Greg Lemenchick, Senior Director, Investor Relations and Corporate FP&A, you may begin your conference. Thank you, and good morning, everyone. Today's conference call and webcast includes a PowerPoint presentation, which is available on our investor relations website, irwendys.com. Before we begin, please take note of the safe harbor statement that appears at the end of our earnings release. This disclosure reminds investors that certain information we may discuss today is forward-looking. Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also, some of today's comments will reference non-GAAP financial measures. Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in our earnings release. On our conference call today, our President and Chief Executive Officer, Todd Penegor, and our Chief Financial Officer, Gunther Plosch, will give a business update, review our 2021 second quarter results, share our revised financial outlook, and provide a franchise health update. From there, we will open up the line for questions. With that, I will hand things over to Todd. Thanks, Greg, and good morning, everyone. Our transformative growth continued in the second quarter as we had one of our best quarters ever as The Wendy's brand. Sales once again significantly exceeded our expectations, leading to record profits and fueling our restaurant economic model. We delivered a second consecutive double-digit, two-year accelerating same-restaurant sales result after accounting for the 53rd- week shift on the strength of our rest of day business, growing breakfast day part, digital business, and a step change in our international performance. Our breakthrough sales led to a restaurant margin of more than 20% and almost 600 basis point expansion year-over-year. Our focus remains on ensuring that we have a robust restaurant economic model across our system, and we are executing. We successfully entered the European market with our first restaurant in the U.K. and are very encouraged by the early results and excitement we've seen so far in that market. We also have a strong pipeline of company restaurants with several more planned for this year and have our first franchisee in REEF Kitchens that is planning to open a handful of delivery kitchens as well this year. I'm extremely proud to share that we are increasing our 2025 global restaurant target to 8,500-9,000 restaurants as the team has been very successful in securing new commitments. This increase is driven by an expanded relationship with REEF Kitchens and a newly created Build to Suit Development Fund. In addition, we finalized approximately 240 incremental new restaurant commitments through our Groundbreaker incentive program. We also recently finished collecting our 2020 U.S. franchise financials, and we saw a significant increase in overall financial health. Our franchise system grew EBITDA dollars by almost 20% in 2020 to what we believe are record profits. As a result of our incredibly strong start to the year and the momentum we are seeing in our business, we are increasing our dividend by 20% to $0.12 per share, which is back to our pre-COVID level. We are also meaningfully increasing our 2021 outlook on all our key financial metrics, which GP will talk through later in the presentation. Our goal remains the same, which is to invest in driving efficient, accelerated growth, and we are delivering on that commitment in a big way. Our momentum carried into the second quarter with global same-restaurant sales growth of 17.4%. This came in well ahead of our internal expectations, driven by continued strength across our U.S. and international businesses. This translated to 11.6% on a two-year basis, reaching double digits for a second consecutive quarter. We accelerated on a two-year basis to approximately 14.1% when accounting for the 53rd- week shift. In the U.S., we achieved double-digit one and two-year same-restaurant sales again this quarter, reaching 16.1% and 11.7% respectively, and record AUVs on a trailing 12-month basis of almost $1.9 million. These strong results were driven by continued growth in our rest of day business alongside our growing breakfast and digital businesses. This is our fourth consecutive quarter of double-digit, two-year same-restaurant sales growth, which showcases the power of our business and our execution against our strategic initiatives. Our international business saw a significant increase in same-restaurant sales this quarter, accelerating to 31.4% on a one-year basis and 13% on a two-year basis. This growth is attributed to the strength and recovery across many of our markets. With our Canadian restaurants reaching all-time high AUVs on a trailing 12-month basis of almost CAD$2.4 million. The continued strength and momentum we've seen in our global same-restaurant sales through the second quarter has once again given us the confidence to take up our systemwide sales outlook for 2021 to 11%-13%. Our global franchise system is engaged, and we are confident in the plans that we have in place for the remainder of 2021. Let's spend a few moments talking about our incredible U.S. same-restaurant sales, which continued to accelerate in the second quarter, driven by a significant improvement in customer counts and continued strong average checks. We continued to innovate with our successful Made to Crave platform this quarter, launching the Bourbon Bacon Cheeseburger, which led to record results within this platform for the quarter. We also relaunched the fan favorite Summer Strawberry Salad, which drove substantial year-over-year growth in our salad business. These programs continue to boost our average checks by trading our customers into our most craveable and highest quality products. We also executed against our high-low strategy by continuing the $5 Biggie Bag promotion, which drove traffic into our restaurants throughout the second quarter. We will continue to strike a balance between our core menu items and new product offerings with exciting and ownable new products. On the innovation front, we continue to lead in the area of spicy, with the recent launch of our Ghost Pepper Ranch dipping sauce. We also have a new addition coming to the Made to Crave lineup launching at the end of August, which we are really excited about. We expect to continue to drive outsized results in our U.S. business as a result of our planned programming and high level of execution. Breakfast continued to be a profitable sales layer for us in the second quarter, and our average weekly sales dollars delivered versus our breakfast plan. We could not be more excited about the upside that is still in front of us at breakfast, and the incremental investment that we announced this morning gives us even more confidence. In the second quarter, our breakfast sales accelerated as expected, growing 10% over the first quarter. This growth was driven by the successful $1.99 Honey Butter Chicken Biscuit and two-for-four trial-driving