This "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Wendy's/Arby's Group, Inc ("Wendy's/Arby's" or "Wendy's/Arby's Group" and, together with its subsidiaries, the "Company" or "we") should be read in conjunction with our accompanying unaudited condensed consolidated financial statements included elsewhere herein and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 28, 2008 (the "Form 10-K"). There have been no significant changes as of June 28, 2009 to the application of our critical accounting policies, contractual obligations (except as described below) or guarantees and commitments as described in Item 7 of our Form 10-K. Certain statements we make under this Item 2 constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. See "Special Note Regarding Forward-Looking Statements and Projections" in "Part II - Other Information" preceding "Item 1." You should consider our forward-looking statements in light of our unaudited condensed consolidated financial statements, related notes, and other financial information appearing elsewhere in this report, our Form 10-K and our other filings with the Securities and Exchange Commission.

Introduction and Executive Overview

Senior Notes

On June 23, 2009, Wendy's/Arby's Restaurants, LLC ("Wendy's/Arby's Restaurants"), which was formerly named Wendy's International Holdings, LLC and is a direct wholly-owned subsidiary of Wendy's/Arby's, issued $565.0 million principal amount of Senior Notes (the "Senior Notes"). The Senior Notes will mature on July 15, 2016 and accrue interest at 10.00% per annum, payable semi-annually on January 15 and July 15, with the first payment on January 15, 2010. The Senior Notes were issued at 97.533% of the principal amount, representing a yield to maturity of 10.50% and resulting in net proceeds paid to us of $551.1 million. The $13.9 million discount will be accreted and the related charge included in interest expense until the Senior Notes mature. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by certain direct and indirect domestic subsidiaries of Wendy's/Arby's Restaurants (collectively, the "Guarantors").

Merger with Wendy's International, Inc.

On September 29, 2008, we completed the merger (the "Wendy's Merger") with Wendy's International, Inc. ("Wendy's") in an all-stock transaction in which Wendy's shareholders received 4.25 shares of Wendy's/Arby's Class A Common Stock for each share of Wendy's common stock owned. Our consolidated results of operations commencing September 29, 2008 include Wendy's results of operations.

Our Business

Wendy's/Arby's is the parent company of Wendy's and Arby's Restaurant Group, Inc. ("ARG"), which are the owners and franchisors of the Wendy's® and Arby's® restaurant systems, respectively. We currently manage and internally report our operations as two business segments: the operation and franchising of Wendy's restaurants, including its wholesale bakery operations, and the operation and franchising of Arby's restaurants. As of June 28, 2009, the Wendy's restaurant system was comprised of 6,608 restaurants, of which 1,395 were owned and operated by the Company. As of June 28, 2009, the Arby's restaurant system was comprised of 3,745 restaurants, of which 1,170 were owned and operated by the Company. All 2,565 Wendy's and Arby's Company-owned restaurants are located principally in the United States and to a lesser extent in Canada (the "North America Restaurants").

Restaurant business revenues for the 2009 first half include: (1) $1,534.2 million of revenues from Company-owned restaurants, (2) $55.2 million from the sale of bakery items and kid's meal promotion items to our franchisees, (3) $173.0 million from royalty income from franchisees and (4) $14.3 million of other franchise related revenue. Our revenues increased significantly in the 2009 first half due to the Wendy's Merger. The Wendy's royalty rate was 4.0% for the six months ended June 28, 2009. While over 80% of our existing Arby's royalty agreements and substantially all of our new domestic royalty agreements provide for royalties of 4.0% of franchise revenues, our average Arby's royalty rate was 3.6% for the six months ended June 28, 2009.

