INQUISITR.COM / News & Politics

Wendy’s To Sell 640 Restaurants To Franchisees

By Dustin Wicksell
Published on: 01:46 PST, May 7, 2015

Fast food chain Wendy’s announced plans on Wednesday to sell off 640 of its restaurants in a bid to generate cash and reduce its long-term expenses.

The burger chain has previously detailed efforts to sell some of its company-owned restaurants, USA Today reports, as a way to increase the number of locations operated by franchisees. Wendy’s will sell off 380 restaurants this year, which includes 100 locations in Canada, and will complete the sale of 260 more in 2016. Wendy’s expects the plan to not only “significantly reduce future capital expenditure requirements,” but also to generate between $400 million and $475 million in pre-tax revenue.

A private equity group will be working with Wendy’s to facilitate the sale, according to CNN Money, which will be directed at currently operating franchise owners. Wendy’s stock rose 7.2 percent on announcement of the plan, a move that will strengthen the chain’s franchisees, according to CEO Emil Brolick.

“Going forward, we intend to buy and sell restaurants opportunistically to act as a catalyst for growth by further strengthening our franchisee base, driving new restaurant development and accelerating Image Activation adoption,” he noted.

Wendy’s will also reportedly sell off its bakery in Zanesville, Ohio. The sale of that asset, which contributed roughly $62 million to revenue in 2014, is likely to be concluded this month.

News of the sale comes amid a first-quarter earnings report for Wendy’s that beat Wall Street expectations. The chain reported earnings of $27.5 million, or seven cents a share, while Wall Street had predicted only five cents per share. A year ago, Wendy’s posted first-quarter earnings of $46.3 million, or 12 cents a share. Revenue fell 10.9 percent to $466.2 million from this time last year, a factor attributable to the interim sale of Wendy’s restaurants. Last year, 56 Wendy’s locations were acquired by NPC International, the world’s largest franchisee, as the Inquisitr previously reported.

At the end of 2014, Wendy’s operated a total of 6,515 restaurant locations worldwide. The company plans to add another 1,000 locations by 2020, excluding closures, although Wendy’s itself only owned 943 of its restaurants at the end of March. The number three burger chain in the U.S., Wendy’s launched a program in 2012 aimed at revamping its image, which included a new logo alongside a renovated menu. The decision to shed 640 restaurants is part of an initiative to reduce ownership and its attendant costs alongside Wendy’s corporate renovation.

[Photo by Spencer Platt / Getty Images]

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