Wendy’s plans to accelerate some unit closings

Wendy’s Co. will close additional restaurants and accelerate planned closings from 2025 into this year, executives said Thursday.

The Dublin, Ohio-based burger chain, which released earnings for the third quarter ended Sept. 29, said it had “made the strategic decision to close additional restaurants this year that are outdated and located in underperforming trade areas, these restaurants have AUVs of approximately $1.1 million and operating margins well below the system average.”

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The company is looking to replace them with restaurants with average unit volumes of $2 million and more.

Kirk Tanner, Wendy’s CEO and President, said, “We designed this initiative to ensure that many of these units will be replaced by new restaurants in better locations with significantly improved sales and profitability.”

Tanner added that executives expected total closings in 2024, including additional closings in the fourth quarter, to be offset by new restaurant openings this year, “leaving our net unit growth roughly flat compared to the prior year.”

Gunther Plosch, Wendy’s chief financial officer, said the “additional closings amount to approximately 140 additional units.”

Executives told analysts that the planned closings were spread out geographically.

“When you think about strengthening our system _— you look at a brand that’s 55 years old and some of these restaurants are just outdated,” Tanner said.

Wendy’s is leaning into its partnership with Coca-Cola Freestyle for the $1 promotional drink going on now, Tanner added.

“It absolutely delivers the portfolio that Coca-Cola has, and it delivers it in both full sugar and zero sugar, giving customers real choice,” Tanner said. “It’s a benefit at Wendy’s, and we wanted to celebrate that and remind people that this was when the $1 promotion was.”

Wendy’s plans to follow suitts SpongeBob SquarePants campaign in the third quarter with a Salted Caramel Frosty and premium mushroom burger in the fourth quarter, Tanner said.

For the third quarter ended Sept. 29, Wendy’s net income was $50.2 million, or 25 cents per share, compared with $58 million, or 28 cents per share, in the year-ago period. Revenue was $566.7 million, up from $550.6 million a year ago.

Wendy’s same-store sales growth in the third quarter was 2.8% globally, with increases of 2.2% in the US and 7.8% internationally.

Per As of September 29, Wendy’s had 6,010 restaurants in the United States and 1,156 internationally for a total of 7,166.

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