December 2025 and September 2026.
Taking all these into account, we now expect adjusted EPS to range from $0.92 a share to $0.98 per share. We expect full year free cash flow under our new definition to be between $185 million and $205 million for the full year.
This includes approximately $65 million of Build-to-Suit investments. We continue to anticipate capital expenditures of between $100 million to $110 million for the year.
In closing, despite the uncertain macro environment, we remain focused on controlling what we can control. We are confident in delivering the highest quality food in QSR and believe that our programming for the remainder of the year will provide customers with compelling reasons to eat at Wendy's and allow us to win in the marketplace.
We have a focused strategy and are executing to elevate the customer experience and investing to expand our global footprint to drive profitable growth.
I'll now hand it over to Aaron to share our Q2 Investor Relations calendar.

Aaron Broholm

Thank you, Ken.
On May 19, we will participate in the Virtual Wolfe Research Investor Conference. We will participate in the Bernstein Strategic Decisions Conference on May 29, and on June 11, we'll participate in the Evercore Consumer and Retail Conference.
If you are interested in joining us at any of these events, please contact the respective sell side analyst or equity sales contact at the host firm.
We will now transition to the Q&A part of the call.
Due to the high number of covering analysts, please limit yourself to one question only.
Operator, please queue up the first question.

Question and Answer Session

Operator

(Operator Instructions)
Jeffrey Bernstein, Barclays.

Jeffrey Bernstein

Just looking at the 2025 guide, I know you sounded bullish in early March at your Investor Day, but you are tempering it this morning after just the first quarter. And it seems like by a fairly good amount. So it does seem to demonstrate you expect the first quarter weakness to prevail for the year.
Just wondering if you could maybe share your thoughts being new to the quick service restaurant space, it would seem like QSR would benefit or would hope to benefit from retaining the lower income consumer and/or trade down from middle and upper income consumers.
That's historically been the calling card for quick service being more defensive in a slow macro. So I'm just wondering, Kirk, how you see quick service positioned currently. And tied to that, just I think you mentioned value a couple of times.
I'm just wondering if you're still confident in your current platform kind of led by that Biggie Bag or whether you need to refresh that platform or maybe increase the mix of marketing on value.

Kirk Tanner

The consumer certainly is under pressure. And I think that's reflected in the Q1 numbers. And we see that persisting. We thought it was prudent to plan if the consumer is under pressure for the full year, what do we do to control what we can control.
And we like the second half of the year for the activity that we have. And we think that we have every right to win the consumer, win in the marketplace. Feel really good about our 100 days of program -- our 100 days of summer program.
And I think it reflects the balanced approach of getting after the customer and solving customer issues and opportunities. Starts with focusing on our core. We have core innovation platforms like our Frosty. Value is important, as you mentioned.
We do have the best quality value meal in the industry. But we will also provide value every single week for our customers through this 100 days of the summer off of our core menu. And then I'd say the collaborations that we have in the summer also drive passion points with customers.
They drive traffic. I'm really excited. Our program starts in June with Takis and it will definitely create consumer love and noise and it'll drive traffic. I think that our approach is one of balance, being able to balance value, innovation, focus on our core, and deliver that with a great customer experience.
We're very focused on hospitality and delivering that execution in the restaurant as well. We've deployed those resources and we like the improvements we're seeing. So it's a couple of things that we see. And we do think that QSR has the right to win in this economic environment.
But we're really focused on what we can do to bring customers into Wendy's and deliver a great customer experience. I know that was a long answer. But that's how we feel. We're very optimistic with what we're doing in the marketplace, but we wanted to have a prudent approach of how we plan.

Operator

David Palmer, Evercore ISI.

David Palmer

Kirk, definitely, you guys are working on a lot of things. And also you made that comment about putting the consumer at the center. I'm wondering if maybe you could touch on the consumer data. What it's telling you in the key metrics that you care about, drive through speed, value perception, quality of your premium items.
Of course, you mentioned something about accuracy there too. But based on your initiatives, where do you see the biggest improvement happening, where are you starting out versus maybe where the brand's been in the past?
Where do you see the biggest improvement happening? It feels like you're doing a lot maybe on the quality side through the rest of the year. But I'd love to get your thoughts about where you see the most improvement coming from where you're starting.