Our restaurant businesses have recently experienced trends in the following areas:

Revenues

· Continued lack of general consumer confidence in the economy and the effect of decreases in many consumers' discretionary income caused by factors such as volatility in the financial markets and recessionary economic conditions, including high unemployment levels, a declining real estate market, continuing unpredictability of fuel costs, and food cost inflation;

· Continued and more aggressive price competition in the quick service restaurant ("QSR") industry, as evidenced by (1) value menu concepts, which offer comparatively lower prices on some menu items, (2) the use of coupons and other price discounting, (3) many recent product promotions focused on lower prices of certain menu items and (4) combination meal concepts, which offer a complete meal at an aggregate price lower than the price of individual food and beverage items;

· Competitive pressures due to extended hours of operation by many QSR competitors, including breakfast and late night hours;

· Competitive pressures from operators outside the QSR industry, such as the deli sections and in-store cafes of major grocery and other retail store chains, convenience stores and casual dining outlets offering take-out food;

· Increased availability to consumers of product choices, including (1) healthy products driven by a greater consumer awareness of nutritional issues, (2) products that tend to offer a variety of portion sizes and more ingredients;
(3) beverage programs which offer a wider selection of premium non-carbonated beverages, including coffee and tea products; and (4) sandwiches with perceived higher levels of freshness, quality and customization; and

· Competitive pressures from an increasing number of franchise opportunities seeking to attract qualified franchisees.

Cost of Sales

· Higher commodity prices which increased our food costs during 2008, with moderation in recent months;

· Changes in fuel prices which, when at much higher than current levels contributed to increases in utility, distribution, and freight costs;

· Federal, state and local legislative activity, such as minimum wage increases and mandated health and welfare benefits which is expected to continue to increase wages and related fringe benefits, including health care and other insurance costs; and

· Legal or regulatory activity related to nutritional content or menu labeling which results in increased operating costs.

· Dislocation and weakness in the overall credit markets and higher borrowing costs in the lending markets typically used to finance new unit development and remodels. These tightened credit conditions and economic pressures are negatively impacting the renewal of franchisee licenses as well as the ability of franchisees to meet their commitments under development, rental and franchise license agreements;

· A significant portion of both our Wendy's and Arby's restaurants are franchised and, as a result, we receive revenue in the form of royalties (which are generally based on a percentage of sales at franchised restaurants), rent and other fees from franchisees. Arby's franchisee related accounts receivable and estimated reserves for uncollectibility have increased, and may continue to increase, as a result of the deteriorating financial condition of some of our franchisees; and

· Continued competition for development sites among QSR competitors and other businesses.

We experience these trends directly to the extent they affect the operations of our Company-owned restaurants and indirectly to the extent they affect sales by our franchisees and, accordingly, the royalties and franchise fees we receive from them.

Business Highlights

We believe there are significant opportunities to grow our business, strengthen our competitive position and enhance our profitability through the execution of the following strategies:

· Revitalizing the Wendy's and Arby's brands by creating innovative new menu items at Wendy's, increasing Arby's customer traffic by targeting our "medium Arby's customers" and expanding our breakfast daypart at both brands;

· Improving Wendy's Company-owned restaurant profitability;

· Realizing cost savings related to the Wendy's/Arby's integration;

· Strategically growing our franchise base by leveraging our brands to expand in North America as well as into new international markets with dual branded Wendy's and Arby's franchised restaurants; and

· Acquisitions of other restaurant companies.

Key Business Measures

We track our results of operations and manage our business using the following key business measures:

· Same-Store Sales

We report Arby's North America Restaurants same-store sales commencing after a store has been open for fifteen continuous months. Wendy's North America Restaurants same-store sales are reported after a store has been open for at least fifteen continuous months as of the beginning of the fiscal year. These methodologies are consistent with the metrics used by our management for internal reporting and analysis. Same-store sales exclude the impact of currency translation.

· Restaurant Margin

We define restaurant margin as sales from Company-owned restaurants (excluding sales of bakery items and kid's meal promotion items to franchisees) less cost of sales (excluding costs of bakery items and kid's meal promotion items), divided by sales from Company-owned restaurants. Restaurant margin is influenced by factors such as restaurant openings and closures, price increases, the effectiveness of our advertising and marketing initiatives, featured products, product mix, the level of our fixed and semi-variable costs, and fluctuations in food and labor costs.

Deerfield

On December 21, 2007, we completed the sale (the "Deerfield sale") of our majority capital interest in Deerfield & Company LLC ("Deerfield"), our former subsidiary, to Deerfield Capital Corp. ("DFR") resulting in non-cash proceeds aggregating $134.6 million, consisting of 9.6 million shares of convertible preferred stock of DFR ("the DFR Preferred Stock") with a then estimated fair value of $88.4 million and $48.0 million principal amount of series A senior secured notes of DFR due in December 2012 (the "DFR Notes") with a then estimated fair value of $46.2 million. As discussed in the Form 10-K, we recorded a valuation allowance of $21.2 million during the fourth quarter of 2008 for these DFR Notes. We also owned an additional 0.2 million common shares in DFR.