promotions during the quarter. These promotions have been critical to our success as we continue to see very strong customer repeat and high customer satisfaction after people try our breakfast. We continue to expect outsized growth during the breakfast daypart in the second half of 2021, driven by continued trial-driving programs and an expected return to routines in the fall. This is being fueled by our incremental company breakfast advertising investment that we just increased by $10 million - $25 million in 2021. We believe this incremental investment will continue to drive trial and acceleration of the company's breakfast offering in a meaningful way. We remain confident in our plan to grow our breakfast sales by 30% in 2021 and reach our goal of 10% of sales coming from breakfast by the end of 2022. We continue to be very pleased with our digital business, which grew across the globe in the second quarter. Our international business continued to deliver double-digit digital sales mix in the second quarter, as we've seen our digital gains during COVID remain strong. In the U.S., digital sales dollars grew over 10% and outpaced our plan for the quarter. This was driven by gains in both delivery and mobile ordering sales. Delivery sales were bolstered by several successful promotions, and we're encouraged by the growth we've seen in this channel, even as mobility continues to increase. Our mobile ordering gains were driven by several impactful acquisition campaigns, which increased our total loyalty program members by 25% compared to the first quarter to 17 million. We saw significant growth in both digital and overall sales during the second quarter, resulting in our digital sales mix holding steady at approximately 7.5%. We remain fully committed to our digital journey. I know that the technology investments we're making alongside our franchisees will set us up for continued growth into the future. As I shared earlier, I am extremely excited to announce that we are increasing our 2025 global restaurant target to 8,500 to 9,000 restaurants, which is a meaningful 500 to 1,000 increase versus our previous target. This increase is being driven by a development commitment by REEF Kitchens for 700 delivery kitchens over the next five years in the U.S., Canada, and the U.K. This commitment builds on the successful test that we completed in Canada and will allow us to further develop urban markets where we are currently under-penetrated. We are still very early in our non-traditional development journey, but we are encouraged by the results that we've seen with REEF and will continue learning alongside them throughout this partnership as we grow our brand. Our increased global restaurant target is also being supported by the creation of a $100 million Build to Suit Development Fund that we expect will drive approximately 80-90 new franchise restaurants from 2022 through 2025. This initiative will be funded by the additional cash that we have obtained as part of our successful debt refinancing that we completed in the second quarter. This program, along with newly implemented lower liquidity and net worth requirements for our new franchisees, will transform how we recruit and engage diverse franchisees into the brand. Our real estate and construction teams will be on point to secure and build the locations, making it a turnkey solution for a franchisee to open a new restaurant. I also wanted to provide an exciting update on our Groundbreaker incentive program, as we were able to secure approximately 240 incremental commitments in Canada and the U.S. that will further solidify our restaurant development pipeline over the next several years. With the incremental commitments from the Groundbreaker and the incremental REEF units, we now have about 70% of our global new restaurant pipeline through 2025 committed under a development agreement, which is our highest level that we've ever seen. We remain on track to reach approximately 7,000 restaurants by the end of 2021. This is supported by a strong global pipeline of restaurants where we currently have almost 70% of our planned restaurants open or under construction through the first week of August. Our development foundation is extremely strong. We are confident that we will reach our increased goal of 8,500 - 9,000 global restaurants by the end of 2025. Our playbook of investing to drive accelerated growth behind our three long-term pillars to meaningfully build our breakfast daypart, drive our digital business, and expand our footprint across the globe remains the same. We continue to make tremendous progress against these goals while making investments and strategic partnerships to set ourselves up for today and the future. These initiatives remain deeply rooted in the foundation of the restaurant economic model, and we are delivering on that promise, as we showed in the second quarter with our accelerating margin performance. Our business momentum, strong partnership, and health of our franchisees, and the dedication of our restaurant crew and support center teams reaffirms our confidence that we will achieve our vision of becoming the world's most thriving and beloved restaurant brand. We know that our best days are ahead of us, and we are excited to deliver. I will now hand things over to GP to talk through our second quarter financial results. Thanks, Todd. We could not be more proud of our second quarter results as our business continued to accelerate to record levels, showcasing same-restaurant sales and earnings growth that were once again well ahead of our expectations. Our global systemwide sales grew an incredible 22.9%. Our same-restaurant sales increased to 17.4% in quarter two on the strength of both our U.S. and international businesses. Year-over-year company restaurant margin increased almost 600 basis points to over 20%, driven by sales leveraging from our 23.9% company-operated SRS growth and lapping recognition pay in the prior year. These benefits were partially offset by having to absorb higher than expected labor rates and commodities of almost 6% and 3.5%, respectively. The increase in G&A was driven by higher incentive and stock compensation accruals as a result of our improved outlook and higher technology costs, primarily related to our ERP implementation. Adjusted EBITDA increased approximately 35% to $131 million. This was primarily driven by higher franchise royalty revenue as a result of increased same-restaurant sales, an increase in company-operated restaurant margin, and an increase in net franchise fees as a result of the company's new technology fee implemented in 2021. These benefits were partially offset by higher general and administrative expense. Adjusted earnings per share increased 125% to $0.27, driven primarily by our higher adjusted EBITDA. Finally, our free cash flow increased significantly to approximately $186 million. The increase resulted primarily from higher net income, higher