Kirk Tanner

Yeah. I appreciate the question, David.
Operational excellence in creating a great customer experience and driving hospitality at Wendy's is the focus of the investment we put behind our field resources. Getting into our restaurants twice with twice the frequency, coaching and training, and elevating that experience is key.
We're focused on a few big drivers of customer satisfaction. One is accuracy. So deploying tools in the restaurants and training in the restaurants. So delivery scales is one thing that we're working on where you can quickly evaluate the weight that ties to the accuracy of the delivered meal.
That is one that we're deploying. Two, label printings. These seem very straightforward, but these things drive focus on accuracy and execution in the marketplace. The other thing is friendliness and hospitality. Measuring those things drive customer satisfaction.
And the early results that we see are good. So when we think about the accuracy from a delivery scale and label printers, those things that we've deployed have dramatically improved accuracy. And so as we take those across our US owned businesses and the franchise system, we're going to do that.
I think the other thing is this is one system. Our franchisees, our customer owned, our personally owned, our company owned restaurants. Doing this together is critical. We've spent the last three weeks visiting with our franchisees, rolling out the summer program, reinforcing the programs of driving execution at the restaurant level, and we have alignment.
There's a high sense of urgency to do that. So what we measure is our customer satisfaction and we see improvements with the things that we're focused on, and we like where we're going.

Operator

Dennis Geiger, UBS.

Dennis Geiger

I was wondering if you could talk a bit more about the unit development outlook, including any information maybe on the pipeline and sort of overall franchisee demand in the current environment. Solid start to the year. Good to see a reiteration of the full year development targets.
But anything sort of on how the current environment might impact demand and plans for '26 looking ahead?

Kirk Tanner

Yeah. We like what we see. Right now, we're off to a good start. I'll tell you it's right on our strategy. So a little over 60% of those units came from international, our international market. I believe our international strategy is working.
And we see that pipeline and commitments in our international plans. And then domestically, we had a strong start domestically with the unit growth. And we have a pipeline that we can see for this year. And the pipeline for '26 and beyond.
We're confident in what we're doing. And again, it goes back to the things and the fundamentals that we're driving. Restaurant level economics, driving the top line and lowering the build cost. We're focused on all those things.
And then engaging with our franchisees to help them drive those solutions. Again, we're also investing more capital in our Build-to-Suit program. So we feel really good about our unit growth in '25. That's why we're sticking to our guidance.
We feel really good about that. And we feel good about the future post '25.

Operator

Jon Tower, Citi.

Jon Tower

I'm just curious if you could dig in a little bit to what transpired during the quarter for your business. And specifically, it did sound like obviously, on that in February, you were expecting a soft quarter, and then March came along and was worse than you had anticipated.
Can you just dig into how that showed up in your business? Was it broad based? Did you see it specifically show up in certain day parts, weekdays, weekends? And if you can parse out maybe, did you see it specifically at certain income levels?
I'm just curious if you could provide any more flavor to that.

Ken Cook

You're right, Q1, it was a noisy quarter. Five of the first eight weeks of the quarter had significant weather events in our system. And then things turned around as we exited February and into March. We launched Thin Mint Frosty on February 21.
We saw our own same-restaurant sales turn positive as we exited February and entered March. And our original outlook assumed that it would stay that way throughout the month of March. However, we saw a significant shift in industry consumer behavior as we moved throughout March.
Consumer confidence fell and customers increasingly pulled back from QSR industry. And we performed in line. We continue to win in the market. But we saw those same trends in our results. So given the uncertainty around industry demand going forward, we grounded our full year outlook into what we were seeing over the past several weeks.
Then we applied normal seasonality to that. And that kind of gets you to the low end of the guidance that we provided. We're not standing still. We have a lot of additional incremental programming through the rest of the year that Kirk talked about, including our 100 days of summer.
We think as we execute that, that will help us continue to win in the market. And then climb our way towards the midpoint of the guidance range that we provided. And then in the event there is some additional consumer recovery later this year, from an industry perspective, then we could be talking about the high end of the guide.
From an income cohort's perspective, we measure household income above $75,000 and household income below $75,000. And we saw broad-based pressure in the quarter. I would say the pressure was more acute with those households under $75,000 and we did see industry traffic with those households pulled back by high single digits, low double digits, especially in the month of March.
We continue to hold share. Obviously, as you can expect, in this environment, both from a weather environment and a consumer pullback environment, breakfast performed a little bit worse than rest of day. Breakfast performed worse than rest of day as consumer behavior changed.
So that's kind of what the layout for guidance is. We're focused on controlling what we can control. We're excited about reaffirming our net unit growth outlook of 2% to 3% and also reaffirming CapEx guidance. We're investing for the long term and we feel confident about building more restaurants, winning in the market, and enhancing restaurant level economics.

