Wendy’s closes 140 underperforming restaurants, opens same number as year ends

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Wendy's Restaurants says it will close 140 underperforming locations for the rest of 2024 while replacing them with new units in better locations. File photo by Bill Greenblatt/UPI
Wendy’s Restaurants says it will close 140 underperforming locations for the rest of 2024 while replacing them with new units in better locations. File Photo by Bill Greenblatt/UPI | License photo

Nov. 1 (UPI) — Wendy’s Restaurants will close 140 underperforming stores during the final months of 2024 while opening a similar number of new stores in better locations, company officials said.

Wendy’s CFO Gunther Plosch told reporters during an earnings call Thursday, the closings will help the $4 billion fast-food provider meet its goal of “significantly accelerated unit growth of 3% to 4%” for next year and beyond.

“The additional closings are about 140 additional units,” Plosch said. “So basically we are closing as many units overall as we are opening. That is why we will end up a bit flat overall (for 2024).”

Wendy’s CEO Kirk Tanner said he has made a “strategic decision to close additional restaurants this year that are outdated and located in underperforming trade areas. These restaurants have (average unit volumes) of approximately $1.1 million and operating margins of way below the system average.”

He added that by the end of the year, Wendy’s will have opened more than 500 new restaurants over the previous 24 months, and it remains on track to “deliver elevated growth in 2025 and beyond.”

“As we shared last quarter, we have development commitments in place to meet our 2025 newbuild target, which supports our previously stated outlook of 3% to 4% net unit growth,” he said.

The company reported an adjusted earnings per of 25 cents a share for the third quarter, compared to 27 cents in the same quarter in 2023. Revenue was reported at $566.7 million, up 2.9% year-over-year, primarily thanks to increased revenue from advertising funds, franchise royalties and franchise fees.

But reflects a industry-wide slowdown in demand due to cost-conscious consumers cutting back on restaurant visits, Wendy’s growth was somewhat offset by a decline in sales from company-operated restaurants.

The profit margin for these restaurants was 16.5% in the third quarter, largely flat year-over-year. Tanner said the reduced customer base and higher labor costs provide headwinds that are largely offset by increased average checks and “labor efficiency.”