Meritage Hospitality Group, one of the largest Wendy's franchisees in the United States, will close at least 30 of its restaurants as part of a Chapter 11 bankruptcy restructuring, according to court filings. The Michigan-based company, which operates 314 Wendy's locations across 15 states, has already identified five unprofitable stores that it planned to shut down and vacate. The closures represent nearly 10% of Meritage's entire restaurant fleet.
The first five locations slated for closure are spread across four states: Gordonsville, Virginia; Jacksonville and Tallahassee, Florida; Levelland, Texas; and Durant, Oklahoma. The closing date identified in court documents for these stores was September 25. Additional restaurants will close on a rolling schedule through October 16, though the franchisee has not yet identified those locations. As of the weekend, the five named stores were still listed as open on Google and appeared on Wendy's store locator, but phone calls to the restaurants went unanswered.
The closures stem from a cash collateral agreement Meritage reached with its lenders. A bankruptcy judge approved the company's use of cash collateral for day-to-day operations last week, a common strategy for businesses navigating Chapter 11 proceedings. In exchange for access to that cash, Meritage agreed to shutter at least 30 restaurants operating at a loss. Court filings describe the closures as «adequate protection» for the company's lenders. Meritage owes one of its lenders more than $135 million, according to court documents.
Meritage initially said it intended to maintain its restaurant operations and continue paying its roughly 9,000 employees throughout the bankruptcy process. It remains unclear how many jobs will be affected by the closures. The company is seeking to cancel the leases and franchise agreements for the identified stores, which it has described as burdensome and unnecessary as it works to restructure its operations.
The franchisee's financial troubles come amid a difficult year for the Wendy's brand. The fast-food burger chain has been closing hundreds of underperforming stores as part of a broader turnaround effort. During its second quarter, Wendy's reported a 7% drop in U.S. same-store sales, reflecting struggles to communicate its value proposition against competitors such as McDonald's and Burger King. CEO Bob Wright acknowledged in August that the brand has fallen short on marketing.
Meritage cited these broader challenges with the Wendy's brand as one of the drivers behind its bankruptcy filing. Shares of The Wendy's Company have declined almost 20% this year. The closures are part of a growing pattern of consolidation and retrenchment in the fast-food industry, as chains grapple with shifting consumer preferences, rising operational costs, and intensifying competition for value-conscious diners.
The bankruptcy proceedings and store closures are ongoing, and additional locations could be identified in the coming weeks. The company has not provided a full list of the remaining stores slated for closure beyond the initial five. Court documents indicate that the closures will continue through mid-October, with at least 30 restaurants affected in total.