Fast-food giant Wendy’s is closing 140 underperforming locations by the end of 2024 as it looks to improve its “restaurant footprint and overall system health.”
However, to combat the closures, the Ohio-based company is working to replace many of these units with “new restaurants in better locations with significantly improved sales and profitability,” Wendy’s CEO Kirk Tanner said in his third term. told analysts on the quarterly earnings call.
The company conducted a thorough review of individual restaurants to ensure they met sales expectations and were profitable enough to support growth, Tanner said, adding that the locations being closed were “old and run down. are in “underperforming areas” whose operating margins are significantly lower than the system average.
“I think when you think about consolidating our system, you look at a brand that’s 55 years old and some of those restaurants are just old-fashioned,” Tanner said.
This restaurant footprint optimization is part of a series of initiatives that Wendy’s is implementing to strengthen the brand and its operations across the company and its franchises.
The company did not disclose where the closures would occur, but Tanner said “it’s not a specific area.”
Wendy’s estimates that net closures in 2024 will be “offset by new restaurant openings this year, keeping our net unit growth roughly flat compared to last year,” Tanner said, adding that the company is confident it will deliver significant accelerated unit growth rates. Will achieve 3% to 4% in 2025.
The company said it will open more than 500 new restaurants over the past two years by the end of 2024.
Tanner said it is “using data-driven insights to target high-growth business areas” as it continues to open new locations.
Globally, the company said it is on track to reach 250 to 300 openings for the full year.
Wendy’s is one of a growing number of chains trying to lure customers back through a number of promotions.
Last quarter, Wendy’s said it maintained “total traffic and dollar share” [quick service restaurant] “Burger Category.”
Its revenue for the quarter exceeded analysts’ expectations, coming in at $566.7 million, up 2.9% from a year earlier.
