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Wendy's will close 140 underperforming restaurants and open a similar number by year's end

Wendy's Restaurants says it will close 140 underperforming locations later in 2024 and replace them with new locations in better locations. File photo by Bill Greenblatt/UPI | License photo

November 1 (UPI) – Wendy's Restaurants will close 140 underperforming stores in the final months of 2024 while opening a similar number of new stores in better locations, company officials say.

Wendy's Company Chief Financial Officer Gunther Plosch told reporters during an earnings conference call Thursday that the closures will help the $4 billion fast-food provider achieve its goal of a “significantly accelerated unit growth rate.” 3% to 4%” for the next year and beyond.

“The additional closures amount to approximately 140 additional units,” Plosh said. “So basically we are closing as many units as we open. That’s why we remain a bit flat overall.” [for 2024].”

Wendy's CEO Kirk Tanner said he has made a “strategic decision to close additional restaurants this year that are aging and located in underperforming commercial areas. These restaurants did this.” [average unit volumes] of approximately $1.1 million and operating margins well below the system average.”

He added that by the end of the year, Wendy's will have opened more than 500 new restaurants over the past 24 months and remains on track to “achieve elevated growth in 2025 and the years ahead.”

“As we communicated last quarter, we have development commitments to meet our new build target for 2025, which supports our previously expressed guidance of 3% to 4% net growth,” he said.

The company reported third-quarter adjusted earnings per share of 25 cents, compared to 27 cents in the same quarter in 2023. Revenue was $566.7 million, up 2.9% compared to the previous year, primarily due to higher advertising revenue, franchise royalties and franchise fees.

However, due to an industry-wide slowdown in demand due to cost-conscious consumers limiting their restaurant visits, Wendy's growth was held back somewhat by a decline in sales at company-owned restaurants.

Profit margins for these restaurants were 16.5% in the third quarter, virtually flat year-over-year. Tanner said lower customer volume and higher labor costs are creating headwinds, but they're largely offset by a higher average check and “labor efficiency.”

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