The DFR Notes bear interest at the three-month LIBOR (0.60% at June 28, 2009) plus a factor, initially 5% through December 31, 2009, increasing 0.5% each quarter from January 1, 2010 through June 30, 2011 and 0.25% each quarter from July 1, 2011 through their maturity. The DFR Notes are secured by certain equity interests of DFR and certain of its subsidiaries. See the "Other - Legacy Assets" section below related to the potential disposition of the DFR Notes.

On March 11, 2008, DFR stockholders approved the one-for-one conversion of all its outstanding convertible preferred stock into DFR common stock which converted the 9.6 million preferred shares we held into a like number of shares of common stock. During the first quarter of 2008, our Board of Directors approved the distribution of our 9.8 million shares of DFR common stock, which also included the 0.2 million common shares of DFR discussed above, to our stockholders. The dividend, which was valued at $14.5 million, was paid on April 4, 2008 to holders of record of our Class A common stock (the "Class A Common Stock") and our then outstanding Class B common stock (the "Class B Common Stock").

In the first quarter of 2008, in response to unanticipated credit and liquidity events in the first quarter of 2008, DFR announced changes to its business model and significant losses. Based on these events and their negative effect on the market price of DFR common stock, we concluded that the fair value and, therefore, the carrying value of our investment in

the 9.8 million common shares was impaired. As a result, we recorded an other than temporary loss which is included in "Other than temporary losses on investments," of $68.1 million (without tax benefit as described below). As a result of the distribution of the DFR common stock, the income tax loss that resulted from the decline in value of our investment of $68.1 million is not deductible for income tax purposes and no income tax benefit was recorded related to this loss.

Related Party Transactions

Wendy's/Arby's and a management company (the "Management Company") formed by our Chairman, who is our former Chief Executive Officer, and our Vice Chairman, who is our former President and Chief Operating Officer, (collectively, the "Former Executives") and a director, who is also our former Vice Chairman (together with the Former Executives, the "Principals"), entered into a services agreement (the "Services Agreement") which commenced on July 1, 2009 and will continue until June 30, 2011, unless sooner terminated. Under the Services Agreement, the Management Company will assist us with strategic merger and acquisition consultation, corporate finance and investment banking services and related legal matters. Pursuant to the terms of this agreement, we will pay the Management Company a service fee of $0.25 million per quarter, payable in advance commencing July 1, 2009. In addition, in the event the Management Company provides substantial assistance to us in connection with a merger or acquisition, corporate finance and/or similar transaction that is consummated at any time during the period commencing on the date the Services Agreement was executed and ending six months following the expiration of its term, we will negotiate a success fee to be paid to the Management Company which is reasonable and customary for such transactions. Approximately $5.4 million in fees for corporate finance advisory services were paid to the Management Company in connection with the issuance of the Senior Notes.

Under a prior services agreement, which expired on June 30, 2009, the Management Company provided a broader range of professional and strategic services to us in connection with the transition of all executive management responsibilities for the Company to the executive management team in Atlanta, Georgia.

Prior to 2006, we invested $75.0 million in the Equities Account, which was managed by the Management Company.. The Equities Account was invested principally in equity securities, cash equivalents and equity derivatives of a limited number of publicly-traded companies. In addition, the Equities Account sold securities short and invested in market put options in order to lessen the impact of significant market downturns.

