Wendy's Sales Fall as It Eyes Meritage Stores

Wendy's is reaching for the keys to restaurants it once handed to franchisees. In its third quarter 2026 results, the burger chain reported a 7.6% slide in U.S. systemwide sales and a letter of intent to take over up to 163 restaurants from Meritage Hospitality Group, according to its SEC filing ^[1].

Meritage, which ran 314 Wendy's locations across 15 states, filed for bankruptcy on September 17, QSR Magazine reported ^[3].

How we got here

• Global systemwide sales dropped 5.9%, since 3.5% growth abroad could not make up for the U.S. decline ^[1].
• U.S. same-restaurant sales fell 5.7%, and GuruFocus, summarizing the earnings call, said traffic sank 11.9% while average checks rose 6.2% ^[1][2].
• Wendy's finished the quarter with 5,711 U.S. restaurants, versus 5,979 a year before, and has a net loss of 258 U.S. locations so far this year ^[1].
• Wendy's says Meritage owes it about $146.9 million in royalties and other charges, and Meritage disputes Wendy's attempt to end its franchise deals ^[3].

But the purchase is far from final. The filing says it still needs a definitive agreement and court approval, and better or higher offers can top it ^[1]. Meritage has already shut 33 Wendy's units since filing and must close another 20 to 60 by November 13 under a court-approved deal, QSR reported ^[3]. Wendy's carries its own strain: its net debt ratio stands at 5.2 times, with $430 million of debt due in March 2028, per the call summary ^[2].

What it means for you

For owners of fast-food buildings leased to franchisees, the operator's finances matter as much as the brand on the roof. Before its filing, Meritage used sale-leaseback deals, the same trades that create many net-lease properties, and its closures show leases being shed when an operator cracks ^[3]. A yardstick: the 10-year Treasury yielded 4.86% on November 6 ^[4], so a $1 million building must earn $48,600 a year in rent, by our math, just to match a government bond. Any yield above that is pay for tenant risk, and falling store traffic raises that risk.

Zoom out

Wendy's is a landlord too: it collected roughly $58.5 million in franchise rental income in the quarter, up from $57.3 million, by our math from the filing's figures ^[1]. It also booked a $9.1 million rise in doubtful accounts tied to royalty deferrals and overdue franchisee bills, the call summary showed, a sign franchisee stress is reaching the parent ^[2].