Dive Brief:
- Wendy’s will undertake a strategic review of its store portfolio and begin closing a number of underperforming U.S. units in late 2025 with closures continuing into 2026, interim CEO and CFO Ken Cook said on the brand’s third quarter earnings call.
- Cook said the review could result in “a mid-single-digit percentage of U.S. restaurants would end up closing.” Given the brand’s 5,979 U.S. restaurants, hundreds of restaurants face closures.
- The closures are part of a systemic brand turnaround effort called Project Fresh, which launched last month, Cook said. Wendy’s reported disappointing same-store sales during the third quarter quarter with a 4.7% drop in the metric, significantly worse than competitors McDonald’s and Burger King, which both posted gains.
Dive Insight:
The review of store performance not only includes closures but also a range of options for weak-performing locations that drag on franchisee performance and damage the brand, Cook said.
“The goal is to address and fix those restaurants,” Cook said. “So in some cases, that’s going to mean deploying operational improvements, deploying additional technology or equipment. In other cases, it will mean transferring those restaurants to a different operator who’s better suited to be successful in that restaurant.”
Closures, even on a large scale, are not necessarily a sign of ill health for QSR brands. McDonald’s closed hundreds of locations inside Walmart in 2021. Burger King also retrenched its store system, shuttering hundreds of locations in 2023 and pushing franchisees to concentrate their holdings in geographically contiguous clusters. Starbucks closed a six quarter same-store sales slide with the closure of upwards of 400 stores this year.
There is a chance Wendy’s could see similar salutary effects from a trimmed system. Cook said he expected closures to result in improved sales at nearby stores; the chain has shifted its domestic focus from growing its unit count to raising its average unit volume. The brand is also focusing on its promotional calendar to keep its messaging to customers clear.
The debut of chicken tenders — which came at the start of Q4 — was not reflected in Q3 sales figures, but Cook said the menu items have performed very well. “Demand was so strong that some restaurants sold out even before the national media support, which fully launches next week,” Cook told analysts.
The brand’s Project Fresh turnaround entails a number of operations and customer experience changes, including additional training for customer-facing employees; tweaks to the app, including geolocation; and investments in tech and equipment upgrades. These changes are further along in the brand’s company-operated units, which outperformed franchise locations by 4% in the quarter, Cook said.
