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Wendy’s Waving Goodbye to Hundreds of U.S. Locations as Customers Tighten Belts
Dublin, OH – Hold onto your Frostys, folks, because Wendy’s is making some big changes! The fast-food giant announced plans to close hundreds of its U.S. restaurants in the coming months, citing a dip in revenue and profits, primarily due to lower-income consumers cutting back on their dining-out habits. And unfortunately, they don’t see this trend easing up anytime soon.
During a recent investor call, interim CEO Ken Cook remained tight-lipped about the exact locations, but he did reveal that the company is looking to shutter a “mid-single digit percentage” of its 6,011 U.S. establishments. That could mean roughly 300 locations will be saying goodbye if they hit the 5% mark. These closures are set to kick off in the fourth quarter of this year, with the aim of boosting traffic and profitability at the remaining U.S. restaurants.
Fast-food chains across the board have been feeling the pinch as rising food costs continue to squeeze lower-income households. Both Wendy’s and its golden-arched rival, McDonald’s, have rolled out value meals to try and lure diners back, but Cook isn’t optimistic about an immediate financial turnaround for these struggling households. “We do see more pressure on the lower-income consumer,” he stated, adding that this trend persisted through the third quarter and is expected to continue into the fourth.
This new wave of closures comes on the heels of 240 U.S. Wendy’s locations already closing their doors in 2024, many reportedly due to their outdated facilities.
Cook, who stepped into the CEO role in July after Kirk Tanner’s departure for Hershey Co., explained that the company plans a multi-pronged approach for struggling stores. Some will get a facelift with new technology and equipment, others might see a change in ownership, and some, unfortunately, will be closed for good.
“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,” he emphasized to investors.
Looking at the numbers, Wendy’s U.S. same-store sales for the first nine months of this year dropped 4% compared to the same period last year. Overall revenue also saw a 2% decline, hitting $1.63 billion, while net income fell 6% to $138.6 million.
While the $5 and $8 meal deals (mirrored by McDonald’s) have helped bring some customers back, Cook admitted that Wendy’s isn’t doing enough to attract new diners. To combat this, the company plans to tweak its marketing strategy, putting a stronger emphasis on value and the freshness of its ingredients.
Despite the news, Wendy’s shares saw a slight uptick of 1.1% in early Tuesday trading, reaching $8.63. However, they’re still down 46% for the year. It seems Wendy’s is gearing up for a significant shake-up in an effort to navigate these challenging economic waters.