royalties collected as the result of lapping the three-month extension of royalty payment terms that was provided to franchisees in 2020, the timing of rental payments, and the timing of accrued compensation payments. Our strong quarter two results and continuing momentum in the business are driving a high quality of earnings that resulted in a meaningful increase to our 2021 outlook for a second straight quarter. We are raising our global systemwide sales growth outlook to 11%-13%, based on our outperformance in quarter two and an improved full-year sales outlook due to the strength of our business. This improved sales outlook is the major driver in our adjusted EBITDA outlook, which is up $10 million to approximately $465 million-$475 million. We are now expecting an increase in our company-operated restaurant margin to 17%-18% in 2021, which is being driven by the improved sales outlook. Our margin outlook is also inclusive of increases to both commodities and labor rates, which we are now expecting to be inflationary approximately 2%-3% and 5%-6%, respectively. We are also expecting an increase in net franchise revenues related to franchise transactions that are expected to close in the back half of the year. These increases are being partially offset by an increase in G&A to approximately $240 million-$250 million, which is driven by higher incentive compensation accrual because of our improved outlook. These increases are also being offset by the incremental $10 million company breakfast advertising investment we are making. Our higher adjusted EBITDA, a slightly lower expected tax rate, and interest savings from our successful debt refinance are resulting in a $0.07 increase to our EPS outlook to $0.79-$0.81. We are raising our free cash flow outlook by $20 million to approximately $270 million-$280 million. Like we do as part of our quarter two earnings release each year, I wanted to take the opportunity to give you an update on our U.S. franchise financial health, as we recently finished collecting and reviewing our financials for 2020. The outstanding results we are seeing as a company are also being experienced by our franchise system. Our franchisee sales in the U.S. grew approximately 2% compared to the prior year. These sales, along with significantly improving restaurant margins that were positively impacted by higher average checks as a result of the pandemic, allowed our system to grow EBITDA dollars by almost 20% in 2020. We believe that these results represent record profits for our franchisees and that the strong performance has continued in 2021 with the momentum that we have seen in our business. Our franchise system also has very healthy balance sheets as their lease-adjusted leverage ratios decline in 2020 and have decreased by more than 0.5 turn since 2018. We know that ensuring franchisee health will ultimately lead us to achieving our long-term growth goals, so we are thrilled with these results. This all led us up to a very strong partnership with our franchise system that allows us to focus on great execution as one system behind the alignment of our strategic growth initiatives. To close, I would like to highlight our capital allocation policy, which remains unchanged. Our first priority remains investing in profitable growth, and we are showcasing this for the investments we are making across our three strategic growth pillars. Our increased breakfast investment and our Build to Suit Development Fund are prime examples of us leaning in to drive transformative growth. We expect that the restaurants from the development fund will deliver a strong return for us and our franchisees who will operate them. Moving forward, we anticipate that we will have a separate line within the investing section of our cash flow statement to report this, and that the cash outflow related to the fund will therefore not impact our free cash flow definition. Today, we announced the declaration of our third quarter dividend and that we are increasing it by 20% to $0.12 per share. Our strong liquidity position, along with the momentum we are seeing in our business, support this increase while still leaving flexibility to invest in growth. Lastly, we plan to utilize excess cash to repurchase shares and reduce debt. We announced today that we have added an additional $70 million to our existing share repurchase authorization to a total of $220 million. As a result, we have approximately $100 million remaining on our authorization that expires in February of 2022. We are fully committed to continue delivering our simple yet powerful formula. We are an accelerated, efficient growth company that is investing in our strategic pillars and driving strong systemwide sales growth on the backdrop of positive same-restaurant sales and expanding our global footprint, which is translating into significant free cash flows. With that, I will hand things back over to Greg. Thanks, GP. To start things off, we'll be doing a virtual NDR with Todd and GP. The first leg will be focused on the Boston market with Oppenheimer on August 17th, and the second on New York with Barclays on August 18th. We'll follow this up with a virtual NDR focused on the Canadian market with RBC on September 1st. Following these NDRs, we will be attending the Wells Fargo conference in person on September 22nd in California. We will also be hosting an investor call on September 9th with BTIG and doing a virtual headquarter visit with KeyBank on September 30th. If you're interested in joining us at any of these events, please contact the respective sell side analyst or equity sales contact at the host firm. Lastly, we plan to report our third quarter earnings and host a conference call on that same day on November 11th. As we transition into our Q&A section, I wanted to remind everyone on the call that due to the high number of covering analysts, we will once again be limiting everyone to one question only. With that, we are ready to take your questions. The first question comes from Brian Mullan with Deutsche Bank. Hey, thank you, and congrats on great results. Just a question on the U.S. development pipeline. You had a lot of positive announcements today between REEF Kitchens, the Groundbreaker incentive, and the Build-to-Suit fund. With these announcements, can you just update us on how you're thinking about U.S. net unit growth in 2022? Related to that, maybe offer some thoughts on how you expect the shape of that net unit growth in the U.S. over that 2022-2025 time period on the path to those new updated targets. Good morning, Brian. For 2021, we are expecting a global unit growth of 2%+, obviously it's going to accelerate between 2022 and 2025 to about 6%. We have said previously, basically what happened is both international growth and U.S. growth is going to lift up, the starting point is a 10%+ growth rate in international for 2021 and about a 1% growth rate in the U.S. Both areas are going to