Todd Penegor: It said it well. It’s a nice balanced calendar. We’ve talked about that historically, and we continue to make sure that we’re there for the consumer, but also make sure that we’re working a strong restaurant economic model. And you see that in the construct of our everyday Biggie Bag bundles at breakfast, good margin construct on that. You see that on the evolution of our Biggie Bag rest of day as we’ve evolved from 4 for $4 to $5 and $6. And you’ll see a nice balance between digital offers new news like Peppermint Frosty coming back into the fourth quarter, and we’ll continue to make sure we bring some exciting innovations as we close out the year on the premium side.
Operator: Our next question comes from Andrew Charles from TD Cowen. Andrew, Your line is now open. Please go ahead.
Andrew Charles: Great. Thanks. Todd, two part question on breakfast. First, just curious if you look back over the last year or so post COVID, how would you describe the progress of driving breakfast trial and to have it? And separately, you talked about the success of the $2 for $3 breakfast promo in the quarter. How do you plan to improve breakfast profitability as value activity for the category is likely to persist and likely put pressure on continued promotions during the day part.
Todd Penegor: Yes, we’re still on a journey. Trying to ingrain the breakfast daypart and the habit, it takes some time. We’ve been doing, a nice job. We’ve got good awareness. We have been driving trial. We continue to have an opportunity to bring our rest of day customer in and get them into our breakfast daypart. But we’re still, what I would characterize in the early innings of breakfast. And you see that where we need to continue to make sure that we’ve got news, we did that in this quarter with Frosty Cream Cold Brew, with English Muffin. We do know we need to have compelling value, 2 for $3 is compelling value, but it’s constructed very nicely to make sure that it works for the restaurant economic model as well for the consumer.
And we just need to be consistent, be consistent on with compelling value. Biggie Bundles gives us that platform to do that and we continue to be consistent out there with messaging, letting the consumer know that Wendy’s is open for breakfast. So, it is a journey. It’s been progressing well. We’ve continued to establish that daypart for us and we know we’ve got a lot of opportunity for growth still ahead of us.
Gunther Plosch: And Andrew, as you know, right, the breakfast business is above average profitability even when we promote, we still basically maintain above-average profitability. That’s the reason why we keep leaning in, keep innovating, keep price promoting to continue to drive the break in habit and building our business because long-term, it’s a sustained tailwind to our margin progression.
Operator: And our next question comes from Gregory Francfort from Guggenheim. Gregory, your line is now open, please go ahead.
Gregory Francfort: Hey, thanks for the question. GP, I just had a question on balance sheet and cash usages. And it sounded like on the prepared remarks, you were talking about maybe no change to the capital structure, but I think you’ve been buying back a little bit of debt here. And I’m wondering, as you look forward the next two or three years, what’s your thoughts are on leverage and what your thoughts are on potentially the pushes and pulls between share repurchase and debt repurchase? Thanks.
Gunther Plosch: Good morning Greg. Yes, we are sitting in a great position, right? Our cash balance is a little bit more than $600 million. As you know, we have securitized debt structure that’s very well-laddered. So, when is our next debt action is clearly end of 2025 when we have to buy back our — payback our debentures is about $50 million outstanding. And then the first WBS debt that’s going to be refinanced in 2026. So, we have time to await what the financial markets are going to do. We are sitting currently at about a 5.2 times — sorry, on the 4.7 times leverage ratio. So, it’s well below the five to six times I started on seven years ago. I would expect with that trajectory that leverage will be naturally delever and you will also see us definitely continuing to look at our debt and maybe buy back more.
You’ve seen the sign the Board has increased our debt authorization. So, if you get all of that done, we will have bought back $85 million of debt on top of the mandatory authorization. So, the balancing act, we’re obviously trying to protect a very, very attractive dividend so that you can continue to see from us. And you can also expect, obviously, share repurchases is continuing to be part of our choices. As you know, we have leaned in on a year-to-date basis. We have bought back $168 million on a prorated basis, really, that would be $125 million on the year. So we are leaning in. So clearly, if you leave the authorization unchanged for the next three years, share repurchases will step down a little bit.
Todd Penegor: The great news is we’ve got a lot of flexibility to GP’s point on the balance sheet with a lot of cash today and a lot of free cash flow generation that we’ve got built into the outlook, and we know we can continue to drive that which gives us the opportunity to invest in growth first and foremost and return a lot of cash to the shareholders in various forms over time.
Operator: And our next question comes from Dennis Geiger from UBS. Dennis, your line is now open. Please go ahead.
DennisGeiger: Great. Thanks very much. I wanted to ask a little bit more about late night and maybe even the snacking daypart opportunities is it seems like you’re making good gains in late night this year. Is this still a notable opportunity into ’24? And then I assume staffing and operations are some of the key drivers to help unlock that opportunity. But how much maybe is digital and loyalty because you guys look to maybe continue to push on those dayparts? Thank you.
Todd Penegor: Yes. Late night continues to be a fast-growing segment of the QSR business, and we’re outperforming the category at late night, and we continue to have a lot of opportunity to continue momentum. We’ve led the way on late night with company. We’ve extended Albers operation now across the system. We’ve made a lot of progress, and there’s still a lot of opportunity across various regions of the country where we know we can do even more at late night. It’s a great business, a lot of incremental volume without adding any labor. We do see a big delivery business at late night with that nice average check. We have seen staffing improve across all dayparts and turnover improve, which has certainly helped us staff the restaurant all the way from breakfast through the late-night daypart.
But we do think that there’s still a lot of leg room and opportunity to grow that business. And we know we can create and deliver some of the best food in the business when we’re fully customized make to order at that late-night day part.
Operator: And our next question comes from Jon Tower of Citi. Jon, your line is now open. Please go ahead.
