Big Changes Ahead

Fast-food enthusiasts might need to say goodbye to some of their favorite Wendy's locations. In a bold move to enhance its brand health, Wendy's is set to close about 140 restaurants by the end of 2024. This decision was revealed during an earnings call on October 31, following the release of the chain's latest quarterly results.

Why the Closures?

Wendy's President and CEO, Kirk Tanner, explained that the closures are part of a strategy to eliminate "outdated" locations situated in "underperforming trade areas." The targeted restaurants are reported to generate an average of $1.1 million in annual sales, falling significantly below the system's average operating margins. Tanner emphasized that the closures would not be concentrated in any specific area, indicating a widespread impact across the country.

A Common Industry Practice

Shutting down underperforming stores to bolster a brand is not uncommon in the fast-food industry. Giants like Subway and Burger King have also trimmed their store counts in recent years for similar reasons. Wendy's, however, is optimistic about its future, planning to open new, more profitable locations to replace the ones being closed.

Future Expansion Plans

Despite the significant number of closures, Wendy's has an aggressive growth plan in place. The company expects to open enough new restaurants to keep its net unit growth steady compared to the previous year. With 6,011 American restaurants operational as of the last quarter, Wendy's aims for a 3% to 4% increase in its restaurant count by 2025, translating to more than 500 new restaurants over two years.

Remodeling and Growth

The fast-food chain is not just focusing on expansion but also on modernizing its existing outlets. With 89% of its global locations already remodeled, Wendy's is looking to significantly increase its footprint in the United States. Tanner sees potential for "another additional couple of thousand restaurants" in the U.S. market, signaling a long-term commitment to growth and improvement.

As Wendy's prepares to streamline its operations and embark on a new phase of growth, fans of the brand can look forward to new and improved dining experiences, even as they bid farewell to some familiar locations.