lift up from an acceleration point of view since all the new incentive agreements are basically of global nature. Your next question is from the line of Brian Bittner with Oppenheimer. Thanks. Good morning. I echo the congratulations on great results and the momentum in the business. Can you talk a little bit more about the difference between breakfast growth and rest of day in the quarter? A follow-up is just as far as breakfast awareness goes, can you update us where we are now? What do you believe is the biggest catalyst to really break through and unlock on the awareness front as it relates to breakfast? Is it continued investments like you've announced today, or is there anything else you believe you can do to really catapult those awareness levels across the U.S.? Yeah, Brian, thanks for the question. If you think about our same-restaurant sales growth in the U.S. of 16.1%, we had really strong growth across the rest of day. Lunch was heavily impacted last year during COVID. Late night was heavily impacted, we have had nice rebounds in both of those day parts. Breakfast continues to grow. It was up 10% versus Q1 when you look at overall sales dollars, we got nice healthy builds happening there. We're also seeing our digital business grow up 10% versus the first quarter. We're continuing to see nice dollar sales build on that front. It's a nice, healthy mix across all elements of same-restaurant sales growth. I think the key unlock on the breakfast front really is continuing to drive trial. Our awareness levels are quite healthy at just north of 50%. We're in there in that same range with where Burger King is around awareness, and they've been there for quite some time. What we need to do is continue to create news, have trial driving events, get folks to try our food, and importantly, be part of the return to routines that we expect to happen as we get into later this month with schools returning, later this quarter with folks returning back to work. Whatever that routine is, we need to be part of it, and that's why we're putting additional $10 million of advertising to work, to make sure that that message is loud and clear. Thank you. Your next question is from the line of John Glass with Morgan Stanley. Thanks. Good morning. I have two development-related questions. First, just on the REEF Kitchens, any early understandings of what the unit economics look like? I'm assuming you built with the capital, but just clarify if we should expect lower volumes just because it's a ghost kitchen or anything about that. As it relates to $100 million, given the franchise economics are good, given you already have Groundbreaker, why did you feel like you needed an additional incentive for development, or was that targeted differently to different types of franchisees? Maybe just explain what the rationale behind putting your capital behind that. Thanks. Yeah, John. Two quick things. REEF, one, as we said in the release, we do expect about 50 to be open this year and then the rest spread evenly over 2022 through 2025. We had a very successful test with about eight units up in Canada. Really allows us to get into urban locations where we're dramatically under-penetrated. If you look at the economics, early to tell what we can do from a sales out of each of those vessels, but we're expecting the sales in the range of $500,000 - $1 million per unit. The good news is we've got a higher royalty rate. In the U.S., almost 6%, 5.5% in the U.K. Even though there's a little bit lower sales dollars coming out of those vessels, we got a nice, healthy economic return. From an investment perspective, REEF is putting up all the dollars to get the vessels, to train the people, hire folks. We're going to support them on training to make sure that they hold to great standards. On the Build to Suit fund, it's just another leg on the stool. We've got a lot of great things happening between REEF, the development agreements in place with Groundbreaker, the pipeline that's already in place. What we really wanted to do is make sure that we were able to bring new franchisees into the system, and allow them to build their way into the system. We think this program is a great program to allow folks to build their way into the system. We also think it's a great program for smaller franchisees to leverage to allow them to scale up along the way. The economics are compelling for the company, and for the franchisees as they come in. This all coupled with the lower liquidity requirements that we talked about to become more competitive, really makes this program compelling for new folks to come in, and it'll help us on the diverse recruiting front too. Your next question is from the line of David Palmer with Evercore. Thanks. Good morning. Great job on the company restaurant margin expansion. GP, I think you mentioned in the prepared remarks that the system had a 20% EBITDA growth in 2020. I'm wondering if maybe you could dissect that and help us think through how the company restaurants, what they're lapping this year versus what the system's lapping. For example, you had the one-time bonuses last year, and then there's the stores that you're going to be re-franchising out of New York, I believe, that were presumably a drag. I mention all this because it doesn't look like your company restaurant profit did as well as the system in 2020. Thanks. Morning, David. We are really happy with our company restaurant performance in the second quarter, despite actually having to absorb more inflation than what we had originally anticipated. We had to absorb about 3.5% commodity inflation and almost 6% labor inflation. Franchisees, just to address your question there, yes, they increased EBITDA by about 18% versus prior year. It's not a profitability number. It's an EBITDA growth number. Obviously the profit growth rate was much higher than the sales growth rate. Franchisees really ran great restaurants and benefited clearly from higher average checks. Just to make absolutely sure is that EBITDA growth of 18% does not include any potential income a franchisee might have gotten out of PPP funds. In terms of outlook for our company restaurants, we have increased the outlook again for this year to about 17%-18%, despite having to experience now and absorb inflation. We had previously thought commodity inflation would be flat. We are now 2%-3%, really driven by beef and pork. On the labor inflation, in the first half, we absorbed about 5% labor inflation. On the year, we are expecting about 5%-6%, so really strong performance. Thank you. Your next question is from the line of Eric Gonzalez with KeyBanc Capital. Hey, thanks for the question and congrats on all the development progress. I just have a question about that, the Development Fund. I was wondering the mechanics of that. Will you be lending money to franchisees for construction in return to receive an elevated rental payment? Is that typically how that works? As a