Wendy’s will close hundreds of US stores due to declining sales

Fast-food giant Wendy’s plans to close hundreds of U.S. stores next year as part of a broader effort to revive its domestic business, which has been under pressure from slowing sales.

Interim CEO Ken Cook said during the company’s earnings call on Friday that a “mid-single-digit percentage” of its 6,011 U.S. restaurants are expected to close next year. A mid-single digit rate is about 4% to 6%, meaning the fewest number of closures would be 241 stores.

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This comes as Wendy’s executives said operations and sales “remain under pressure” and the company is “acting with urgency” to return sales growth at its U.S. stores.

In the last fiscal quarter, global sales fell 2.6% and sales at US locations fell 4.7%. The company attributed the decline in US sales largely to fewer customer visits, although this was partially offset by higher spend per order.

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However, the company said in its earnings call that it is “making meaningful progress on key actions to improve the customer experience” and that it is paying off at its U.S.-operated restaurants. Earlier this year, the company said it was working to simplify programming and execution.

Instead of adding more stores, the company is trying to focus on growing sales at each U.S. location. To achieve this, Wendy’s launched Project Fresh, a massive plan designed to improve performance, increase profits and ensure viability.

Wendy’s executives said operations and sales “remain under pressure.” (Justin Sullivan/Getty Images)

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Wendy’s story is not unique. In fact, the entire quick-service restaurant industry has come under pressure as core customers feel stressed by the higher cost of living, reducing their discretionary income. This has forced many industry giants to ramp up their promotions in an attempt to drive more traffic.

Instead of adding more stores, the company is trying to focus on increasing sales at each U.S. location. (Daniel Acker/Bloomberg)

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“With almost 40% of households having a lower income already retreating, recent QSR [quick-service restaurant] price cuts could signal a broader shift in the industry,” he said, adding that “brands are facing increasing pressure from value-conscious consumers, and if this trend accelerates we could see a realignment of pricing strategies across the industry.”