Wendy’s Shuts Hundreds of U.S. Stores Amid Reduced Spending
Wendy’s is set to shut down hundreds of its U.S. locations due to declining revenue and profits. This decision comes as the company anticipates ongoing cutbacks by lower-income consumers, a trend that is likely to continue through the end of the year.
Details of the Store Closures
During a recent investor call, Ken Cook, the interim CEO of Wendy’s, did not specify the exact number of locations to be closed. However, he indicated that the closures could amount to around 300 restaurants, which represents about 5% of the company’s 6,011 U.S. locations. The closures are expected to begin in the fourth quarter of this year.
Reasons for Closure
- Declining sales among lower-income consumers due to rising food costs.
- Efforts to boost profitability and traffic at remaining locations.
- Previous closures of 240 locations earlier in 2024.
Cook mentioned that some locations will undergo improvements, including upgrades to technology and equipment. Others may be transferred to different operators or closed altogether. “The goal is to address and fix those restaurants that do not elevate the brand,” he stated.
Financial Performance
In the first three quarters of this year, Wendy’s experienced a 4% decline in same-store sales compared to the prior year. Revenue dropped 2%, totaling $1.63 billion, while net income decreased by 6% to $138.6 million.
Adapting to Consumer Needs
To counter the financial challenges, Wendy’s has rolled out meal deals priced between $5 and $8, a move that has been mirrored by competitors like McDonald’s. Despite these efforts, Cook acknowledged that attracting new customers has proven difficult.
Looking ahead, Wendy’s plans to enhance its marketing strategy to better highlight the value and freshness of its offerings. In early trading, Wendy’s shares saw a slight increase to $8.63, although they remain down 46% for the year.
