Major burger chain franchisee files for bankruptcy, putting over 300 locations at risk

A major Wendy’s franchise operator has filed for bankruptcy protection, putting hundreds of restaurants across the country under financial pressure. While the filing raises questions about the future of the locations, the company says customers should not expect immediate changes at its restaurants.

314 Wendy’s restaurants affected

Meritage Hospitality Group, based in Grand Rapids, Michigan, filed for Chapter 11 bankruptcy protection on September 17 in federal court in Michigan. The company operates 314 Wendy’s restaurants across 15 states, making it one of the largest franchisees in the fast-food chain’s U.S. system.

Meritage said it plans to continue operating its restaurants during the bankruptcy process and continue paying its approximately 9,000 employees.

Michigan is the company’s largest market, with 54 Wendy’s locations. It also operates dozens of restaurants in Georgia, Florida, Connecticut, Tennessee, and Oklahoma, along with locations in several other states.

Why did the company file for bankruptcy?

The bankruptcy follows financial difficulties and a dispute with Wendy’s. Court documents indicate that Wendy’s terminated Meritage’s franchise agreement on September 16.

Wendy’s says Meritage owes approximately $27.4 million in royalties and fees, along with another $119.5 million in continuous operations fees associated with restaurant closures. Meritage closed 60 underperforming Wendy’s locations late last year as part of its restructuring efforts.

Meritage has also pointed to rising costs, including beef prices, as a factor. The company reported that its average beef costs increased nearly 19% during the three months ending in June compared with the same period a year earlier.

What happens to the restaurants?

For now, Meritage says its Wendy’s locations will continue operating. However, the company said it expects to evaluate additional restaurant closures or sales as it restructures under Chapter 11.

The bankruptcy comes as Wendy’s itself faces declining sales and a broader effort to reduce underperforming locations across its restaurant network.

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