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Generated Title: Wendy's Closures: A Calculated Cull or a Sign of Deeper Problems?The Gre... Generated Title: Wendy's Closures: A Calculated Cull or a Sign of Deeper Problems?
The Great Wendy's Purge of '25/'26
Wendy's is planning a cull. That's the long and short of it. Hundreds of locations—a "mid-single-digit percentage" of their 6,000-strong empire—are slated to close between late 2025 and 2026. Initial reports suggest between 200 and 350 restaurants are on the chopping block, though some investors are estimating closer to 300. The official line? A strategic "turnaround plan" to jettison underperforming locations.
But here's where the numbers start to get interesting.
The company's interim CEO, Ken Cook, stated that these closures are about restaurants that "do not elevate the brand" and are a "drag from a franchisee financial performance perspective." That sounds reasonable enough. The goal, he says, is to "address and fix those restaurants." But what does "fix" really mean in this context? Are we talking about significant capital investment in struggling franchises, or simply cutting losses?
Wendy's closed 140 stores in 2024. And they were expecting to open 250 to 300 new sites in 2024. But now? "We now expect a similar number of closures as openings, so we expect net unit growth in 2024 to be roughly flat," according to Wendy's spokesperson Heidi Schauer. Flat growth isn't exactly a sign of robust health, is it?
The company also announced stronger-than-expected performance in its third-quarter earnings, with adjusted earnings per share (EPS) of $0.24, surpassing the forecast of $0.20. Revenue also beat expectations, reporting $549.5 million against a forecast of $534.98 million.
This is where I raise an eyebrow.
Wendy's is simultaneously claiming strong earnings and planning a major contraction. It's like a dieter bragging about their weight loss while secretly binging on late-night snacks. There's a disconnect.
And this is the part of the report that I find genuinely puzzling: Global system-wide sales decreased by 2.6%, the company said, primarily due to a 4.7% decline in U.S. same-restaurant sales. However, international sales grew by 8.6%. So, while the US market is shrinking, they are expanding overseas.
The Dave Thomas Legacy
It's worth remembering where Wendy's came from. Founder Dave Thomas, born in Atlantic City, New Jersey, built an empire on square burgers and folksy charm. He even starred in more than 800 national television commercials. That's more appearances than any company founder in American history. He named the chain after his daughter, Wendy. It's a classic American success story. But success stories don't guarantee future performance.
Thomas was also the regional director for Kentucky Fried Chicken. He sold his stock back to KFC for $ 1.5 million, which allowed Thomas to become part of the investor group that founded Arthur Treacher's Fish & Chips.
The question is, would Dave Thomas approve of this strategic "right-sizing"? Or would he see it as a failure to connect with the American consumer?
The closure announcement didn't specify which restaurants would close, but New Jersey has 145 Wendy's locations, and Michigan has 218. So, it's safe to assume that a proportionate number of closures will occur in those states. Wendy's to close roughly 300 stores nationwide in late 2025. Are any in Michigan?
In Somers Point, New Jersey, a Wendy's recently completed a major refurbishment. It's unlikely that location is on the chopping block. But what about the older, less profitable locations?
It's also a bit rich that they call this "Project Fresh," considering they're shuttering restaurants. It's marketing doublespeak, plain and simple.
A Calculated Cull, or a Slow Burn?
Wendy's wants us to believe this is a strategic move to improve profitability. But the data suggests something more troubling: a decline in domestic sales, masked by international growth and creative accounting. The closure of hundreds of restaurants isn't a sign of strength; it's a symptom of a deeper malaise. The question is, can Wendy's reverse this trend before it's too late? I'm not betting on it.