You don't see the name Meritage on the sign. You see Wendy's. But behind 314 Wendy's restaurants in the US was one Michigan company, and in September it filed for bankruptcy.
Who is Meritage?
Meritage Hospitality Group, based in Grand Rapids, started life running hotels. Over the years it became one of the largest Wendy's operators in the country, with restaurants across the Midwest and the Southeast, plus a Bojangles and five Morning Belle breakfast spots.
What went wrong
Wendy's itself has had a rough run: six straight quarters of falling sales at existing restaurants, including a 7% drop last quarter. In August, Burger King pushed it out of the No. 2 spot among US burger chains. Beef got more expensive. Meritage's store-level profit fell 48% last year, and it owes about $150 million to City National Bank, which declared the loan in default.
Meritage put it plainly: because most of its restaurants are Wendy's, "those system-wide pressures have had a significant impact on the Company's financial position."
The closures
Meritage had already closed about 60 weak restaurants before filing. Since filing, 33 more have gone, 20 in September and 13 in October, a condition its lenders set for letting it keep using cash. Now it has asked the court to close at least 20 and up to 60 more, through 13 November. No list of locations has been made public yet.
Add it up and Meritage could lose nearly a third of its 314 restaurants.
What Wendy's says
Wendy's told Fast Company it is "focused on keeping as many stores open as possible" and noted that no specific locations have been named. Meritage says the same goal: keep as many open as it can, and turn the brand around.