Wendy’s plans to close hundreds U.S. restaurants over the next few months in an effort to boost its profit and make its remaining stores more appealing.
The Dublin, Ohio-based chain said during a conference call with investors Friday that it planned to begin closing restaurants in the fourth quarter of this year. The company said it expected a “mid-single-digit percentage” of its U.S. stores to be affected, but it didn’t give any more details.
Wendy’s ended the third quarter with 6,011 U.S. restaurants. If 5% of those locations were impacted, it would mean 300 store closures.
The new round of closures comes on top of the closure of 240 U.S. Wendy’s locations in 2024. At the time, Wendy’s said that many of the 55-year-old chain’s restaurants are simply out of date.
Ken Cook, Wendy’s interim CEO, said Friday the company believes closing locations that are underperforming – whether it’s from a financial or customer service perspective – will help improve traffic and profitability at its remaining U.S. restaurants.
Cook became Wendy’s CEO in July after the company’s previous CEO, Kirk Tanner, left to become the president and CEO of Hershey Co.
“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,” Cook said during a conference call with investors.
Cook said in some cases, Wendy’s will make improvements to struggling stores, including adding technology or equipment. In other cases, it will transfer ownership to a different operator or close the restaurant altogether.
U.S. fast food chains have been struggling to attract lower-income consumers in the past few years as inflation has raised prices. Cook said he expects lower-income consumers to remain pressured for the rest of this year.
In the first nine months of this year, Wendy’s said its U.S. same-store sales, or sales at locations open at least a year, fell 4% compared to the same period last year. Wendy’s revenue fell 2% to $1.63 billion in the same period, while its net income fell 6% to $138.6 million.
Cook said $5 and $8 meal deals — which have been matched by McDonald’s — have helped bring some traffic back to its U.S. stores. But Wendy’s isn’t doing a good job of bringing in new customers, Cook said, so the company plans to shift its marketing to emphasize its value and the freshness of its ingredients.
Wendy’s shares dropped 7% Friday. On Monday, they were down 5% in afternoon trading.