Wendy's Closes Low-Performing Locations to Focus Resources on Expanding Successful Outlets

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Wendy's Closes Low-Performing Locations to Focus Resources on Expanding Successful Outlets

Bitget-RWA2025/11/10 21:10

By:Bitget-RWA

- Wendy's plans to close 350 underperforming U.S. stores by 2026 to boost profitability and reinvest in high-performing franchisees. - Q3 2025 results showed a 12% profit drop due to weak margins and asset impairments, but adjusted EBITDA rose 2.1% and international sales grew 8.6%. - Analysts remain divided: RBC cut its price target citing closure risks, while Truist maintained a "Buy" rating despite a 51% stock decline in 2025. - The strategy shift prioritizes average unit volume growth over expansion, w

Wendy's (WEN) is speeding up a restructuring initiative that will see as many as 350 underperforming U.S. restaurants shuttered by 2026, with the goal of improving profits and channeling resources toward top-performing franchisees. Interim CEO Ken Cook explained that closing these locations—about a "mid single-digit percentage" of the brand’s 6,000 U.S. outlets—will allow franchisees to reinvest in more successful stores, a move expected to drive greater efficiency and boost sales at nearby restaurants

Wendy's To Close Up To 350 U.S. Restaurants Amid Turnaround Strategy

. This decision comes after 240 stores were closed in 2024 and 140 in 2023 due to weak results, with U.S. same-store sales dropping 4.7% in the most recent quarter, trailing competitors like McDonald's and Burger King

Wendy's To Close Up To 350 U.S. Restaurants Amid Turnaround Strategy

Financial results for the third quarter of 2025 highlighted the urgency of these changes. Net income fell by 12% to $44.25 million, impacted by slimmer margins at company-run U.S. locations, lower franchise royalty income, and increased asset write-downs

Wendy’s Q3 2025 profit falls as US store closures planned

. Nevertheless, adjusted EBITDA climbed 2.1% to $138 million, and international sales advanced 8.6%, helping to counterbalance domestic weakness. Cook pointed to gains from the "Project Fresh" turnaround, including the successful debut of Tendys chicken tenders, which sold out in some areas even before official advertising began

Wendy's Closes Low-Performing Locations to Focus Resources on Expanding Successful Outlets image 0

Wendy’s Q3 2025 profit falls as US store closures planned

Analysts remain wary. RBC Capital Markets reduced its price target from $10 to $9, citing the anticipated closure of 300 U.S. stores and a projected 9.7% drop in advertising spending for 2026. The firm noted that lagging franchisee locations have weighed on sales, with company-owned outlets outperforming franchisees by 400 basis points in the third quarter

Wendy's Faces Franchisee Store Closures, Decline in Ad Spending, RBC Says

. Meanwhile, Truist Securities kept its "Buy" rating, highlighting

Wendy's

the early progress of the turnaround and a 6.24% dividend yield as positives, despite the stock’s 51% drop in 2025

Truist Securities reiterates Buy rating on Wendy’s stock amid turnaround efforts

The closures reflect a broader strategic pivot. Cook revealed a shift toward growing average unit volume (AUV) rather than expanding the number of U.S. locations, cutting 2025 capital expenditures by $20 million and reallocating funds to digital improvements and marketing

Wendy’s signals shift to AUV growth and anticipates over 9% international net unit growth in 2025 amid Project Fresh rollout

. International expansion remains strong, with net unit growth expected to exceed 9% in 2025

Wendy’s signals shift to AUV growth and anticipates over 9% international net unit growth in 2025 amid Project Fresh rollout

. Still, challenges remain: U.S. digital sales climbed 14.9% year-over-year but make up only 20.3% of total sales

Wendy’s signals shift to AUV growth and anticipates over 9% international net unit growth in 2025 amid Project Fresh rollout

Wendy's shares jumped 11.66% in pre-market trading after third-quarter results surpassed earnings and revenue expectations, though the stock is down 47% so far this year

Wendy's (NASDAQ:WEN) Shares Gap Up on Strong Earnings

. The company reaffirmed its 2025 outlook, forecasting adjusted earnings per share between $0.82 and $0.89 and a global systemwide sales decline of 3–5%

Wendy's Analysts Cut Their Forecasts After Q3 Results

. With a significant portion of its U.S. stores at risk, the outcome of Project Fresh—which centers on revitalizing the brand and improving operations—will be key to whether Wendy's can regain its standing in the fast-food sector.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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