Wendy’s Shutters Hundreds of US Restaurants to Boost Profits, CEO Announces

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Wendy’s Shutters Hundreds of US Restaurants to Boost Profits, CEO Announces

Wendy’s has announced a significant strategy shift to boost profits by shuttering hundreds of locations across the United States. This decision comes as part of the company’s plan to enhance the appeal and profitability of its remaining restaurants.

Wendy’s Plans Restaurant Closures

During a recent investor conference call, Wendy’s management disclosed plans to begin closing stores in the fourth quarter of this year. The Dublin, Ohio-based fast-food chain estimates that up to a mid-single-digit percentage of its 6,011 U.S. locations may be affected, equating to potentially 300 closures.

Historical Context of Closures

This forthcoming wave of closures follows earlier decisions to shut down 240 U.S. locations in 2024. Wendy’s attributed these closures to the fact that numerous restaurants within the 55-year-old chain are now outdated.

Leadership Insights

Ken Cook, Wendy’s interim CEO, emphasized the need to remove underperforming locations. He stated that both financial and customer service issues at certain restaurants hinder the brand’s overall performance. Cook took over the CEO role in July, succeeding Kirk Tanner, who transitioned to Hershey Co.

Operational Changes Ahead

Cook revealed that the company is evaluating individual restaurants. In some instances, Wendy’s will enhance struggling stores with new technology and equipment. Alternatively, the company may transfer ownership or close the site completely.

Challenges in the Fast Food Market

Wendy’s, like many fast food establishments, has faced challenges in attracting lower-income customers as inflation continues to pressure consumer spending. Cook predicts that this demographic will remain financially strained for the remainder of the year.

Sales and Revenue Trends

Wendy’s U.S. same-store sales fell by 4% in the first nine months of the year compared to the previous year.
Revenue declined by 2%, totaling $1.63 billion during the same period.
Net income dropped by 6%, amounting to $138.6 million.

Although promotional meal deals priced at $5 and $8 have helped to attract some customers back, Cook acknowledged that Wendy’s struggles to attract new clientele. To counter this, the company intends to revamp marketing efforts, focusing on the value and freshness of its offerings.