follow-up to the earlier question on the Build-to-Suit Fund, I am just wondering how much incremental risk is being introduced by lowering the threshold around net worth and liquidity, and what you may be doing to prevent an uptick in store closures down the line, particularly where you might be on the hook given your position as a Build-to-Suit lender. Good morning, Eric. Yeah, the Build-to-Suit program is kind of a classic Build-to-Suit program that we had on a smaller scale up in Canada. We actually are providing the building. The franchisee will have to invest in signage and equipment. Think roughly 70% of the capital is ours, 30% is the franchisee's. In return for us to make a return on the capital that we are investing, we are getting a slightly elevated royalty rate and rental rate income. It creates really a high-quality income stream in future years for us. In terms of your question around risk exposure by lowering the requirements. Liquidity requirement previously was about $2 million. We lowered it to $0.5 million. The net worth requirement was $5 million. We lowered it to $1 million. At first glance, by blush, it looks like we're taking on a lot of risk. I have to say, we studied competition. We actually were too conservative and not competitive. The kind of requirements that we have are very much in line with what the rest of competition is doing. Thanks. Next question is from the line of Jeffrey Bernstein with Barclays. Great. Thank you very much. Just wanted to follow up on the franchise health. That 18% increase in EBITDA, I am just wondering if you can give any kind of dollar context into maybe where it was or where it is today. On that front, as you talk about the elevated commodity and labor costs, especially through the back half of this year, just wondering what the feedback or discussion is with franchisees on that. Maybe if you can share what the current menu pricing is for company or system-wide in your estimation to help mitigate that to drive such strong profitability. Thank you. Yeah, I think Jeffrey snuck in there three questions. There was one. I'll try to remember them all. On the 18% increase, really, we didn't quote absolute dollars, but as we said on the call, in absolute dollar terms, this is the highest absolute profit per restaurant that we have seen in the franchise system. It's remarkable, right? The sales growth was held back with only 2% growth, which is in line with what we have reported previously. Actually expand profits by 18% is strong. Actually, Canada performed even stronger. Canada's EBITDA was a little bit north of 20% growth. That's the other number that I can give you. On the lease-adjusted leverage ratio, again, it's remarkable that we are down half a turn versus 2018, given all the capital requirements franchisees have, right? They need to invest in technology. We're obviously accelerating and have accelerated our new build capital. We are accelerating our Image Activation. With all of that, the lease-adjusted leverage ratio goes down, is good. By the way, we are calculating this on an in-time rent basis. That was the first question. The second question was the commodity and labor inflation. The upshot there is really the driver is the labor shortage that we have. That started relatively quickly then in the second quarter. That's why we took on more labor inflation in the second quarter. We expect that to stay elevated to compete effectively in the marketplace. Labor shortage has not really significantly impacted our sales performance. We are seeing, however, a little bit more overtime that we do need to get checked in our profitability. That I think covers your second question. The last one would have been on pricing. Where we've gone on company pricing is company has been on par with food away from home inflation. We've had a little more opportunity than our franchisees as we've been a little more conservative over the last few years on pricing, so we had a little bit more opportunity than them. The system was slightly below food away from home inflation. With the healthy consumer, with the wage and commodity inflation that GP just talked about, we believe we have pricing power to offset a portion of these headwinds, and that's the focus and built into the guidance for the year. Your next question is from Chris Carril with RBC Capital Markets. Hi. Good morning. On the incremental advertising spend of $10 million to support breakfast, can you provide any more detail around that decision? What drove it? Are you seeing anything from your peers to suggest competition in the morning day parts ramping up? Are you just simply seeing more of an opportunity to drive trial as mobility continues to improve as you had discussed earlier? Thanks. It's really the latter. We're really playing our own game. Like we've always said, ingraining the breakfast habit is a several year journey. A little different as habits are changing on the morning routines. We really want to be there as morning routines start to get re-established as we get into the fall. We thought it was a wise decision to continue to keep the pressure on, continue to invest in awareness, continue to invest in trial, and really ingrain that habit to make sure that it's the gift that keeps giving so we can continue to drive our sales towards that 10% of sales mix by the end of 2022. That was really our thinking around that decision. Our opportunity is to continue to have fun trial-driving events to get our food in our consumers' mouths. They'll get to see on this weekend, if you want, you can go get a free croissant in any Wendy's restaurant on Saturday and Sunday. A great trial-driving event leading into some other support that we'll have around breakfast. It's coming quickly. Your next question is from the line of Andrew Charles with Cowen. Great, thanks. GP, I wanted to come back on the restaurant level margins. Guidance for 17%-18% implies a step down from the 18.7% year-to-date. I think you said guidance for 5% labor inflation and 2%-3% commodity inflation, which is a bit of a deceleration versus what you saw in Q2. Can you talk a little about what's driving the deceleration in the anticipated restaurant level margins? You guys are about 95% reopened on dining rooms, I think I saw in the Q, so I don't think that it's any incremental dining rooms coming on board. Just any more color to kind of help flesh that out would be helpful. Thanks. Good morning, Andrew. Yeah, this is a correct observation. Our year-to-date restaurant margin is sitting at 18.7%, so obviously the guidance of 17%-18% will be decelerating slightly. A couple of things. The comparisons are getting a little bit more difficult, so we're going to get a little bit less sales leverage on a one-year basis into our restaurant P&L. It's probably first reason. Second one is we still have sequentially inflation stepping up. On a year-to-date basis, we absorbed commodity inflation of about 1%. On the year, we