TCMG-MA, LLC (a wholly-owned subsidiary of ours and the entity which owned the Equities Account investments) ("TCMG-MA") and the Management Company entered into a withdrawal agreement (the "Withdrawal Agreement") which provided that TCMG-MA would be permitted to withdraw on an accelerated basis (the "Early Withdrawal") all amounts in the Equities Account effective no later than June 26, 2009. Prior to the Withdrawal Agreement and as a result of an investment management agreement with the Management Company which was terminated on June 26, 2009, TCMG-MA had not been permitted to withdraw any amounts from the Equities Account until December 31, 2010, although $47.0 million was released from the Equities Account in 2008 subject to an obligation to return that amount to the Equities Account by a specified date. In consideration for obtaining such Early Withdrawal right, TCMG-MA agreed to pay the Management Company $5.5 million, is not required to return the $47.0 million referred to above and is no longer obligated to pay investment management and incentive fees to the Management Company. The Equities Account investments were liquidated in June 2009 for $37.4 million (the "Equities Sale"), of which $31.9 million was received by us, net of the $5.5 million withdrawal fee (the "Withdrawal Fee") included in "Investment expense, net," and for which we realized a gain of $2.3 million in the 2009 second quarter.

On June 10, 2009, Wendy's/Arby's and the Management Company entered into a liquidation services agreement (the "Liquidation Services Agreement") whereby, the Management Company will assist us in the sale, liquidation or other disposition of our cost investments and DFR Notes (the "Legacy Assets"), which are not related to the Equities Account. As of the date of the Liquidation Services Agreement, the Legacy Assets were valued at $36.6 million (the "Target Amount"). The Liquidation Services Agreement, which expires June 30, 2011, provides that we will pay the Management Company a fee of $0.9 million in two installments, which is being amortized over the term of the agreement and will be recorded in "General and administrative expenses." In addition, in the event that any or all of the Legacy Assets are sold, liquidated or otherwise disposed of and the aggregate net proceeds to us are in excess of the aggregate value of the Legacy Assets as of the date of the Liquidation Services Agreement of $36.6 million (the "Target Amount"), then we will pay the Management Company a success fee equal to 10% of the aggregate net proceeds in excess of the Target Amount.

During the second quarter of 2009, the time share agreements with the Principals and the Management Company for the use of two of our aircraft expired. One of the aircraft was sold in the third quarter of 2009 to an unrelated third party.

Wendy's/Arby's and TASCO, LLC (an affiliate of the Management Company) ("TASCO") entered into an aircraft lease agreement (the "Aircraft Lease Agreement") for the other aircraft that was previously under a time share agreement. The Aircraft Lease Agreement provides that the Company will lease such corporate aircraft to TASCO from July 1, 2009 until June 30, 2010. The Aircraft Lease Agreement provides that TASCO will pay $0.01 million per month for such aircraft plus substantially all operating costs of the aircraft including all costs of fuel, inspection, servicing and storage, as well as operational and flight crew costs relating to the operation of the aircraft, and all transit maintenance costs and other maintenance costs required as a result of TASCO's usage of the aircraft. We will continue to be responsible for calendar-based maintenance and any extraordinary and unscheduled repairs and/or maintenance for the aircraft, as well as insurance and other costs. The Aircraft Lease Agreement may be terminated by us without penalty in the event we sell the aircraft to a third party, subject to a right of first refusal in favor of the Management Company with respect to such a sale.

All of these agreements entered into in the second quarter of 2009 were negotiated and approved by the Audit Committee of our Board of Directors, which was advised in the process by independent outside counsel.

Presentation of Financial Information

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to December 31. All quarters presented contain 13 weeks. Because our 2009 fiscal year ending on January 3, 2010 will contain 53 weeks, our fourth quarter of 2009 will contain 14 weeks. All references to years and quarters relate to fiscal periods rather than calendar periods.

Results of Operations

Three Months Ended June 28, 2009 Compared with Three Months Ended June 29, 2008

Presented below is a table that summarizes our results, same-store sales and
restaurant margins for the 2009 second quarter and the 2008 second quarter. Due
to the Wendy's Merger, the percentage change between these three-month periods
is not meaningful.

                                                             Three Months Ended
                                                     June 28,       June 29,
                                                       2009           2008        Change
                                                                (In Millions)
Revenues:
Sales                                               $    816.2     $    291.3     $ 524.9
Franchise revenues                                        96.5           21.7        74.8
                                                         912.7          313.0       599.7
Costs and expenses:
Cost of sales                                            686.5          245.0       441.5
General and administrative                               112.7           42.1        70.6
Depreciation and amortization                             44.7           16.4        28.3
Impairment of long-lived assets                            8.7            1.3         7.4
Facilities relocation and corporate restructuring          3.0              -         3.0
Other operating expense, net                               0.6              -         0.6
                                                         856.2          304.8       551.4
Operating profit                                          56.5            8.2        48.3
Interest expense                                         (31.1 )        (13.9 )     (17.2 )
Investment expense, net                                   (2.8 )         (5.7 )       2.9
Other than temporary losses on investments                (0.8 )         (3.5 )       2.7
Other income, net                                          1.6            1.2         0.4
Income (loss) before income taxes                         23.4          (13.7 )      37.1
(Provision for) benefit from income taxes                 (8.5 )          6.8       (15.3 )
Net income (loss)                                   $     14.9     $     (6.9 )   $  21.8

