A big Wendy’s franchisee could close up to 60 restaurants
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A big Wendy’s franchisee bankruptcy will mean more closures for the fast-food chain. Photo: Shutterstock
A giant Wendy’s franchisee could close more locations than initially expected.
Meritage Hospitality Group, the Grand Rapids, Michigan-based operator, closed another 13 restaurants late last week, bringing the number of locations that have been closed since late September to 33.
The number is expected to keep increasing. According to court documents, the company could close up to 60 restaurants through mid-November.
That does not include the 60 restaurants Meritage closed earlier this year, before its Sept. 17 filing. In effect, it means a franchisee that at one point operated 374 Wendy’s locations will have closed 120 if it shutters another 60 locations.
The restaurants slated for closure generally have low average unit volumes and lose money.
Meritage has been closing locations in groups in a bid to improve the company’s overall profitability. In effect, lenders holding the franchisee’s $155 million in secured debt want to preserve as much cash as possible, and money-losing stores tend to drain cash.
The locations slated for closure generate low average unit volumes, with some locations making less than $900,000 in revenue per year, according to court filings. That’s less than half the average for the Wendy’s system.
Each of the restaurants generates negative EBITDA, or earnings before interest, taxes, depreciation, and amortization. Some restaurants lost nearly $200,000 over the past 12 months.
The problems with Meritage have worsened the decline of a Wendy’s estate that has been shrinking in recent years.
Wendy’s has closed a net of more than 300 locations since 2024. That includes 245 net closures in the first half of this year, according to company filings. Many of those closures were designed to improve franchisee profitability.
Wendy’s sales have taken a hit in the past couple of years amid a weak operating environment as consumers cut back on fast-food dining, and amid the chain’s own challenges.
The company earlier this year hired Bob Wright to be CEO and has overhauled much of the leadership team, including the recent hire of Tariq Hassan to be the chain’s chief marketing officer.
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