Wendy’s Franchise Fight Raises a Bigger Question: Why Aren’t Franchisees Fighting Harder to Make the Brand Relevant Again?

 

A franchise agreement should be more than a license to display a familiar logo. It should be an investment in a brand that continually earns consumer attention, delivers compelling food, justifies its price, and gives customers a reason to return according to Steven Johnson, Grocerant Guru® Founder, at Tacoma, WA based Foodservice Solutions®.

Yet the Chapter 11 battle involving Wendy’s and one of its largest franchisees, Meritage Hospitality Group, raises a question that reaches well beyond bankruptcy court: Why are franchisees spending so much energy fighting over which restaurants to close when the industry needs an equally serious fight over how to make the restaurants worth visiting in the first place?

According to the supplied report, Meritage entered Chapter 11 after a difficult financial period, with additional restaurant closures under consideration and a dispute with Wendy’s over franchise terminations, potential damages, and which underperforming locations should shut down. Meritage’s restructuring team argues that keeping deeper-loss restaurants open undermines the purpose of its closure program. Wendy’s, meanwhile, argues that its preferred closures would better serve the overall restaurant portfolio.

Both parties have financial arguments to make. But from the perspective of the Grocerant Guru®, the larger strategic issue is what happens when a legacy brand’s consumer proposition fails to generate enough sales to support the economics of the franchise system.

Closing restaurants can reduce losses. It does not, by itself, rebuild consumer relevance.

The real question is whether franchisors and franchisees are working together aggressively enough to create more reasons for consumers to choose the brand, more often, at a price they believe is worth paying.

The numbers tell a story beyond bankruptcy

The figures in the supplied report illustrate the challenge facing Meritage and the broader strategic question facing Wendy’s.

The report states that Meritage was closing 41 additional restaurants across five groups, following 60 earlier closures. The 41 locations in the current closure process reportedly averaged $1.15 million in annual sales while losing approximately $127,000 per restaurant over the preceding 12 months.

Wendy’s proposed alternative list reportedly averaged $1.07 million in annual sales and lost approximately $114,000 per restaurant over the same period. The report also puts Wendy’s national average annual restaurant sales at approximately $2 million through 2025.

Those figures are reported numbers, not independently audited conclusions presented here. Nevertheless, the gap deserves attention.

If the figures are comparable, the restaurants under discussion are generating substantially less revenue than the reported systemwide average. That is a signal to investigate location economics, local competition, operating execution, consumer demand, and the strength of the brand proposition in each market.

The figures alone do not prove that Wendy’s brand messaging, food, pricing, or service caused those restaurants to underperform. Restaurant-level results can also reflect occupancy costs, labor expenses, traffic patterns, management, competition, and other market-specific factors.

But the strategic question remains: When a restaurant generates substantially less sales than the system average, what is the plan to make it more relevant to the consumer before the only remaining plan is to close it?

That question deserves just as much attention as the closure schedule.

1. Brand messaging: Familiarity is not the same as relevance

Wendy’s has a recognizable brand, a distinctive square hamburger, a long-standing fresh-beef message, and a history of irreverent advertising. Those are assets. But legacy brand equity is not a permanent guarantee of consumer preference.

Consumers do not buy a brand’s history. They buy what the brand delivers today.

Wendy’s own management acknowledged the need for change when it introduced Project Fresh on October 9, 2025. The plan called for strengthening brand positioning, improving marketing effectiveness, assessing the U.S. restaurant system, elevating the customer experience, and prioritizing average unit volume growth. The company specifically identified a need to connect more effectively with the next generation of customers..

That announcement is significant. It demonstrates that brand relevance and restaurant productivity are not simply complaints raised by struggling franchisees; they are issues Wendy’s corporate leadership has publicly identified as priorities.

The performance numbers add urgency. Wendy’s reported U.S. same-restaurant sales declined 5.6% for full-year 2025, following growth of 1.4% in 2024 and 3.7% in 2023. U.S. franchised restaurant average unit volume also declined, from approximately $2.086 million in 2024 to $1.984 million in 2025..

These results do not establish that advertising or messaging alone caused the decline. They do establish that a recognized national brand experienced a meaningful reversal in sales momentum.

The question for franchisees is straightforward: Are they getting the brand-building, marketing, menu innovation, and customer traffic support they need to compete effectively in their own markets?

Franchisees should demand measurable answers, not simply more promotional calendars.

They should ask corporate leadership to demonstrate which campaigns generate incremental visits, which messages convert younger customers, which promotions bring in new customers rather than discount existing purchases, and which marketing investments produce sustainable increases in restaurant-level sales.

A franchisee paying royalties and contributing to marketing funds should expect more than brand awareness. The objective is to generate profitable transactions.

