Wendy’s plans to shut down a couple of hundred restaurants in the US over the next year as part of its recently announced turnaround strategy.
The move was revealed by interim CEO Ken Cook during an earnings call last week.
Based on the current information, Cook estimated that around “a mid-single-digit percentage” of US locations would end up closing. This would amount to around 200 to 350 restaurants in Wendy’s 6000-location network in the country.
The closures are expected to begin later this year and continue into next year, with more updates to be announced during the next quarter’s call.
According to the interim CEO, the action is part of Project Fresh, a comprehensive turnaround plan launched last month to drive profitable growth and long-term value across the company’s US system.
System optimization is one of the four main pillars in Project Fresh, aside from brand revitalization, operational excellence and capital allocation.
Cook said system optimization is about “having the right restaurant footprint” in each market to maximize profitability.
“We are working with our US franchisees to evaluate each and every underperforming restaurant in our system from both a financial and a customer experience perspective and developing action plans for how to improve both.
“For some locations, it is about making operational changes or deploying technology. For others, we’re improving productivity by aligning operating hours to better match demand, particularly in the morning and late-night day parts. In other cases, the solution will be to close consistently underperforming restaurants,” Cook said.
He added that these actions will strengthen the system and enable franchisees to invest more capital and resources in their remaining restaurants.
US sales remain under pressure
The announcement comes as Wendy’s reported a 2.6 per cent decline in systemwide sales for the third quarter. US sales continued to drag down results with a 4.4 per cent decrease, while international sales grew 8.6 per cent.
Same-restaurant sales for the quarter slid 3.7 per cent, driven by a 4.7 per cent drop in the US and partially offset by a 3 per cent increase in international markets.
Net income dropped to $44.3 million from $50.2 million a year earlier, while adjusted EBITDA rose 2.1 per cent to $138 million.
During the quarter, Wendy’s opened 54 new restaurants, bringing year-to-date openings to 172.
Cook said the results were “in line with expectations”, citing strong international performance and some improvements at US company-operated restaurants.
“We are acting with urgency to execute the operational and brand initiatives to drive AUV growth in the US, creating value for our franchisees and shareholders,” he said.
Looking ahead, Wendy’s reaffirmed its FY25 guidance, targeting global systemwide sales of -5 per cent to -3 per cent and adjusted EBITDA of $505 million-$525 million.