Operator

Sara Senatore, Bank of America.

Sara Senatore

Last quarter, I think you said that in 2025, you were redeploying some of the advertising spend to investments in field operations. I was wondering if you think this pullback in spending might have influence or an effect on your performance.
I know you mentioned maintaining share, but I think the conventional wisdom says the share of voice should lead your share of market. And we did see some other restaurants improve in March and April. So do you have thoughts on advertising spend or maybe pressing the lever a little bit harder?
And then just curious, what was burger traffic down last year, QSR burger traffic? I know you had expected it initially to be flat to down in 2025, down 1%. I'm just curious if you can benchmark for last year.

Ken Cook

Yeah, happy to.
In terms of QSR burger traffic, for the last several years, it's kind of been down in the low single digit range. We expected this year in total to be a little bit better than that based on the industry forecasts we were looking at of 0% to minus 1%.
Obviously, the first quarter from an industry perspective performed worse than that. We saw industry traffic down mid single digits in the first quarter, which was worse than we expected. And we do expect those industry forecasts to come down as we move throughout the rest of the year.
And obviously, that is embedded in our guidance because we assume that the current consumer pressure persists throughout the remainder of the year. In terms of advertising spending, I think when you look at what the industry traffic did relative to what we did, again, we continue to hold and hold share in total on traffic and dollar wise.
So I don't think that the advertising spend had a big impact on us. The other thing I'd say is we do see significant opportunity in our restaurants as we enhance the customer experience. We think that ultimately drives frequency.
It enhances The Wendy's value proposition and will ultimately allow us to continue to win in the market. So we feel good about the decisions we make.

Operator

Brian Bittner, Oppenheimer.

Brian Bittner

Just around the industry and within your own business, I think we've seen very successful LTOs or promotions such as your time with SpongeBob last quarter and others around the industry are doing similar things.
Why do you think that is so effective and how do you think about how to convert those successes into sustainable future comp growth moving forward? And do you have any catalysts like that set for 2025?

Kirk Tanner

Brian, great question.
Look, I think it's a balanced approach. I think you have to focus on your core. Your innovation has got to be incremental, and you have to have compelling value. I'd say that's foundational. So that's what we're focused on.
Collaboration like SpongeBob, I think, connect you to culture and drive excitement through passion points. They bring you in -- they bring customers into the restaurant. I think that is for sure. We are focused on the learnings that we took from SpongeBob into the future collaborations that we have coming up.
We have a collaboration on our Frosty lineup, starting with strawberry Pop-Tart and Oreo Brownie Batter. Those two are collaborations with brands that we know consumers are going to love. So that's going to elevate the Frosty platform.
Shortly thereafter, we've got a partnership with Takis. Takis. Why Takis is so important? It connects with Gen Z customers. It's multicultural. It's a customer group we're going after. It drives traffic into our restaurants, and we give customers a great experience through the collaboration of our chicken sandwich.
We have a Takis chicken sandwich meal. We have Fuego fries. Customers are going to be looking for these things. The secret is how do you build on that? How does that become innovation off your core menu, and you create brand love through those experience.
But I think it's so important to stay customer focused. That customer focus tapping into passion points through these collaborations, I think is really important. Now for us, we're very intentional on who we partner with and we ask ourselves, does that help us get the customers that we're looking for to drive traffic and share and win in the marketplace.
But I like the frequency in which we have planned collaborations. We have Takis. We have one again. At the end of the summer, it's tied into an entertainment property. We're not going to talk about it right now. But that will be coming as well.
Again, we're taking our learnings, tapping into passion points, and going after specific customer groups that build our brand for the long term.

