Wendy's to close hundreds of restaurants in the US

Wendy's domestic same-store sales declined 4.7% in the third quarter. This outperformed its quick-service burger competitors, McDonald's, which grew 2.4%, and Burger King, which grew 3.2%. Wendy's cited commodity and labor inflation, as well as declining traffic, for the difficult quarter.

During the company's earnings call Friday morning, interim Chief Executive Officer Ken Cook said the company is "working diligently" to return the domestic system to competitive sales growth. He further stated that the Project Fresh initiative has so far strengthened the performance of company-operated restaurants and has performed "significantly better" than the overall system.

Wendy's is also focusing on its operations and increasing its investment in training to improve the customer experience, which Cook said has yielded "measurable results" at company-operated restaurants so far.

Perhaps the biggest takeaway from Wendy's earnings report is its "System Optimization" column, which Cook described as "having the right restaurant presence to maximize profitability." Wendy's is evaluating each underperforming restaurant in its domestic system from both a "financial and customer experience" perspective. Some of these restaurants may improve with the use of technology or increased productivity, while others are at risk of closure. Wendy's expects to complete its system evaluation in the next few months, and "some restaurants" will be closed starting later this year and into 2026.

Cook estimates the number of restaurants closing will be in the "mid-single digits," equivalent to approximately 200 to 300 restaurants.

"We're talking about net unit growth. Gross unit growth is still on track," he said. "It's about taking a long-term view, looking ahead, and asking ourselves, 'Three years from now, what decisions would we want to be making?'"

He added that it's also about improving restaurant-level economics. Cook said that by optimizing the system and focusing on strong restaurants, the customer experience should improve, "which will ultimately drive demand."

Wendy's Third Quarter Figures

• Global system-wide sales were $3.5 billion, down 2.6% from the previous year.

• International system-wide sales increased 8.6%, with growth across all regions.

• International same-store sales increased 3%.

• Domestic sales declined 4.4%.

• Domestic same-store sales declined 4.7%.

• 54 new restaurants opened, bringing the total to 172 at the end of the third quarter.

• Net income was $44.3 million, and adjusted EBITDA increased 2.1% to $138.0 million.