Wendy's store closures may be just the beginning, analyst warns

Brian SozziWed, October 14, 2026 at 1:35 PM UTC

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Don't be surprised if your local Wendy's soon turns off its grills for one final time.

After nearly two years of struggles competing with the likes of behemoths McDonald's (MCD) and Yum! Brands' (YUM) Taco Bell, plus upstarts such as Shake Shack (SHAK), Wendy's may be on the cusp of creating a fresh wave of restaurant closures.

"With one of its largest franchisees filing bankruptcy in September (although contested by WEN given prior termination of franchise agreement), we think investors likely expect closures to tick higher than expected, but we admit visibility on our side remains somewhat limited and there could still be a range of outcomes," veteran restaurant analyst Andy Barish warned in a note on Wednesday. "That said, given our view that there are likely additional franchise operators in the system facing challenges with leveraged balance sheets, higher interest rates and profitability pressures from higher beef, labor & build costs (like many others in QSR), we think it is prudent to moderate our development estimates and bake in more potential closures over the next 6-12 months, as the company works to strengthen its system."

Meritage Hospitality Group, one of Wendy's largest franchise operators, with more than 300 locations, filed for Chapter 11 bankruptcy protection in September following severe margin pressures and an escalating dispute with corporate headquarters. The company has reportedly initiated plans to shutter at least 41 locations, with more potentially on the way.

The high-profile bankruptcy only added grease to the smoldering fire that is the Wendy's restaurant base.

Franchisees had already been closing their locations and heading for the hills.

Buried inside Wendy's brutal second quarter earnings call was a mention that 289 locations closed in the US during the first half of the year.

There are about 5,700 Wendy's in the US.

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Barish estimates the Wendy's US store base will be around 5,600 by the end of 2027.

The decision on how many more locations will be closed falls on new CEO Bob Wright, who hasn't hidden his view that Wendy's needs to focus on more profitable locations.

Wright officially took over as CEO on May 21, adding to the yawning list of executive turnover at the fast food chain over the past two years. He is a seasoned fast food exec who spent the previous five years fixing Potbelly as CEO. Wright's appointment marked a return to Wendy's, where he previously served in several senior leadership roles, including COO.

Wright has his work cut out for him in saving Wendy's beyond tightening up the store base count.

Wendy's has posted six straight quarters of same-store sales declines, per Yahoo Finance AlphaSpace analysis.

"We think the right leadership is in place with CEO Wright given previous turnaround experience and history with the Wendy's brand as COO," Barish said. "The company also recently hired a new CMO, Tariq Hassan who joined in August from MCD. Clearly, a heavy lift ahead for WEN as the quick-service restaurant environment remains challenging, and a turnaround will take time, but we like what we've heard so far from the new team about the initial approach and look forward to hearing more about the strategy as we learn more with the 3Q report."

Brian Sozzi is Yahoo Finance's Executive Editor, host of the Sozzi Unleashed morning show and the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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Source: “AOL Money”