Wendy’s operator with 314 locations files for bankruptcy
One of the biggest Wendy’s franchise operators in the U.S. is officially in bankruptcy, and the problem goes beyond one struggling restaurant group. Meritage Hospitality Group, which operates 314 Wendy’s locations across 15 states, filed for Chapter 11 bankruptcy protection Thursday, pointing to prolonged weakness in the Wendy’s brand and mounting financial pressure.
The good news for anyone with a Baconator on the calendar is that the restaurants are expected to stay open during the restructuring. Meritage also says it plans to keep paying its roughly 9,000 employees their wages and benefits, subject to court approval.
The numbers are bad
Meritage says it spent more than a year working with its lenders and Wendy’s before deciding that a court-supervised restructuring was the best way forward. And the numbers show why. Store-level earnings before interest, taxes, depreciation, and amortization dropped 48% in 2025, according to CNBC. Higher beef prices and increased reliance on discounts squeezed the franchisee' finances at a time when Wendy’s itself has been trying to get customers back through the doors.
Meritage's court filings put both its assets and liabilities somewhere between $10 million and $50 million. Wendy’s franchising arm, legally known as Quality Is Our Recipe LLC, is Meritage's largest unsecured creditor, with a $24.9 million claim tied to unpaid franchise fees.
It all goes back to Wendy’s struggling
Meritage's bankruptcy is happening against the backdrop of a rough stretch for Wendy’s. U.S. comparable restaurant sales fell 7% in the second quarter, following a 7.8% drop in the first quarter. That marked six consecutive quarters of declining same-store sales, according to CNBC.
The company also cut its quarterly dividend in half and withdrew its full-year financial outlook in August as new leadership works on a turnaround. Investors have also felt the pain, as Wendy’s shares have lost roughly two-thirds of their value over the past three years.
For franchisees like Meritage, that kind of prolonged sales weakness creates a particularly nasty equation. When customers pull back, operators still have to deal with labor, food, rent, and other operating costs. Throw in more expensive beef and heavier discounting, and the margins can get very thin.
What happens to the 314 Wendy’s?
For now, business as usual is the plan. Meritage expects debtor-in-possession financing, combined with cash generated from its restaurants, to fund operations and cover its obligations during the restructuring.
The company also operates one Bojangles restaurant and five locations under independent brands, although Wendy’s makes up the overwhelming majority of its portfolio.
