Wendy's to Close Hundreds of U.S. Restaurants Amid Profit Decline

Wendy's has announced plans to close hundreds of its U.S. restaurants in an effort to boost profitability and enhance the performance of its remaining locations. The closures are expected to begin in the fourth quarter of this year, affecting a "mid-single-digit percentage" of its U.S. stores, which translates to approximately 300 out of 6,011 locations.

This decision follows the closure of 240 U.S. Wendy's locations in 2024, attributed to outdated facilities. Interim CEO Ken Cook stated that addressing underperforming restaurants—whether due to financial issues or customer service concerns—will help improve traffic and profitability at the remaining U.S. locations.

"When we look at the system today, we have some restaurants that do not elevate the brand and are a drag from a franchisee financial performance perspective. The goal is to address and fix those restaurants," Cook said during a conference call with investors.

Cook outlined that some struggling stores will receive improvements, such as new technology or equipment, while others may be transferred to different operators or closed altogether.

The fast-food industry has faced challenges in attracting lower-income consumers amid rising inflation. Wendy's reported a 4% decline in U.S. same-store sales during the first nine months of this year compared to the same period last year. Revenue fell 2% to $1.63 billion, and net income decreased by 6% to $138.6 million.

To counteract these trends, Wendy's has introduced $5 and $8 meal deals, which have been matched by competitors like McDonald's. However, Cook acknowledged the need to attract new customers and plans to shift marketing efforts to emphasize value and the freshness of ingredients.

Following the announcement, Wendy's shares dropped 7% on Friday and were down 5% in afternoon trading on Monday.