Wendy's Franchisee Bankruptcy Filing
Major Wendy's Franchisee Meritage Hospitality Group Files For Chapter 11 Bankruptcy Protection
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Key Points
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Meritage attributed an 11.3% same-store sales decline in the final quarter of 2025 partly to unusual La Niña-related winter weather in the southern United States.
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The company said tariffs on South American beef contributed to its average beef costs rising 18.9% from the previous year.
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Meritage asked the bankruptcy court for permission to continue honoring Wendy’s gift cards and loyalty programs during the restructuring.
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Court documents say Meritage has between 1,000 and 5,000 creditors, with both its assets and liabilities estimated at $10 million to $50 million.
Meritage Hospitality Group, which operates 314 Wendy's restaurants across 15 states, filed for Chapter 11 bankruptcy on September 17, putting thousands of jobs at risk. The company says it will keep restaurants open and continue paying roughly 9,000 employees while it restructures, pending court approval Cincinnati.com.
Wendy's terminated Meritage's franchise agreements before the filing, citing about $147 million in unpaid fees and royalties. Meritage disputes the move and says its franchise rights are protected in bankruptcy. The chain is challenging whether Meritage can continue using the Wendy's brand Yahoo Finance.
Sales Collapse and Weather Woes Hit Meritage Hard
Meritage reported an 11.3% same-store sales decline in the final quarter of 2025, partly driven by unusual La Niña winter weather in the southern United States. The company saw store-level earnings plunge 48% and posted a $31.5 million loss in 2025. Revenue dropped 7.6% overall The Daily Record.
The franchisee blamed weak customer traffic, rising operating costs, and less effective Wendy's marketing for its struggles. Already facing headwinds, Meritage closed about 60 underperforming restaurants and changed or reduced breakfast service at additional locations Dispatch.
Tariffs Push Beef Costs Up Nearly 19%
Tariffs on South American beef hammered Meritage's bottom line. The company's average beef costs rose 18.9% from the previous year, a major hit for a restaurant chain built on burger sales. These higher input costs squeezed margins already under pressure from slowing sales The News-Messenger.
Wendy's Eyes New Operators for Affected Stores
Wendy's indicated that affected Meritage locations could be taken over by the company itself or transferred to new operators. The fast-food giant says it is working to protect customers and employees as the bankruptcy process unfolds Yahoo Finance.
Meritage asked the bankruptcy court for permission to continue honoring Wendy's gift cards and loyalty programs during restructuring. Court documents show the company has between 1,000 and 5,000 creditors, with assets and liabilities each estimated at $10 million to $50 million Cincinnati.com.
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