Wendy's Trims Underperforming Stores to Reinvest in High-Performance Growth

Wendy's (WEN) is accelerating a restructuring plan that includes closing up to 350 underperforming U.S. locations by 2026, aiming to boost profitability and refocus resources on high-performing franchisees. Interim CEO Ken Cook stated the closures—representing a "mid single-digit percentage" of the chain's 6,000 U.S. stores—will free capital for franchisees to reinvest in better-performing restaurants, a strategy expected to enhance efficiency and sales at nearby locations Wendy's To Close Up To 350 U.S. Restaurants Amid Turnaround Strategy. The move follows the closure of 240 stores in 2024 and 140 in 2023 due to declining performance, with U.S. same-store sales falling 4.7% in the latest quarter, lagging behind rivals like McDonald's and Burger King Wendy's To Close Up To 350 U.S. Restaurants Amid Turnaround Strategy.

The third-quarter 2025 financial results underscored the urgency. Net income dropped 12% to $44.25 million, driven by weaker margins at company-operated U.S. restaurants, reduced franchise royalty revenue, and higher asset impairments Wendy’s Q3 2025 profit falls as US store closures planned. Despite this, adjusted EBITDA rose 2.1% to $138 million, and international sales grew 8.6%, offsetting domestic declines. Cook highlighted progress from the "Project Fresh" turnaround plan, including a successful launch of Tendys chicken tenders, which sold out in some markets before formal advertising began Wendy’s Q3 2025 profit falls as US store closures planned.

Analysts remain cautious. RBC Capital Markets cut its price target to $9 from $10, citing expected closures of 300 U.S. locations and a 9.7% decline in ad spending in 2026. The brokerage noted that underperforming franchisee sites have dragged on sales, with company-owned stores outperforming franchisees by 400 basis points in Q3 Wendy's Faces Franchisee Store Closures, Decline in Ad Spending, RBC Says. Meanwhile, Truist Securities maintained a "Buy" rating, emphasizing Wendy's early-stage turnaround efforts and a 6.24% dividend yield as positives, despite the stock's 51% decline in 2025 Truist Securities reiterates Buy rating on Wendy’s stock amid turnaround efforts.

The closures align with a broader shift in strategy. Cook announced a focus on average unit volume (AUV) growth over new unit expansion in the U.S., reducing 2025 capital spending by $20 million and redirecting funds to digital upgrades and marketing Wendy’s signals shift to AUV growth and anticipates over 9% international net unit growth in 2025 amid Project Fresh rollout. International growth remains a bright spot, with over 9% net unit expansion projected in 2025 Wendy’s signals shift to AUV growth and anticipates over 9% international net unit growth in 2025 amid Project Fresh rollout. However, challenges persist: U.S. digital sales rose 14.9% year-over-year but still account for just 20.3% of the mix Wendy’s signals shift to AUV growth and anticipates over 9% international net unit growth in 2025 amid Project Fresh rollout.

Wendy's shares surged 11.66% in pre-market trading after Q3 results beat earnings and revenue forecasts, though the stock has fallen 47% year-to-date Wendy's (NASDAQ:WEN) Shares Gap Up on Strong Earnings. The company reaffirmed 2025 guidance, projecting adjusted earnings of $0.82–$0.89 per share and global systemwide sales declines of 3–5% Wendy's Analysts Cut Their Forecasts After Q3 Results. With a significant portion of its U.S. footprint at risk, the success of Project Fresh-centered on brand revitalization and operational efficiency-will determine whether Wendy's can reclaim its position in the fast-food landscape.