Operator

Jim Salera, Stephens.

Jim Salera

I wanted to ask a little bit about the engagement from the consumer with some of these branded partnerships, particularly if we kind of assume maybe a softer consumer for the remainder of the year. We've heard competitors talk about extending value offerings and like QSR pizza is seeing I think a higher frequency of discounting.
And so do you have any concern that if some of these offerings on like the Frosty platform and any other collaborations you might have might get drowned out by all of the other value offerings in the channel or do you still think that they can bring incremental traffic to the store even with kind of more value noise out there?

Kirk Tanner

I think it's an important question.
I think that balance on our menu is important. So we have compelling value across our Biggie platform plus we'll have value on our core. But when you talk about consumer passion points, that is -- I'd like to think about that is a value proposition.
When you can ignite customer passion points, that drives traffic. I think you only have to look back to the SpongeBob event in October. That ignited a passion and it tied into culture that drove traffic. I believe we have those collaborations that are very intentional.
I think that those are valuable -- are value. And I don't believe value meals or deep discounting will overshadow how you connect with customers. My experience has been when you ignite customer passion points, that's a major driver of enthusiasm for your brand.
And I like where we're going with that.

Operator

Lauren Silberman, Deutsche Bank.

Lauren Silberman

So I wanted to follow up on one of the comments from Sara's question. You said burger traffic was down mid single digit in Q1. Does that imply traffic is down closer to high single digit exiting the quarter in April? And then my actual question is on the comp guide.
Just want to level set expectations in terms of what you're embedding for the cadence of comps as we move through the year. It sounds like 2Q may be similar to the first quarter. Improvement in 3Q given the initiatives and not sure on the fourth quarter given the tough compare.
Is there any color you can give on cadence and perhaps what you're expecting for the international segment versus US, would be helpful.

Ken Cook

Starting off with the shape of the year. You're right. I would say we would expect the second quarter to look very much like the first quarter in terms of total systemwide sales growth, in terms of SRS, in terms of the profitability side.
So year over year, expect the second quarter to look a lot like the first. To Kirk's point, we do have a lot of exciting programming coming out through the summer and at the end of summer. So we do expect to see momentum as we exit the second quarter to propel us into the third.
We expect that momentum to continue in the fourth. But like you said, we do have some tough comps there. From an international perspective, we really like what we're seeing in the market. So international systemwide sales grew 8.9% year over year on a constant currency basis with all regions contributing.
So Europe and APMEA both grew high teens, low 20% systemwide sales year over year. We saw Latin America and the Caribbean plus 10% on the constant currency basis. And Canada grew mid single digits from a systemwide sales perspective.
So broad-based strength internationally in the business, which is what we like to see. In terms of traffic for the industry, yeah, I do think it will be -- it will remain pressured. So we did see the consumer behavior change across the industry throughout the month of March.
And the guidance -- the low end of the guidance assumes that behavior and that traffic pattern persists throughout the remainder of the year.

Operator

Margaret Binshtok, Wolfe Research.

Margaret Binshtok

So you launched your revamped Frosty platform in mid April. Can you discuss any early readings and the opportunity you see here, especially when it comes to driving awareness?

Kirk Tanner

Yes, we just launched Frosty Swirls and we launched Frosty Fusions May 12. We've seen really good results early with Frosty. And I can tell you our experience has been, when we get it right with Frosty, it definitely delivers traffic.
We saw this when we did the Girl Scouts Frosty with our collaboration earlier this year. That set us up for this platform. We have a lot of confidence in building out our Frosty business. We think that this is a place where we're tying into again, customer passion points with one of our most iconic brands.
So yes, we plan on that being a differentiator and helping us win in the market and take share. Frosty will definitely be a platform. We have a lot of confidence and early results are really encouraging.