Restaurant statistics:
                                    Second
Wendy's same-store sales:        Quarter 2009
North America Company-owned
restaurants                         (1.2)%
North America franchised
restaurants                         (0.1)%
North America systemwide            (0.4)%

                                                   Second
                                    Second        Quarter
Arby's same-store sales:         Quarter 2009       2008
North America Company-owned
restaurants                         (5.8)%         (3.7)%
North America franchised
restaurants                         (7.4)%         (2.8)%
North America systemwide            (6.9)%         (3.2)%

Restaurant margin:
                                                   Second
                                    Second        Quarter
                                 Quarter 2009       2008
Wendy's                              15.9%
Arby's                               14.9%         15.9%

Restaurant count:                Company-owned   Franchised   Systemwide
Wendy's restaurant count:
Restaurant count at March 29,
2009                                     1,399        5,224        6,623
Opened                                       2            8           10
Closed                                     (5)         (20)         (25)
Sold to franchisees                        (1)            1            -
Restaurant count at June 28,
2009                                     1,395        5,213        6,608

Arby's restaurant count:
Restaurant count at March 29,
2009                                     1,171        2,570        3,741
Opened                                       3           17           20
Closed                                     (4)         (12)         (16)
Restaurant count at June 28,
2009                                     1,170        2,575        3,745
Total Wendy's/Arby's restaurant
count at June 28, 2009                   2,565        7,788       10,353

Sales

Our sales, which were generated primarily from our Company-owned restaurants, increased $524.9 million to $816.2 million for the three months ended June 28, 2009 from $291.3 million for the three months ended June 29, 2008. The increase in sales was due to the Wendy's Merger which added 1,395 net Company-owned restaurants as of June 28, 2009 and generated $539.1 million in sales during the 2009 second quarter. Wendy's North America Company-owned same-store sales, excluding the impact of fewer restaurants serving breakfast in the second quarter of 2009 as compared to the second quarter of 2008, would have increased approximately 0.6%. Excluding Wendy's, sales decreased $14.2 million, which is attributable to the 5.8% decrease in same store sales of our Arby's North America Company-owned restaurants stemming from lower customer traffic primarily impacted by the previously described negative economic trends and competitive pressures in "Introduction and Executive Overview - Our Business." The decrease in Arby's sales was partially mitigated by the continued positive effect on sales of the new Roastburger™ product launch in the 2009 first quarter.

Franchise Revenues

Total franchise revenues, which were generated entirely from franchised restaurants, increased $74.8 million to $96.5 million for the three months ended June 28, 2009 from $21.7 million for the three months ended June 29, 2008. The increase in franchise revenue was due to the Wendy's Merger which added 5,213 franchised restaurants as of June 28, 2009 to the Wendy's/Arby's restaurant system and generated $76.1 million in franchise revenue during the 2009 second quarter. Wendy's franchise store sales were not significantly impacted by changes in the number of restaurants serving breakfast in the second quarter of 2009. Excluding Wendy's, franchise revenues decreased $1.3 million, which is attributable to the 7.4% decrease in same-store sales for Arby's North America franchised restaurants. Same-store sales of our Arby's North America franchise restaurants decreased primarily due to the same factors discussed above under "Sales". In addition, sales at Arby's North America franchise restaurants were negatively affected by less aggressive pricing and in-store value promotions than at Company-owned restaurants.

Restaurant Margin

Our restaurant margin decreased slightly to a consolidated 15.6% for the three months ended June 28, 2009 from the Arby's 15.9% for the three months ended June 28, 2008. The 2009 second quarter restaurant margin reflects the mix of the . . .