are getting to 2%-3%, and it's basically driven by bacon and beef, so that puts pressure on it. The second one is labor inflation, a little bit of an uptick, right? Year-to-date, about 5% labor inflation. We're expecting in the year about 5%-6%. As we get towards the end of the year, we do expect that check sizes are going to come down a little bit, and obviously it's also going to put a little bit pressure on it. If you step back from it, 17%-18% margin is a super strong result for us compared to the 15% we posted last year. Thank you. Next question is from Dennis Geiger with UBS. Great. Thanks for the question. GP or Todd, wondering if you could talk a little bit more about the core lunch and dinner day part and how you think about some of the drivers going forward. Maybe if you could touch a bit on menu innovation. I know you've talked about some items, I believe, in test there. Thinking about the digital loyalty piece, the contribution from the reopened dining rooms, and if there's anything on throughput and service speed that you're thinking about for the rest of the year and just going forward over the coming quarters. Any other key contributors to continue to drive those day parts would be great. Thank you. I think first and foremost, it starts with speed. We need to continue to get folks through our drive-throughs even quicker. That's why we're doing all the work on mobile grab and go. That's why we're doing the work on getting folks to do more mobile ordering. That's why we continue to roll out curbside across all of our restaurants. Folks are looking for speed to support their need, and we want to be there to continue to support that. Our opportunity is to continue to make sure our restaurants are fully staffed to truly complement a great experience and that speed along the way. As you think about the rest of the calendar, beyond just great operational execution, we do have a lot of nice things planned for the rest of the year. There will be a nice balance between core messaging to continue to drive the equities that we have, and we've seen a lot of success on our premium core. You will see news on the Made to Crave lineup. I'm very pleased that the Made to Crave lineup continues to trade customers up, and an exciting promotion coming fairly soon on that front. Lastly, we'll continue to stay focused on our food and upgrading the quality of the food across chicken, hamburgers, and french fries. I think all of those things, as our brand continues to be more relevant to the consumer, just creates better experiences, creates more value for the money, and keeps those customers coming back a little more often. Thank you. Your next question is from John Ivankoe with JP Morgan. Hi, thank you. I was hoping we could talk about the average ticket, 2021 versus 2019. In other words, and what I'm assuming, how much transactions might actually be down. If you have an intention of regaining the total transaction count that you had in 2019, if that's even important to you. Certainly, you make more money selling higher margin product at higher prices to fewer customers, and that's just how the math works. If you don't mind, can you talk about that average ticket in the context of commodities, not just beef, but also chicken, at least it looks like right now as those contracts may potentially roll over? Yeah, we've been very pleased. If you look at average ticket versus 2019, it is up significantly. We haven't given out the specifics on that, but you got a combination of things happening. You got average items per transaction up with consumer bringing things home more often. You've got a nice digital mix happening, both with mobile ordering, with 15%-20% higher average checks, delivery with 40%-50% higher average checks. And then we're seeing some great mix, trading folks up from the value side of our menu into our core premium, and all the way up into our Made to Crave lineup, which had an all-time record sales mix in the second quarter. I think all those dynamics can continue as we deliver high-quality, craveable products time and again. Customer counts would still be down relative to 2019. They are important. We want to continue to make sure we got a balanced high-low calendar. Four for $4 will continue to have a role. $5 Biggie Bag has a role. We need to have that balance on the high and the low to continue to bring those customers back as mobility continues to increase more around a routine basis, because mobility has coming back. Folks don't have that routine down yet, thinking about getting lunch at work or breakfast on the way to work, dinner on the way home from the office. Those things are still all opportunities out in front of us to bring more customers into our restaurants. If possible, can you talk about just your overall outlook on average ticket, especially in the context of new commodities, which may be even more significant in 2022 than they were in 2021? Yeah. The way we built our guidance, John, is we will see the average check be elevated through the fall timeframe, and then we think it will start to moderate late in the year as customer traffic starts to pick up, but still higher than pre-COVID levels. Okay. Thank you. The next question is from Gregory Francfort with Guggenheim Securities. Hey, thanks. Maybe just following up on that, I don't know if you guys are willing to break out what actual pricing is, but maybe that would be helpful. My question was on the war for talent that's out there, can you talk where staffing is for your restaurants and how Wendy's is managing that better than peers, and what you guys are doing differently? Thanks. First, on the labor front and what we're doing, I can have GP talk a little bit about price mix and give you a little bit of flavor on that. Like the whole industry in Q2, we did see some staffing challenges during the quarter like the rest of the industry. The good news was, as the federal benefits rolled off, we did see some improvement in applicant flow and staffing. We also saw improvements going into the summer with kids out of school, which certainly helped our restaurants. We also start from a very good spot. The good news is our overall employee engagement scores are meaningfully better than the industry average, which really helps on the retention front. You are seeing that in the numbers. We have lower than industry turnover in our restaurants. We're really working to make sure that our restaurants are fun and energizing. In the short term, as GP said earlier, we got to run a little bit overtime to make sure we're staffed appropriately. You do see a few pockets outside of core day parts where the dining room may be closed a little bit just to manage some of the staffing challenges, but it wasn't a material impact on our business during the quarter. Last but not least, we've been spending a lot of time, energy, and effort on focusing on our online digital recruiting campaign that we leveraged during the Hire