Wendy's Closes Low-Performing Locations to Focus Resources on Expanding Successful Outlets

Wendy's (WEN) is speeding up a restructuring initiative that will see as many as 350 underperforming U.S. restaurants shuttered by 2026, with the goal of improving profits and channeling resources toward top-performing franchisees. Interim CEO Ken Cook explained that closing these locations—about a "mid single-digit percentage" of the brand’s 6,000 U.S. outlets—will allow franchisees to reinvest in more successful stores, a move expected to drive greater efficiency and boost sales at nearby restaurants

. This decision comes after 240 stores were closed in 2024 and 140 in 2023 due to weak results, with U.S. same-store sales dropping 4.7% in the most recent quarter, trailing competitors like McDonald's and Burger King .

Financial results for the third quarter of 2025 highlighted the urgency of these changes. Net income fell by 12% to $44.25 million, impacted by slimmer margins at company-run U.S. locations, lower franchise royalty income, and increased asset write-downs

. Nevertheless, adjusted EBITDA climbed 2.1% to $138 million, and international sales advanced 8.6%, helping to counterbalance domestic weakness. Cook pointed to gains from the "Project Fresh" turnaround, including the successful debut of Tendys chicken tenders, which sold out in some areas even before official advertising began .

Analysts remain wary. RBC Capital Markets reduced its price target from $10 to $9, citing the anticipated closure of 300 U.S. stores and a projected 9.7% drop in advertising spending for 2026. The firm noted that lagging franchisee locations have weighed on sales, with company-owned outlets outperforming franchisees by 400 basis points in the third quarter

. Meanwhile, Truist Securities kept its "Buy" rating, highlighting the early progress of the turnaround and a 6.24% dividend yield as positives, despite the stock’s 51% drop in 2025 .

The closures reflect a broader strategic pivot. Cook revealed a shift toward growing average unit volume (AUV) rather than expanding the number of U.S. locations, cutting 2025 capital expenditures by $20 million and reallocating funds to digital improvements and marketing

. International expansion remains strong, with net unit growth expected to exceed 9% in 2025 . Still, challenges remain: U.S. digital sales climbed 14.9% year-over-year but make up only 20.3% of total sales .

Wendy's shares jumped 11.66% in pre-market trading after third-quarter results surpassed earnings and revenue expectations, though the stock is down 47% so far this year

. The company reaffirmed its 2025 outlook, forecasting adjusted earnings per share between $0.82 and $0.89 and a global systemwide sales decline of 3–5% . With a significant portion of its U.S. stores at risk, the outcome of Project Fresh—which centers on revitalizing the brand and improving operations—will be key to whether Wendy's can regain its standing in the fast-food sector.