Fast food giant Wendy’s plans to close hundreds of its 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 percentage is about 4% to 6%, which means the least number of closures would be 241 stores.
FOX Business reached out to Wendy's for comment.
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This comes as Wendy’s executives said that its business and sales "remain under pressure" and that it is "acting with urgency" to return sales at its U.S. stores to growth.
In its latest fiscal quarter, global sales were down 2.6% and sales at U.S. locations fell 4.7%. The company blamed the drop in U.S. sales largely on fewer customer visits, though this was partially offset by higher spending per order.
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However, the company said in its earnings call that it is making "meaningful progress on key actions to enhance the customer experience" and that it is seeing this payoff in its U.S. company-operated restaurants. Earlier this year, the company said it was working on simplifying its programming and execution.
Rather than adding more stores, the company is trying to focus on increasing sales at each U.S. location. To do this, Wendy's launched Project Fresh, a major plan that was designed to improve performance, boost its profits and ensure viability.
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Wendy's story isn't unique. In fact, the entire quick-service restaurant sector has come under pressure as its core customers feel strained by higher living costs, which are shrinking their discretionary income. This has forced many industry giants to ramp up promotions in an effort to drive more traffic.
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Will Auchincloss, who serves as the EY‑Parthenon's Americas retail sector leader, previously told FOX Business that its consumer research points to the fact that Americans are beginning to adjust discretionary spending to offset rising costs for essential goods and services like food and housing. Restaurant spending, across all income cohorts, is the first to take a hit, he said.
"With nearly 40% of lower-income households already pulling back, recent QSR [quick-service restaurant] price cuts may be a signal of a broader industry shift," he said, adding that "brands are facing mounting pressure from value-conscious consumers, and if this trend accelerates, we could see a realignment of pricing strategies across the sector."