Up strategy for breakfast. We continue to do that to really make sure that we're staffed appropriately to drive the business that's out there today. GP, on price mix? Yeah. On price mix, I think we really did a great job on this. You probably didn't see the detail yet, but on the food and paper line in the second quarter, on the face of the P&L, we are 110 basis points favorable. Again, keep in mind, we had a 3.5% inflation, actually 100 basis points on headwind. What that tells you is mix management and pricing allowed us to expand and improve food and paper cost by about 210 basis points. It's really programming. There are all-time high sales on Made to Crave behind Bourbon Bacon Cheeseburger. Definitely helped. We promoted salads pretty well. That obviously helps with sales mix as well. In the company, we have pricing actually year-over-year positive. That has also helped us get basically our margin performance up on the food and paper line. Thanks. The next question is from the line of Peter Saleh with BTIG. Great. Thanks. Congrats on a great quarter. I just wanted to ask about the development with REEF Kitchens. Is this in any way an exclusive agreement with them for ghost kitchens, or could we see potential future partnerships with other operators? Just secondly, on geographies in the U.S., any particular geographies you or REEF Kitchens plans to target with these ghost kitchens? Thanks. Yeah, Peter, it's not exclusive. REEF's out there with many other brands. The great news is the dedicated vessel that they put in place to support our products to our standards in Canada has been a big success. That's what they're going to replicate in the U.S., Canada, and in the U.K. moving forward. Our opportunity really is in urban locations. We are dramatically under-penetrated if you look at our footprint across all urban locations, whether that's east, west, north, south. As you think about where their opportunity is on delivery only provide more access to our brand, urban locations will be job one. We're excited to get them rolling quickly. As we've said, 50 REEF Kitchens out of the gate to finish this year is a strong fast start. We'll get a lot of learnings in a hurry. Thank you. Your next question is from Jared Garber with Goldman Sachs. Hi, thanks for the question. Likewise, congrats on a strong quarter. I wanted to circle up on the digital side of the business. I think that that penetration of 7.5% has been relatively stable over the last couple of quarters, obviously, while the dollar base has grown. Just wanted to see what you guys are seeing on the digital side and how consumers are interacting with the brand. Obviously, with the launch of the Loyalty Program last year, we would expect that you're seeing some increased levels of engagement there. If you could also update us on the active members on that program, that would be helpful too. Thanks. A few thoughts, right? As we said on the prepared remarks, digital sales grew 10% versus Q1. That does result in mix being flat as a result of strong total sales that we had at 7.5%. The great news is 17 million loyalty members, up 25% over the 13 million that we had as of Q1. The active users are up slightly, so we're now north of three million. The great news is those active users are more active than last quarter. They're in more often. We're seeing higher average checks. We're seeing increased frequency for those folks. Our opportunity ahead is still to continue to leverage all of this data to really truly have one-to-one customer interaction, and those are opportunities that are yet to be fully unlocked, and we're working hard on those things. If you think about where we are across the key elements, we're seeing a nice uptick on mobile ordering. Clearly, the ease, the ability to do mobile grab and go, and curbside helps that. Delivery is hanging in there nicely at the mix. We do feel that it is a healthy mix for us. We're seeing higher average checks, and we're seeing loyalty, and it will continue to help us drive against our frequency goals moving forward. Thanks. Just to follow up there, are you seeing anything that just thinking through the breakfast versus the rest of day, any difference in usage among the app or the loyalty program frequency of customers based on day part breakouts? Yeah, we're still seeing more active use around the digital tools at lunch and dinner. Breakfast is starting to pick up a little bit, still less than that. I think one important nugget, interesting nugget that we probably would want to get out there is if you look at frequency and the number of visits to Wendy's restaurant on an annual basis, if you look back over the last 12 months, we're up about 20%, from 5.5 Visits to 6.5 Visits. We're very proud of that. Breakfast driving some of that, digital certainly helping that. If you look at all the QSR burger frequency over that same period, they saw declines of 5% to 10%. We always get the question, is breakfast incremental? That helps prove it out. Does digital help and drive the business? Clearly is for us. We're seeing folks engaged, and we're seeing our frequency head in the right direction, and that's at a time where traffic is still impacted through the COVID challenges. Great. Thanks so much. Your next question is from Lauren Silberman with Credit Suisse. Thanks. My question is on the ghost kitchen strategy. You talked about the opportunity for greater penetration in urban markets. How are you thinking about leveraging ghost kitchens to test new markets? Is that contemplated at all? With that in mind, how do we think about the breakout of these units in the U.S. versus international markets? Just one last, if I could relate it. If I heard it correctly, I believe you mentioned in the script that a franchisee is opening with REEF. How does that arrangement work? Good morning, Lauren. Again, the big strategy around the ghost kitchen is really under-penetrated areas for The Wendy's Company, so it's really urban. That is our big plot. We're not as ready to give the breakout between the U.S., Canada, and the U.K. Once we get a little bit more experience under the belt, we will probably maybe talk about that. You forgot a question at me. At the end of the day, REEF will be our franchisee. Yeah. When you think about them being the franchisee, the comment that you heard in the prepared remarks is they will become our first franchisee in the U.K. As we're kind of building out outside of the urban location and the suburban locations with the company footprint, they will come in and support that urban footprint just as GP articulated they're going to do in the U.S. Yeah. It's technically three different contracts with the U.K., with Canada, and the U.S. Technically, there's kind of three different franchisees that are interacting with us, and they're obviously held to the same standards as any other franchisee. Understood. Thank you, guys. Your next question is from James Rutherford with