Starting out as a single restaurant in Columbus, Ohio, in 1969 when fast food was still a novelty on the American food scene, Wendy’s grew into one of the largest restaurant chains in the U.S. Throughout its history, and into the present, Wendy’s has positioned itself as a tried-and-true hamburger-and-fries-focused restaurant, but to compete with its more dominant sector-mates like McDonald’s and Burger King, it’s always done things a little bit differently. Its burger patties are square, it famously serves a melty, malty concoction called the Frosty instead of a milkshake, and the menu offers unique and even healthy fare like chili and baked potatoes as well as fat-laden monster sandwiches like the Baconator.
Forever an underdog because it’s been unable to reach the breadth or income level of McDonald’s, Wendy’s has shown signs of struggle in recent years. Will the chain created and curated by founder and spokesperson Dave Thomas so long ago get swallowed up by the fast food industry it helped normalize? It very well could. Here are all the things that could point to Wendy’s not being around forever.
The world’s first Wendy’s location is sadly no more, and so are a lot more Wendy’s stores as of late. While there are well over 6,000 Wendy’s locations open for business in the U.S. in 2024, only a few hundred of those are company-owned. And in a sign that the business might be suffering some problems, Wendy’s announced plans to close down more than 100 of its outlets in 2024. In the first three months of the year, it already shut down shops at a rate of one every three days.
The decision to abruptly close down such a substantial portion of its portfolio came on the heels of Wendy’s changing its mind about the future. In 2023, it walked back an aggressive plan to move more into food delivery. Some locales are now unable to secure their Wendy’s food in any way, which means things don’t necessarily bode well for Wendy’s even as it recalibrates and sets off on a plan to open new restaurants while simultaneously closing others (it’s one of the many fast food restaurants shutting down stores in 2024).
There’s a lot of money to be made in the fast food breakfast sector — McDonald’s dominates it with more than $2 billion in annual sales of its Egg McMuffin and other morning offerings. McDonald’s also pioneered a.m. fast food in the 1970s, and it’s been difficult for its competitors to cut into its business, particularly Wendy’s. The smaller burger chain has tried several times to launch a nationwide breakfast menu, and each time in the past, they’ve failed. Attempts in 1985, 2007, and 2012 all proved unpopular with customers and thus unprofitable. Wendy’s new breakfast menu finally debuted in 2020, and although it’s lasted for a company-record four years, the $20 million, heavily-advertised gamble hasn’t fully paid off yet.
In 2024, Wendy’s CEO Kirk Tanner pledged to spend another $25 million over the next year to make breakfast stick, which he claims the chain’s customers enjoy. “Breakfast remains an incredibly important daypart,” Tanner said in an earnings call (via RetailWire). “It is highly profitable, and we have not yet reached our potential.” Many gains in breakfast can be attributable to a bargain-priced, low-profit $3 item bundling promotion, while Wendy’s overall missed its second quarter earnings projections by $7 million. Breakfast may be a modest success, but it’s not enough to take Wendy’s to the next level of fast food supremacy.
There are slightly more than 7,000 Wendy’s locations in the United States. A scant 400 or so are owned and operated by Wendy’s itself, leaving the remaining 6,600 to be operated by franchisees. In this type of structure, individual proprietors pay substantial fees to the parent company for the right to sell its products and use its imagery, and then profits are split between the two entities. Such a model lets franchisees function like small business owners but with a safety net of a nationally advertised, well-known brand. But when those franchised locations fail or close, the individual proprietors suffer the financial consequences while the restaurant brand suffers a hit to its reputation.
Nearly ¾ of Wendy’s franchisees own and run 10 restaurants or less. If one of those eateries goes under, Wendy’s on the whole can absorb the blow. When one of its bigger operators goes out of business, it’s potentially a huge financial loss for Wendy’s at large, and it could be a harbinger of future issues, too. In late 2023, the Starboard Group filed for bankruptcy protection, citing prohibitively expensive business costs and interest rates. Just before the declaration, Starboard shut down nine of its 61 Wendy’s franchises. Such a business decision likely means many more of that restaurant group’s Wendy’s outlets will close down, too.
