The company is looking to replace outdated and underperforming restaurants
The Wendy’s Co. will be closing additional restaurants, accelerating planned closures from 2025 into this year, executives said Thursday.
The Dublin, Ohio-based burger chain, which released earnings for the third quarter ended Sept. 29, said it had “made the strategic decision to close additional restaurants this year that are outdated and located in underperforming trade areas these restaurants have AUV's of approximately $1.1 million and operating margins well below the system average.”
The company is looking to replace them with restaurants doing average unit volumes of $2 million and more.
Kirk Tanner, Wendy’s CEO and president, said: “We have designed this initiative to ensure that many of these units will be replaced by new restaurants at better locations with significantly improved sales and profitability.”
Tanner added that executives anticipated total closures in 2024, including additional closures in the fourth quarter, would be offset by new restaurant openings this year, “leaving our net unit growth approximately flat compared to the prior year.”
Gunther Plosch, Wendy’s chief financial officer, said the “additional closures total about 140 additional units.”
Executives told analysts that the planned closures were spread out geographically.
“When you think about strengthening our system — you look at a brand that's 55 years old and some of those restaurants are just out of date,” Tanner said.
Wendy’s is leaning into its partnership with Coca-Cola Freestyle for the $1 promotion beverage going on now, Tanner added.
“It definitely delivers the portfolio that Coca-Cola has, and it delivers it in both full sugar and 0 sugar, giving customers real choice,” Tanner said. “That's an advantage at Wendy's, and we wanted to celebrate that and remind people of that that's when the $1 promotion.”
Wendy’s plans to follow its SpongeBob SquarePants promotion in the third quarter with a Salted Caramel Frosty and premium mushroom burger in the fourth quarter, Tanner said.
For the third quarter ended Sept. 29, Wendy’s net income was $50.2 million, or 25 cents a share, compared to $58 million, or 28 cents a share, in the prior-year period. Revenues were $566.7 million, up from $550.6 million a year ago.
Wendy’s same-store sales growth in the third quarter was 2.8% globally with increases of 2.2% in the United States and 7.8% internationally.
As of Sept. 29, Wendy’s had 6,010 restaurants in the United States and 1,156 internationally for a total of 7,166.
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