Operator

Andrew Charles, TD Cowen.

Andrew Charles

Kirk, there's an increased focus on chicken across the industry in 2025, particularly in the immediate term. So I'm curious if we look past the current cajun chicken limited-time offering, the Takis limited-time offering in June.
Are you happy with your chicken portfolio or do you believe there are opportunities to bring permanent news to the menu via strips or a revamped chicken sandwich? And Ken, if I could just sneak one more in. It didn't come up during the call or prepared remarks, but the $4 million claim that was cited in the queue, can you just talk a little bit more about that just given the increase it drove and other operating income?

Kirk Tanner

Yeah. So let me talk about chicken. One, that we're very intentional about putting the Takis collaboration with our chicken sandwich. And we do see chicken as a major opportunity. We will announce later this year our plans to holistically look at the chicken.
We have been working on it. I've tried these products. We have a lot coming your way from a chicken standpoint, I would think about delivering the best chicken sandwich in the industry. Plus we're looking at other chicken innovations that go with that.
That will be coming shortly. I'd say we're very intentional about again, setting up our chicken, getting momentum in that part of our menu. We know that is critically important to our customers and attracting customers.
So we are very focused on it. You'll see much more from us in the later half of the year.

Ken Cook

Yeah. In terms of the $4 million claim settlement, that was associated with a settlement with credit card providers. We won't get into the details on that, but it was planned for. As we exited 2024, we expected this to happen in the first quarter and it came in in line with our expectations.

Operator

Danilo Gargiulo, Bernstein.

Danilo Gargiulo

Usually around this time, you update on the franchisee cash flow. So I was wondering if you can provide an update on the franchisee cash flows. How much it grew on a year over year basis? And more importantly, as we look into 2025, we have the balance of your guidance embedding some customer macro environment while Abigail is leading operational excellence in the stores, which hopefully is going to be leading to greater EBITDA for franchisee.
So can you comment also on what's your expectation for '25 on the balance between these two things?

Ken Cook

Franchisee profitability, we normally give an update on the second quarter call in terms of what that looked like. And we'll plan to do the same this year, provide an update on franchisee financials. I talked a little bit in my prepared remarks about the P&L benchmarking tool that we're rolling out.
So we are in the process of collecting data from franchisees for both full year 2024 results as well as 2025 results. One of the things we're really excited about this P&L benchmarking tool is it is going to provide franchisees with more data so they can uncover opportunities in the restaurant to further enhance the economics there.
So historically, now that we're -- that we will be collecting it at a restaurant level, we'll be able to compare across the system with restaurants that are most similar to each franchisee from an AUV perspective, from a wage environment perspective, from a demographic perspective.
So we're really excited about the ability to do that. And helping our franchisees who are our most important customer enhance the economics of their individual restaurants.

Operator

Rahul Kro, JPMorgan.

Rahul Krotthapalli

The question is on the 300 US units planned for the next four years, of which I believe 75% of them you are co-investing in. Given the current trends and outlook revision and if these headwinds were to persist, would you still think this is the right level of development for the US?
And at what point would you revisit this given the fact that sales to investment still continues to be around 1 times? And the follow up here is would you take the opportunity of this current environment to manage the US store portfolio more aggressively or asked another way, would the bar for Abigail's performance metrics we discussed in March be notably higher?

Ken Cook

I guess two things. We'll start with the second half of the question. We are looking at opportunities to accelerate all those initiatives throughout the year, both from a productivity perspective in the restaurants and from a hospitality perspective in the restaurants.
So yeah, we're going to take every opportunity we can and we're going to implement those initiatives as quickly as we can. In terms of new unit development beyond 2025, so we're not going to make any changes to that today.
I think the important thing to think about when you think about Wendy's unit development is about 70% of those new restaurants are going to happen outside the United States. And our international business is firing on all cylinders.
We're really happy with the performance there. When you look at the US, we think the hospitality culture, the model of excellence that we're implementing and rolling out now, is going to drive significant improvement to both the top and the bottom line for company owned franchisee restaurants.
So we're really excited about sharing progress on that as we move throughout the year and into 2026.

