Wendy's Franchisee Faces 60 Restaurant Closures Amid Financial Strain
Meritage Hospitality Group, a major Wendy's franchisee, is closing up to 60 more restaurants by mid-November as part of a court-approved restructuring, following 33 closures since its September bankruptcy filing.
A major Wendy's franchisee could close up to 60 restaurants by mid-November. This is part of a larger restructuring effort by Meritage Hospitality Group, which previously operated 374 Wendy's locations and may have closed 120 if the latest wave proceeds.
Another 20 to 60 restaurant shutdowns are required by November 13 under a court-approved agreement.
Meritage Bankruptcy and Closures
Meritage Hospitality Group filed for bankruptcy on September 17. The company closed 13 restaurants late last week, bringing total closures since late September to 33. This follows 60 restaurant closures earlier this year, before the bankruptcy filing.
The franchisee employed approximately 8,850 people before and during the period of closures. At the time of its bankruptcy filing, it operated 320 restaurants across 15 states, including 314 Wendy's locations.
Financial Pressures
Low revenue and negative earnings have driven the closures. Locations slated for closure have low average unit volumes, with some generating less than $900,000 in annual revenue. The average revenue for these locations is less than half the Wendy's system average.
Each restaurant slated for closure generates negative EBITDA, with some losing nearly $200,000 over 12 months. The earlier closures of 60 underperforming restaurants were estimated to improve annual EBITDA by $8 million.
Same-store sales fell 7.2 percent in fiscal 2025 and 8.3 percent in the first half of 2026. Meritage reported net losses of $31.5 million in fiscal 2025 and $23.1 million in the first half of 2026.
The franchisee attributed its financial difficulties to weak sales, raised beef costs, national discounting, disruptive weather, and less effective Wendy's marketing. Before bankruptcy, Meritage pursued cost reductions, changes to breakfast service, and sale-leaseback transactions to improve profitability and reduce debt.
Contractual Dispute
Wendy's moved to terminate Meritage's franchise agreements one day before the bankruptcy filing. Meritage disputes the termination and claims its franchise agreements remain in place.
According to Wendy's, the franchisee owes approximately $146.9 million in royalties, fees, and other contractual charges. The franchisee's $155 million in secured debt is held by lenders seeking to preserve cash.
Industry Context
Wendy's has closed a net of more than 300 locations since 2024. The chain recorded 245 net closures in the first half of 2025 alone. Wendy's sales have declined due to weak consumer dining habits and internal challenges.
New leadership was brought in earlier this year, with Bob Wright hired as CEO and Tariq Hassan hired as chief marketing officer. The article closes on the court-mandated requirement for 20 to 60 additional shutdowns by November 13 under a binding agreement.
