Wendy’s Franchisee Files for Bankruptcy

One of the biggest franchisees of Wendy’s has sought Chapter 11 bankruptcy protection, facing challenges in attracting customers amid fierce competition from McDonald’s and Burger King.

Meritage Hospitality, which runs 314 Wendy’s locations as well as one Bojangles and five other restaurants across 15 states, announced on Thursday that it’s working to improve its financial health.

“The significant majority of Meritage’s restaurant portfolio operates under the Wendy’s brand, so the challenges facing the system have heavily influenced our financial situation,” Meritage stated.

Wendy’s has seen a decline in same-store sales for six consecutive quarters, as consumers increasingly gravitate towards McDonald’s for value or shift to Burger King, which has been enhancing its menu and customer service.

In August, Wendy’s lost its position as the second-largest burger chain in the U.S. to Burger King, ending a six-year run right behind McDonald’s.

During a recent investor conference, Meritage CEO Bob Schermer Jr. revealed that earnings before interest, taxes, depreciation, and amortization at the store level had plummeted 48% in 2025. He pointed out that surging beef prices and increased discounts at stores had negatively affected profit margins.

The company has experienced quite a bit of leadership turnover, with three new CEOs stepping in since longtime chief Todd Penegor left in 2024. This constant change has delayed turnaround efforts, to some degree.

Wendy’s current CEO, Bob Wright, acknowledged in August that the chain is “clearly not performing at our potential,” highlighting issues related to customer traffic, value offerings, and the economics for franchisees. He introduced a new five-point turnaround strategy.

Over the past three years, Wendy’s stock has lost two-thirds of its value and has declined by more than 16% this year alone.

Despite the bankruptcy filing, Meritage plans to keep its restaurants open during the restructuring process and will continue to pay wages and benefits to its 9,000 employees.

The franchisee estimates that its assets and liabilities fall within the $10 million to $50 million range.

Wendy’s franchise operation, Quality Is Our Recipe LLC, is the top unsecured creditor of Meritage, with a claim totaling $24.9 million for deferred fees.

To win back customers, the burger chain has recently sought to evoke nostalgia by announcing its plan to reintroduce its iconic bright yellow packaging in stores starting September 28.