Most of the most famous fast food brands started in the United States before establishing themselves overseas. Collectively, the 10 biggest American quick-serve restaurants operate 66,000 outlets outside of the U.S. While the domestic fast food industry could become saturated sooner rather than later, the biggest opportunities for growth are thus everywhere else. Unfortunately for Wendy’s, expansion into some of the most particularly promising and lucrative areas abroad will be challenging, if not outright impossible.
Only ⅓ of all McDonald’s locations are in the U.S.; more than 80% of Wendy’s operate stateside. Wendy’s trails the competition in part so badly because it’s hamstrung by legal rulings from opening restaurants in Europe. Collectively, the 27 member nations of the European Union represent the biggest economic market in the world. Wendy’s tentatively opened a few stores in Germany, Belgium, the Netherlands, and Luxembourg in the 1970s and 1980s, but they flopped and closed down. Meanwhile, a Dutch restaurateur opened an eatery called Wendy’s in 1988 and trademarked the name in 1995. The U.S. Wendy’s and the European Wendy’s have engaged in many court battles — but the European Wendy’s always emerges victorious as the rights-holder. The more famous Wendy’s keeps trying to set up shop in Europe, opening some locations in the non-E.U. United Kingdom in recent years and securing agreements to try out Ireland and Romania.
In 2024, Wendy’s publicly floated a plan to change its pricing structure. Whether it was a publicity stunt purposely staged to get people talking online about the fast food brand, or if that virality was some negative unwanted attention over a very real business plan, the whole episode is indicative of a company that might be flailing. Wendy’s unveiled its worst idea ever, theoretically, in early 2024: dynamic, or surge pricing. Similar to what ride-share services like Uber do, Wendy’s flirted with charging customers more during its most consistently busiest hours. “Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing,” Wendy’s CEO Kirk Tanner said in a February 2024 earnings call (via NPR). Tanner was speaking mainly about the chain’s rollout of digital menus, which can be altered at any time — Wendy’s can even change the prices of its fare.
Shortly after the earnings call highlight received a lot of media attention, Wendy’s had to publicly explain itself. The company had internally discussed lowering prices on breakfast items during less busy times of the day, and claims to have never considered raising prices.
To the big companies, the ones that play around with hundreds of millions if not billions of dollars and track their financial health by constantly examining the fluctuations of its stock price, nothing matters more than growth. Revenues, and the value of the stock, need to be consistently moving in a healthy and upward fashion. If a fast food mega-chain’s revenues are growing, but only in small amounts, that’s almost as bad as stagnation or a decline. In recent financial periods, Wendy’s has enjoyed upticks in revenues but they’re so small that they worry investors. Paired with data that suggests fewer overall customer visits to Wendy’s, it could spell a dark future for the burger chain.
Analysts predicted that Wendy’s could expect to enjoy a 6% rate of growth in 2024, notes BNN Bloomberg. But after looking at its figures following the second quarter of the year, the restaurant company announced that its sales would rise by somewhere around 3% to 5%. As far as customers, rates were down by 2%, suggesting that diners with less income weren’t going to Wendy’s as often as they once did while customers with more income were dining there more often but spending less money than they once might have.
By and large, lawsuits are just plain bad for business. Not only do they eat up precious company resources in the form of legal fees and potentially large settlement payouts in the event of a loss, but they also can profoundly and negatively impact standard operating procedure, which is to say nothing of the negative press and customer ire that may transpire. In recent years, Wendy’s has faced a number of courtroom challenges over marketing, food, and health issues. In 2023, Wendy’s emerged victorious in a class action lawsuit accusing the chain of false advertising, alleging that its actual products didn’t resemble at all the appetizing burgers shown in photos in commercials and on its website. Wendy’s reached a financial settlement in another class action suit filed by ex-employees who alleged that the company broke Illinois state laws by collecting biometric information from its workers without their consent. The company agreed to pay out $18 million in damages.
In 2024, the parents of 11-year-old Aspen Lamfers filed suit against Wendy’s, alleging that their daughter’s consumption of a Biggie Bag in 2022 led her to contract an E. coli infection. After experiencing stage three kidney failure, Lamfers endured permanent and profound neurological damage.
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