A sprawling Wendy’s franchisee that sought Chapter 11 chapter safety earlier this month might shut as many as 30 eating places over the subsequent few weeks as a part of a money collateral settlement, new courtroom filings reveal.
Meritage Hospitality Group, which operates 314 Wendy’s locations throughout 15 states, says it has already recognized 5 unprofitable shops that it deliberate to close down and vacate this weekend.
In a chapter docket filed late Friday, Meritage stated it’s searching for to cancel the leases and franchise agreements for the shops, which it has described as burdensome and pointless, because it seeks to restructure its operations.
The impacted Wendy’s eating places are situated in Virginia, Florida, Texas, and Oklahoma.
As of Saturday, the shops have been nonetheless listed as open on Google and showing on Wendy’s retailer locator, however cellphone calls to the shops went unanswered.
Quick Firm reached out to The Wendy’s Firm and Meritage Hospitality Group for remark.
Why are these Wendy’s shops closing?
Michigan-based Meritage Hospitality Group has sought to make use of money collateral for its day-to-day operations, a typical and infrequently essential technique for firms as they work by way of the Chapter 11 course of. Final week, a chapter choose authorised Meritage’s use of money collateral.
Nonetheless, as a part of an settlement with lenders, the franchisee stated in a courtroom submitting that it’s going to shut at the least 30 of its eating places which can be working at a loss. That determine is nearly 10% of Meritage’s whole fleet.
The shop closures are described in courtroom filings as “sufficient safety” for Meritage’s lenders in change to be used of the money collateral. Meritage owes considered one of its lenders greater than $135 million, courtroom paperwork present.
Which Wendy’s shops are closing?
The franchisee has recognized the primary 5 places that may shut, with the eating places situated in 4 states:
- 441 Market St, Gordonsville, VA 22942
- 1175 Dunn Ave, Jacksonville, FL 32218
- 301 School Ave, Levelland, TX 79336
- 2525 South Monroe Road Tallahassee, FL 32301
- 2420 W Principal St, Durant, OK 74701
The cut-off date recognized in courtroom paperwork for these shops was yesterday, September 25.
In line with the money collateral order, further shops will shut on a rolling schedule by way of October 16, with at the least 30 shops impacted in complete. The extra shops weren’t recognized.
It was not instantly clear what number of jobs may very well be impacted by these closures. Meritage initially stated it had meant to take care of its restaurant operations and proceed paying its roughly 9,000 staff throughout the chapter course of.
Is Wendy’s in hassle?
Wendy’s will not be having the perfect of years.
Along with considered one of its largest franchisees being in chapter, the fast-food burger chain has been closing hundreds of underperforming stores in a laborious turnaround effort.
Throughout its second quarter, Wendy’s noticed its U.S. same-store gross sales drop 7% because it has struggled to successfully talk its worth proposition in opposition to these of rivals resembling McDonald’s and Burger King.
Wendy’s CEO Bob Wright admitted in August that the model has fallen quick on marketing. Meritage Hospitality Group, in its Chapter 11 filings, has cited these broader challenges with the Wendy’s model as being one the drivers of its chapter.
Shares of The Wendy’s Firm (Nasdaq: WEN) have declined nearly 20% this yr.
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