Wendy’s surprised both customers and investors when it shared plans to close down around 300 restaurants by the end of the year.

The chain’s interim CEO, Ken Cook, explained the decision and the logic behind it during the fast-food chain’s third-quarter earnings call.

“We are working with our U.S. franchisees to evaluate each and every underperforming restaurant in our system from both a financial and a customer experience perspective and developing action plans for how to improve both,” he said.

“For some locations, it’s about making operational changes or deploying technology. For others, we’re improving productivity by aligning operating hours to better match demand, particularly in the morning and late-night dayparts.”

In some cases, however, more drastic steps are needed.

Cook believes that closing certain locations will be a positive for the strength of the chain and its franchisees.

“These actions will strengthen the system and enable franchisees to invest more capital and resources in their remaining restaurants,” he added.

Those investments include:

  • New kitchen equipment to ensure the highest-quality, best-tasting food.
  • Technology upgrades such as digital menu boards to enhance productivity and give teams more time to focus on hospitality.

“Consistent with what we’ve seen in our company-operated restaurants, we expect these actions to elevate the customer experience, increase AUVs and improve restaurant economics,” Cook shared.

Burger rivals have shut down restaurants, too

While Wendy’s is taking a corporate-driven approach to closing underperforming locations, some of the chain’s rivals are shutting down restaurants for various reasons. In some cases, those moves are driven by franchise problems. In other cases, corporate is making the decision.

  • Burger King
    Reason: Dozens of stores in Florida and Georgia affected due to a major franchisee (Consolidated Burger Holdings) filing for Chapter 11 bankruptcy. Some reports suggest hundreds more closures tied to underperforming franchisee locations.

    Source: Yahoo News

  • Red Robin
    Reason: Closing up to 70 underperforming restaurants to focus on stronger markets and improve overall profitability.

    Source: TheStreet

  • Wahlburgers
    Reason: Closing 79 franchise units, mostly inside Hy-Vee grocery stores, due to low sales and strategic retrenchment.

    Source: AS.com

  • McDonald’s
    Reason: Closing older, underperforming “Experience of the Future” stores to reinvest in modern, higher-performing locations. These are strategic portfolio optimizations rather than mass closures.

    Source: Flavor365

Wendy’s competitors are closing restaurant locations for various reasons.

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Why McDonald’s is closing locations

While McDonald’s has not struggled like many of the other chains on this list, it has still been shuttering locations.

“The primary reason is strategic optimization. For years, McDonald’s expanded aggressively, sometimes placing restaurants in locations that are no longer optimal. The most significant closures have been the hundreds of locations inside Walmart stores. As Walmart’s own business model has shifted towards grocery pickup and reduced foot traffic inside stores, these McDonald’s outposts have become less profitable.” shared Eat Healthy365.

The chain has also been leaning heavily into its “Experience of the Future” locations, which include the following features:

  • Double-Lane drive-thrus: Drive-thru sales now account for the vast majority of business. Upgrading to faster, more efficient drive-thrus is a top priority.
  • Digital integration: Locations must support mobile ordering, curbside pickup, and delivery services seamlessly.
  • Digital kiosks: Restaurants offer tablets for ordering, rather than requiring customers to place an order with an actual person.
  • Smaller footprints: New restaurants are often more compact and cost-effective to build and operate, focusing less on large dining rooms.

In addition to closing select restaurants, McDonald’s has refocused its efforts on delivering value for consumers.

“We heard our customers loud and clear on the need to deliver everyday value and affordability across their favorite items on our menu board. In September, we introduced Extra Value Meals or EVMs, a nationally advertised $5 Sausage McMuffin with Egg Meal and an $8 Big Mac Meal. And for the month of November, we’re back with a $5 Sausage Egg and Cheese McGriddles Meal and an $8 10-piece Chicken McNuggets Meal,” CEO Christopher J. Kempczinski shared during the chain’s third-quarter earnings call.