Wendy’s, the American fast-food chain, announced this week that it will be closing 140 restaurants in the coming months. The company also stated that it plans to open an equal number of new stores in areas where they believe will enhance Wendy’s business.
On Thursday, the CEO of Wendy’s, Kirk Tanner, mentioned during a financial conference call that the planned closures are for restaurants that are “outdated and located in underperforming areas.”
Tanner told investors that even though Wendy’s is a brand with a 55-year history, some of its restaurants have become outdated.
Gunther Plosch, the CFO of Wendy’s, stated during the call that the revenue from these “outdated” restaurants is significantly lower than the system’s average, with an average revenue of about $1.1 million.
The company plans to replace these stores with higher-profit locations, which have an average revenue of over $2 million.
Although the company did not provide a list of specific restaurants to be closed, it mentioned that the closures will be phased in both the U.S. and globally.
Tanner emphasized that Wendy’s conducted a thorough review of each restaurant to ensure they meet sales expectations, have the ability to drive growth, and provide customers with the Wendy’s brand experience. “Overall, the Wendy’s system is very healthy,” he said.
This closure comes after Wendy’s announced the closure of 100 stores back in May.
Despite several rounds of closures, the total number of Wendy’s restaurants has not decreased, with approximately 6,000 stores in the U.S. The chain is currently building around 250 to 300 new stores, featuring the tech-enhanced design unveiled in 2022, including new pickup windows, updated kitchen equipment, and refreshed interior décor.
Recently, other fast-food chains have also announced the closure of underperforming stores, including Denny’s and Shake Shack.
Wendy’s has had mixed results in revenue, with same-store sales falling 0.2% below analysts’ expectations.
Tanner noted that the company remains optimistic about its performance for the quarter, citing the success of their SpongeBob-themed menu items “resonating with consumers, creating a strong response, and driving a significant increase in sales.”
As of the end of the third quarter on September 29, Wendy’s had a total of 7,166 stores, with 6,010 in the U.S. and 1,156 internationally.
Tanner expressed that Wendy’s aims to achieve growth through new stores and promotions, including the recently launched limited-time offerings such as the crab sandwich combo and the sea pineapple frosty. The company executives also disclosed plans to establish a partnership through the current $1 promoted beverage deal with Coca-Cola Freestyle.
(Information in this article referenced reports from CNN and USA Today)