Wendy's announces closure of 140 locations as CEO blames “outdated” areas for decline

A popular restaurant chain is poised to close 140 aging stores in underperforming areas to bolster its profit forecasts.

Wendy's CEO Kirk Tanner announced in a conference call Thursday that the chain will close more than 100 stores nationwide this quarter.

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The restaurant closures are offset by new restaurant openings, so net unit growth is roughly stagnant, according to the company's chief financial officer, Günther Plosch.

The chain – the second-largest fast-food chain in America – said it expects to open 250 to 300 new restaurants worldwide this year.

The closure follows a series of restaurant closures in recent months as chain restaurants suffer from rising rents, inflation and rising costs.

For example, TGI quietly closed nearly 50 restaurants on Friday last week amid reports the chain is facing bankruptcy.

Denny's also announced plans to close 150 low-selling restaurants by 2025 as the chain seeks to revamp its brand.

During the first nine months of the year, Wendy's closed 111 locations nationwide, including 78 franchise locations and six company-owned locations, according to a filing with the U.S. Securities and Exchange Commission.

Tanner blamed the store closures on poor location performance.

Overall, Wendy's system is incredibly healthy

Kirk TannerWendy's CEO

The locations slated to close are in multiple states across the country and are not tied to a specific area.

“I have made the strategic decision to close additional restaurants this year that are aging and located in underperforming trading areas.”

Tanner said the closures will help the company strengthen its macroeconomic forecasts as the brand expands in the coming years.

During the earnings call, Tanner said the company expects to open more stores in the coming years.

“By the end of 2024, we will have opened more than 500 new restaurants over the past two years and are confident of achieving increased growth in 2025 and the years to come,” Tanner said.

Shares of Wendy's fell on Wednesday after the fast-food burger chain missed sales expectations by the most in more than four years.

While the brand's sales came in above forecasts, the company reduced its growth outlook due to a “weaker category environment.”

RESTAURANT APOCALYPSE

Restaurant chains across the country are struggling financially.

The closures come after a number of other chains filed for bankruptcy this year, including Red Lobster, America's largest seafood chain, and Italian restaurant chain Buca di Beppo.

Restaurants blame changing consumer behavior for the closures as inflation hits shoppers.

Food prices are rising, with guests paying 4% more than in May last year.

With inflation continuing, diners prefer home-cooked meals rather than eating at chain restaurants.

Wendy's currently operates more than 7,200 worldwide.

The chain predicts that about 30% of future store openings will occur in the U.S., while the remaining 70% will open outside the country.