Wendy’s (WEN) could soon be making burgers for a billionaire.
Longtime Wendy’s investor and former chairman Nelson Peltz of Trian Partners has reportedly offered $1.4 billion to buy the struggling fast-food giant, according to an SEC filing.
Shares of Wendy’s rose 15% in early trading. The company’s market capitalization was $1.17 billion before the transaction.
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At 10:52:25 a.m. EDT. Open market.
A Wendy’s spokesperson did not respond to a request for comment. A spokesperson for Trian Partners did not respond to a request for comment.
Billionaire Peltz – although familiar with the operations – would essentially be buying into a dumpster fire.
After nearly two years of battling giants like McDonald’s (MCD) and Yum! Brands (YUM) Taco Bell, along with newcomers such as Shake Shack (SHAK), Wendy’s is poised to close a slew of restaurants.
“With one of its largest franchisees filing for bankruptcy in September (although contested by WEN given the early termination of the franchise agreement), we think investors are likely expecting higher than expected closures, but we admit that visibility on our side remains somewhat limited and there could still be a range of outcomes,” veteran restaurant analyst Andy Barish cautioned in a recent note.
“That said,” he added, “given that we believe there are likely other franchise operators in the system facing challenges related to leveraged balance sheets, higher interest rates and profitability pressures from rising meat, labor and construction costs (like many others in QSR), we believe it is prudent to moderate our development estimates and anticipate more potential closures over the next few years. “Next 6-12 months as the company works to strengthen its system.”
Meritage Hospitality Group, one of the largest Wendy’s franchise operators, with more than 300 locations, filed for Chapter 11 bankruptcy in September following severe pressure on its margins and a growing dispute with corporate headquarters. The company has reportedly launched plans to close at least 41 locations. Reports emerged this week that it could close as many as 60.
The high-profile bankruptcy has only added grease to the smoldering fire that forms the basis of the Wendy’s restaurant.
The franchisees had already closed their branches and were heading for the hills.
Buried in Wendy’s abrupt second-quarter earnings call was a mention that 289 locations closed in the U.S. during the first half of the year.
There are approximately 5,700 Wendy’s in the United States, and Barish estimates that the number of Wendy’s stores in the United States will be approximately 5,600 by the end of 2027.
The decision on how many additional locations will be closed rests with new CEO Bob Wright, who has made no secret of his view that Wendy’s needs to focus on more profitable locations.
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