Wendy’s announced it will shutter hundreds of its U.S. restaurants in the months ahead. This move is ostensibly to increase revenue and net income at the stores that are not closing. The closures will come from what the fast-food giant expects to be “mid-single-digit percentage” of its 6,011 U.S. restaurants closed during that stretch. If the announced closures only covered 5% of its locations, it would mean roughly 300 stores closing down.
Interim CEO Ken Cook only took his position in July following Kirk Tanner’s departure. In that announcement, he mentioned how this decision was aimed at supporting underperforming restaurants that were harming both the company brand and franchisee financial performance. So when he talked about the need to repair these places for the long-term vitality of the business, it became a big deal.
“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.” – Ken Cook
Wendy’s had the largest same store sales decrease of all the major fast food companies reporting, down 5% from last year from July to September. As such, the closures have not yet been announced. The quick-service restaurant sector, of which Wendy’s is a part, has been wrestling with pressures to lure back lower-income diners as inflation continues to soar.
In an effort to lure customers back, Wendy’s shifted their marketing strategy to promoting $5 and $8 meal combos. These promotions have been quite effective in driving more customers into its locations. As fast food competitors including rivals such as McDonald’s have quickly matched these offers, increasing competition for every footstep.
Wendy’s plans to begin doing in the fourth quarter of this year. This latest step is part of efforts to respond to a rapidly evolving marketplace and bolster its brand identity. The deep company cut 240 U.S. stores in 2024, underscoring a wave of continued restructuring.
Following the announcement, Wendy’s shares experienced a 7% drop on Friday, signaling investor concerns over the company’s future performance amid these significant changes.
To further bolster its brand image and attract more customers, Wendy’s plans to shift its marketing focus towards highlighting its value offerings and the freshness of its ingredients. As Wendy’s navigates these challenges, the emphasis on improving customer experience and operational efficiency remains crucial for its long-term success in a competitive fast-food landscape.
