The Wendy's Company (WEN) is known for square burgers, Frostys, and a cheeky personality that has long helped it stand out in the crowded fast-food world. But lately, the fast-food chain has been dealing with a much less appetizing problem: Diners are pulling back, value has become a bigger priority, and Wendy’s has struggled to keep sales moving in the right direction. Same-store sales have declined for six consecutive quarters, while a revolving door of CEOs has made the company's turnaround strategy harder to pin down. Now, one of its biggest U.S. franchisees has waved an even bigger red flag.
Meritage Hospitality, which operates 314 Wendy’s restaurants across 15 states, recently filed for Chapter 11 bankruptcy protection, citing pressure from weaker demand and deteriorating restaurant economics. The franchisee said store-level EBITDA plunged, hit by higher beef costs and aggressive discounting. There’s also another awkward detail — Wendy’s itself is Meritage’s largest unsecured creditor with about $24.9 million in deferred franchise fees.
