Wendy's Largest Franchisee Files for Bankruptcy, Plans to Close Up to 30 Restaurants
Meritage Hospitality Group, a major Wendy's franchisee, has filed for Chapter 11 bankruptcy protection and plans to close as many as 30 restaurants. The closures are part of an agreement with lenders.
Meritage Hospitality Group, which operates 314 Wendy's restaurants across 15 states, has filed for Chapter 11 bankruptcy protection and intends to close up to 30 underperforming locations. This move is part of a cash collateral agreement with the company's lenders.
The franchisee has already identified five restaurants slated for closure on September 25. These locations are situated in Virginia, Florida, Texas, and Oklahoma. The remaining closures are expected to occur on a rolling basis through October 16.
Meritage sought court approval to use cash collateral for its day-to-day operations during the bankruptcy proceedings. Lenders agreed to this in exchange for the franchisee closing unprofitable stores. Meritage owes one lender over $135 million, according to court documents.
The Wendy's parent company has faced industry challenges this year. In its second quarter, Wendy's saw U.S. same-store sales decline by 7%. CEO Bob Wright acknowledged in August that the brand's marketing efforts have fallen short against competitors like McDonald's and Burger King. The Wendy's Company's stock has fallen nearly 20% year-to-date.