Operator

Chris O'Cull, Stifel.

Christopher O'Cull

Kirk, can you give us a sense of the early operational impacts the company is seeing from the fresh AI voice system and maybe any metrics to help frame the system's benefit to labor, order accuracy or any other KPI?

Kirk Tanner

Yeah, Chris. We like what we're seeing. I think we focused on two things. One is the opportunity to see an increased check size. And we're seeing that. We see that through the customer because there is this opportunity when Wendy greets you at the drive-through, she knows what to ask you to get the opportunity to enhance your order.
Maybe you forgot that, but she'll remind you. And so we see that uptick in sales. And then accuracy is also a big driver. Taking an accurate order is the key. And driving accuracy and you have a perfectly accurate order that's right in front of the customer. That we've seen work.
We've also seen efficiency in the restaurant. Driving efficiency around being able to get working on the order and providing speed of service and accuracy from a delivery standpoint. So we like what we see. The economics are encouraging.
And it continues to roll out. We talked about -- we'll be in over 500 restaurants this year. So we like where we're going with fresh AI.

Operator

Brian Mullen, Piper Sandler.

Brian Mullan

Question on the breakfast day part. In the past, you've referenced that maybe the next leg of growth could come from innovation. Just wondering if you could remind us really any components of the offering where you see the biggest opportunity and how you'll be addressing that either this year or longer term.
And related to that, if you could just address the beverage offering at breakfast as you talked about it, we'd love to get your thoughts.

Kirk Tanner

Yeah. I think it's a really important question. Breakfast remains a priority for us -- a top priority for us because we have a ways to reach our potential and it'll be upside. We are innovating on our beverage platform and this summer, we will have a new coffee lineup of cold brew coffees that they're exceptional. I've tried them.
They're fantastic. We'll also drive value at beverages in the morning as part of our 100 days of summer program. We know and we've done some beverages tests in the past and we've learned that we sell a high level of beverages in the morning and we're tying that to some value offerings that we can -- so we can drive traffic against that day part.
So we're encouraged. We'll continue though in the future to innovate on breakfast and bring that into our restaurants. So that we remain competitive. And again, grow to our full potential, which is a long term strategy, but there is a pipeline of innovation.

Operator

Brian Harbour, Morgan Stanley.

Brian Harbour

As this [payer] industry comments about it kind of marks and whatnot. I guess we've -- more recently, as we think about March and April, I think there's some of the top 10 QSR chains that are up year over year solidly, right? And there's others that are more challenged.
So it seems like there's kind of a clear share shifting dynamic more recently and is that the case? Are you kind of seeing that based on your data? And what do you think will make the most difference from your perspective to take back some of that share this year?

Kirk Tanner

I think that's a really important question. Yes, there is an -- what it shows is winning in the marketplace in challenging conditions is what we're focused on. I think from a planning standpoint, we prudently planned, but our expectation is to win in the marketplace.
And I think it goes to some of the things that we've talked about with this 100 days of summer. You go after a highly seasonable time for customers and you deliver against what I think are critical check marks for the customer.
One, your core menu has to stand out and be exceptional. Value is important. And you have to deliver value worth paying for. Exciting collaborations that drive consumer passion points, I think is really important. And innovation that's incremental.
And if you think about our plans, this is the plan we believe we will win in the marketplace. Innovation that drives our core brands, excitement plus collaborations keeps our brand in mind share of the customer. I think that's really important.
Those that are winning are delivering against these elements every single day with great customer experience and hospitality. And we know we have opportunities to drive great customer experience in hospitality.
That's why we deploy the resources that we did to do just that. So that you can have that great customer experience in Wendy's. That I think is the plan. That's our recipe for success in our moving forward. And we really like where we're going in the second half of the year and our 100 days of summer.

Aaron Broholm

That was the last question of the call. Thank you, Kirk and Ken, and thank you to everyone for joining us this morning. Have a great day.

Operator

Thank you, all for joining today's call. You may now disconnect your lines.