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Why Wendy's Wants to Buy 400 of Its Own Bankrupt Restaurant Locations

A large franchisee filed for Chapter 11 bankruptcy in July.
Wendys sign

The parent company of Wendy's hopes to buy hundreds of bankrupt franchised locations in order to prevent them from being sold off.

The Wendy's Company wants the nearly 400 Wendy's restaurants operated by franchisee NPC International to remain Wendy's locations. But there's a problem: NPC International filed for Chapter 11 bankruptcy in July. NPC International operates more than 1,200 Pizza Hut restaurants and 385 Wendy's, the latter of which the bankrupt company announced plans to sell. (Related: 9 Restaurant Chains That Closed Hundreds of Locations This Summer.)

Now, The Wendy's Company itself appears poised to be the buyer. The corporation fears many of the impacted locations may not remain Wendy's restaurants if they are sold, instead being knocked down so the property can be used for other purposes. In a filing with the Securities and Exchange Commission, The Wendy's Company made clear that it did not plan to hold onto the hundreds of to-be acquired locations indefinitely. Instead, "several existing and new franchisees would be the ultimate purchasers of most of the NPC markets, with the company acquiring at most one or two markets."

For more, check out 7 Fast Food Chains Opening New Locations This Year.

In other words, the company is not trying to consolidate power. It just really wants the Wendy's restaurants currently in existence to remain as such. Overall, about 5% of the chain's more than 6,500 locations are corporately owned. That figure stands in marked contrast to rival McDonald's, where closer to 45% of the restaurant's locations are corporately owned.

Wendy's reported its highest global same-store sales growth in more than 15 years at the end of the third quarter. Revenue of $452 million also nudged out the $437 million earned the year prior, which lends credence to The Wendy's Company's actions.

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Steven John
Steven John is a freelancer writer for Eat This, Not That! based just outside New York City. Read more