One Of America's Biggest Fast Food Chains Is Closing Hundreds Of Restaurants

Fast food has been having a rough few years and now the downturn has hit one of America's most popular chains. This year has seen a string of headlines that sum up the woeful state of the industry, with Jack-in-the-Box and Starbucks closing hundreds of stores and KFC, Del Taco, and Pizza Hut all reporting drops in sales. This follows what was a brutal 2024 for sit down chain restaurants, with multiple popular chains going bankrupt within months of each of other. And now Wendy's is joining the long list of chains that are shuttering locations.

The announcement came from interim Wendy's CEO Ken Cook during the company's Q3 earnings conference call. While not being overly specific, Cook says that Wendy's is looking to close a "mid single-digit percentage" of its total stores, according to CNN. Wendy's ended 2024 with just over 5,900 locations in the U.S., so that would imply around 300 stores could be closing soon. This follows on the heels of a smaller retraction last year, when the chain closed 140 locations. Cook expressed optimism that Wendy's as a whole is healthy, and that a smaller percentage of underperforming stores were dragging down the brand. The chain is also looking to renovate stores and add new technology to help improve sales in these struggling locations. Last month, Wendy's also announced a new brand overhaul called "Project Fresh" in a bid to help turn things around.

The closure of Wendy's locations isn't surprising given the year the brand has had, and the state of the market as a whole. During the earnings call the chain revealed sales in the U.S. have dropped 3.4% over the past year. Concern about the chain has also led to its stock price plummeting around 50% this year. Wendy's has struggled to retain leadership, with several executives departing recently, including former CEO Kirk Tanner, who shocked the company by leaving after just 18 months. And while fast food as a whole is struggling, Wendy's also underperformed its rivals. McDonald's sales grew 2.5% last year, while Burger King's grew 1.5%.

Customers are cutting back on fast food spending as price increases have made it less of a value and concerns about an economic downturn have lingered. But the chain has unique struggles, with Wendy's breakfast menu in particular underperforming. As a brand that emphasizes quality over price compared to its rivals, it has also been hard hit by cash-strapped customers who are looking for more value.

Interestingly, Wendy's Project Fresh overhaul appears to be more about efficiency than food, with plenty of talk about optimizing labor and investing in digital capital to make individual stores more profitable. And Wendy's locations are struggling in this regard, doing only half of McDonald's per-unit sales. But will a "brand refresh" fix that, or is the problem something bigger?