Stephens Inc. Thanks, and congrats on the quarter. I just wanted to follow up on the breakfast marketing investment. Sorry if I missed this, did you share the breakfast mix in the quarter? The core question here is, just given the opportunity in the day part and how large it is and the strength of your cash flows, how did you settle on that $25 million number, and is there potential for further acceleration in investments to build trial around that day part? Thank you. You see when you get a chance to get into the queue, breakfast mix ticked up to 7.2%, it's up slightly from last quarter. The dollars are up, as we said earlier, 10% versus first quarter. We got the rest of the day part just being really strong, which has impacted the mix number a little bit. As we look at the pressure that we need to really drive and ingrain the habit between the company incremental investment of $25 million, the ad funds that we're getting from the breakfast sales, our full year pressure on breakfast is up about 20% on advertising versus last year in our launch year. Obviously, the launch year was impacted a bit by COVID and the challenges there. We do think that's a good weight and one that we can manage to for the rest of this year. As we look at 2022, we're still committed to having about $15 million of support, which we talked about previously from a company perspective. We think that's a nice progression to continue to drive on that support and awareness, especially as our overall business sales continue to grow at breakfast and create more ad contributions along the way. Thank you. Your next question is from Brett Levy with MKM Partners. Great. Thanks for taking the question. I know in the prepared comments, you talked about the strength of your sales improving throughout the quarter. Would you care to give any more quantification in terms of how it ended or any color into the quarter to date? Also, what are you seeing from the consumers and regionality? Have you seen any changes in just how the consumer is using you and the makeup of them? Thanks. Yeah, Brett, we're not providing any specific commentary on our Q3 start, but let me give you a little bit of flavor. One, very pleased with our momentum in the first half of the year. Really resulted in the confidence to call up our global systemwide sales to 11%-13% as we said in the remarks. Our two-year stack, adjusted for the 53rd- week built in Q2. If you do the math and kind of back into things, if you look at the outlook for the back half of the year, we will really be at low double-digit two-year comps throughout that back half of the year. That shows that we've got really nice momentum continuing. That assumes checks remain elevated at least into the fall. As we said earlier, we don't see those returning to pre-COVID levels. We feel like our business is really connecting with the consumer, and that frequency metric that I talked about a little bit earlier is an important one as we continue to bring folks back into our restaurant a little more often. Your next question is from Nicole Miller with Piper Sandler. Thank you. Good morning. On the labor inflation, could you talk a little bit through staffing challenges and/or where the inflation lies? I'm thinking about back of house versus front of house, and also about stores that are up and running versus new stores that need to open. Is it any more challenging to get those stores open? Thanks. Clearly with 70% of our restaurants open or under construction against our development goals this year, labor hasn't impacted the ability to get new restaurants open. We feel good that we can continue to support those restaurants in those markets. If you look at the overall labor pool, clearly rates have come up as GP had guided in his comments around inflation on labor rates. We've had to do some things on sign-on bonuses, retention bonuses, free meals. We're doing what it takes to make sure that we got those restaurants fully staffed, even leveraging a little more overtime because there is sales and transactions to be gained. There's a lot of leverage to continue to keep those customers coming through the doors, even with a little higher wage rates along the way. We're working hard to make sure that the restaurants are fully staffed. I think some of our franchisees are being very conscious around their trade area and when should the dining room be fully open, when should it be closed. There will be times potentially, after the dinner day part where the dining room might close a little bit earlier than historical and we go full drive-through only. Those are just smart moves based on the amount of traffic that's coming through the restaurant, and I think we've gotten really good and flexible to be able to manage through the labor situation based on what we know in the communities that we serve. How is turnover trending? Thank you. Yeah, our turnover continues to be better than industry average. You go historically, we're better than industry average. We continue to be better than industry average. We just completed a big Voice of Wendy's survey, and the great news is against competitive benchmarks our overall engagement scores of our employees at the restaurant level is significantly better than the rest of the industry. Our work to make sure these restaurants are fun and energizing is paying off. It helps retention. It also helps folks to show up day in and day out to continue to serve our customer. Thanks again. Your final question comes from the line of Jim Sanderson with Northcoast Research. Hey, thanks for the question and congratulations on a great quarter. I just wanted to ask one last follow-up question on REEF Technology. I think you mentioned that your franchise rate would be slightly higher than peers in markets where they operate. Is the contribution to advertising going to be comparable to franchise peers? If you could provide a little bit more detail about whether Wendy's will make any type of equity investment in REEF Technology to ensure the 700+ unit growth over the next couple of years. Thank you. Yeah. On the REEF equation, the royalty will be a little bit higher. As I said a little bit earlier, about 6% in the U.S., about 5.5% in the U.K. Ad contribution will be a little bit lower. Really the focus on a REEF kitchen is local advertising. It's about 2% contributions to local advertising for REEF to really make sure in those urban locations where they're building, they make sure there's awareness so they can drive the delivery business. On the investment side, we'll have to see where that goes over time. Would we want to make an investment in REEF or not? We'll see how that plays out. All right. Thank you. Thank you, Jim. That was our last question of the call. Thank you, Todd and GP, and thank you for everyone for participating this morning. We look forward to speaking with you again on our third quarter conference call in November. Have a great day. You may now disconnect.