Wendy's to close 140 restaurants by the end of the year
Fast food giant Wendy's is shuttering 140 underperforming locations through the end of 2024 as it looks to improve its "restaurant footprint and overall system health."
To counter the closures, though, the Ohio-based company is working to replace many of these units with "new restaurants at better locations with significantly improved sales and profitability," Wendy's CEO Kirk Tanner told analysts on its third quarter earnings call.
The company thoroughly reviewed individual restaurants to ensure they meet sales expectations and are profitable enough to support growth, and said that the locations closing are "outdated and in underperforming areas," with operating margins far below the system average, Tanner said.
"I think when you think about strengthening our system, you look at a brand that's 55 years old and some of those restaurants are just out of date," Tanner said.
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This restaurant footprint optimization is part of a slate of initiatives the company is deploying to strengthen the brand and its operations across the company and its franchisees.
The company didn't disclose where the closures will be, but Tanner noted that "it's not one particular area."
The company anticipates the total closures in 2024 to be "offset by new restaurant openings this year, leaving our net unit growth approximately flat compared to the prior year," Tanner said, adding that the company is confident that it will achieve significant accelerated unit growth rate of 3% to 4% in 2025.
By the end of 2024, the company said it will have opened more than 500 new restaurants over the last two years.
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Tanner said it is also "using data-driven insights to target high-growth trade areas" as it continues to open up new locations.
Globally, the company said its on track to reach 250 to 300 openings for the full year.
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Wendy's is among a growing number of chains that have been trying to lure customers back in through a slew of promotions.
In the prior quarter, Wendy's said it maintained "overall traffic and dollar share in the [quick service restaurant] burger category."
Its revenue for the quarter came in above analysts’ expectations, notching $566.7 million, a 2.9% increase from a year earlier.