Wendy’s Strategic Shift: Optimizing Growth Amid U.S. Expansion Challenges

Wendy’s (WEN) has long been a bellwether for fast-food trends, and its recent moves reflect a nuanced strategy in the face of a “challenging” U.S. market. Contrary to headlines suggesting a pullback, the company is recalibrating its expansion playbook—closing underperforming locations while aggressively opening new, high-potential restaurants. This pivot, paired with bold technology investments, positions Wendy’s as a competitor to watch in an increasingly competitive landscape.

The Closures Aren’t a Retreat—They’re a Reset

In 2024, Wendy’s shuttered 140 underperforming U.S. locations, primarily those with average unit volumes (AUVs) below $1.1 million—well below the system’s $1.6 million average. This culling isn’t about shrinking; it’s about replacing weaker units with better sites. By 2028, the company aims to add 300 net new U.S. restaurants, targeting locations with AUVs of $2 million or more. The result: a leaner, higher-margin footprint.

This strategy mirrors broader industry trends. shows Wendy’s outperforming peers in recent quarters, driven by its focus on unit-level profitability.

Tech as the Engine of Growth

Wendy’s is betting big on technology to fuel scalability. In 2025, capital expenditures are set to double to $100–$110 million, with funds directed toward:
- Wendy’s FreshAi: A voice-activated drive-thru system designed to reduce wait times and errors, critical in a market where drive-thru efficiency drives customer satisfaction.
- Digital Infrastructure: Upgrades to mobile apps, loyalty programs, and self-service kiosks aim to boost order accuracy and retention.

These investments are already paying off. In 2024, digital sales surged to 25% of U.S. revenue, up from 18% in 2021. The company now sees digital tools as a “force multiplier” for both existing and new locations.

Financial Targets: Ambitious but Achievable

Wendy’s 2025 Investor Day outlined a clear financial algorithm: 3–4% annual net unit growth will drive 5–6% systemwide sales growth. By 2028, the global restaurant count is projected to hit 8,100–8,300, up from ~7,000 today, with the U.S. contributing ~60% of new units.

Crunching the numbers:
- U.S. Market: The 300 net new restaurants by 2028 would add ~4% annual growth, aligning with the company’s targets.
- Global Ambitions: Expansion in Canada, India, and the Middle East—where Wendy’s has ~25% lower saturation than the U.S.—offers untapped upside.

Risks and Opportunities

The U.S. market’s challenges—such as rising labor costs and shifting consumer preferences—remain real. However, Wendy’s is mitigating risks through:
1. Unit Quality: Prioritizing high-AUV locations reduces reliance on sheer volume.
2. Tech Leverage: Every $1 million invested in FreshAi or kiosks is projected to boost U.S. same-store sales by ~1–2% annually.

Conclusion: A Recipe for Sustainable Growth

Wendy’s isn’t backing down from the U.S.—it’s reinventing its presence. By closing 140 low-performing units in 2024 and replacing them with better sites, the company is targeting a $2 million AUV threshold, which would boost margins by ~5–7% per location. Combined with tech investments and global expansion, this strategy aligns with its 2028 goal of $8 billion in annual sales (up from $6.5 billion in 2023).

Investors should note that WEN’s stock currently trades at 23x 2025E EPS, a premium to MCD’s 28x but justified by its faster growth trajectory. If Wendy’s meets its unit and sales targets, this valuation could expand further. The takeaway? This isn’t a story of contraction—it’s a carefully orchestrated push to dominate in a crowded space.

In a market where execution matters most, Wendy’s is proving that sometimes, less is more—especially when “less” means fewer underperformers and more high-potential locations.