2. Product: Does the menu fit the way consumers eat today?

The burger business has changed. Consumers still buy burgers, but they also compare chicken, snacks, beverages, breakfast, customizable meals, delivery options, and food that fits a particular occasion.

That is where the Grocerant Guru® perspective becomes important. Consumers increasingly construct meals across multiple channels and formats. A restaurant is not competing only with the burger restaurant across the street. It competes with convenience stores, supermarket prepared foods, delivery platforms, and other destinations offering quick, portable meal solutions.

The National Restaurant Association's 2025 off-premises research reported that nearly 75% of restaurant traffic occurred off-premises, including takeout, delivery, and drive-thru occasions. Its research also identified convenience, quality, and price as important considerations when customers choose off-premises meals..

That is a major consumer behavior signal. A brand must deliver more than a recognizable product. It must make the product easy to purchase, transport, eat, and justify economically.

Wendy’s has taken steps in this direction. In February 2025, the company outlined plans to expand chicken and beverage offerings, strengthen its Biggie Bag value platform, improve loyalty engagement, and continue breakfast innovation. Restaurant Dive reported that Wendy’s SpongeBob-themed Krabby Patty promotion produced a 20% same-store sales lift at its peak, according to company commentary.

That promotion offers an important lesson: a distinctive product-and-marketing combination can generate a measurable traffic response. It does not prove that every promotion will work or that the effect will persist after the promotion ends. It does show why franchisees should insist on a pipeline of relevant products and compelling reasons to visit.

Three product questions franchisees should push corporate leadership to answer:

·       Which menu innovations produce repeat purchases and incremental traffic, rather than a brief promotional spike?

·       How quickly can local operators test products that respond to regional tastes, emerging meal occasions, and competitive gaps?

·       Does the menu offer enough flexibility for consumers seeking affordable combinations, portable snacks, chicken, breakfast, and beverages throughout the day?

A franchisee should not have to accept a stagnant consumer proposition simply because the brand has a famous hamburger.

3. Price: Value is what customers receive, not just what they pay

Price competition is unavoidable. But discounting without a clear value proposition can weaken margins while failing to build loyalty.

The National Restaurant Association's 2025 industry outlook found that 47% of limited-service customers said their dining experience mattered more than price. The same report said 47% of restaurant operators planned to introduce new discounts, deals, or value promotions to attract traffic.

These findings point to a tension: affordability matters, but price is not the entire experience.

For Wendy’s, the challenge is to communicate why its food deserves the customer's money while offering price points that make sense for different budgets and occasions. A value meal must feel like a genuine solution, not a complicated calculation involving add-ons, app restrictions, or an offer that disappears before the customer can use it.

This is where franchisees should demand a better balance between national promotional strategy and local restaurant economics.

A corporate offer can produce more transactions and still leave the franchisee with insufficient incremental profit if food costs, labor, discounts, and transaction mix are not properly accounted for. Conversely, a well-designed combination can improve perceived value, increase attachment rates, and encourage customers to purchase more than a single item.

Franchisees should insist that promotional evaluations include:

·       Incremental transactions and repeat visits.

·       Average check and food-cost impact.

·       Profit contribution after discounts and labor.

·       New-customer acquisition versus subsidizing existing purchases.

·       Performance by daypart, market, and customer segment.

The objective should be to grow profitable unit sales, not simply to advertise a low price or defend market share.

4. Service: The promise is made at the drive-thru window

Brand messaging creates an expectation. Product delivers the promise. Price frames the value. Service determines whether the customer wants to repeat the experience.

A national advertising campaign cannot compensate indefinitely for inaccurate orders, inconsistent food, long waits, or an unfriendly interaction.

Wendy’s itself placed customer experience and operational execution among the priorities in its Project Fresh plan. Its investor-day strategy also emphasized more consistent execution, digital convenience, and improved hospitality..

That matters because service is not merely an expense to manage. It is part of the product the customer buys.

Franchisees should push for store-level reporting that connects speed, order accuracy, food quality, customer complaints, digital ordering, and repeat visits. They should also have a voice in determining whether corporate initiatives make operations easier or add complexity during already difficult service periods.

Three practical tests should be applied to every major operating change:

1.       Does it make ordering easier for the customer?

2.       Does it help employees deliver a more consistent experience?

3.       Does it increase repeat business or profitable transactions enough to justify the cost?

If the answer is no, the system should reconsider the change.

The important point is not to demand fewer standards. It is to demand standards that improve the customer experience and the economics of the restaurant together.

5. Why don't more franchisees demand a growth strategy?

The Meritage dispute illustrates a fundamental imbalance in franchising. Operators may invest their capital, hire employees, manage local execution, pay occupancy and operating costs, and absorb the consequences when customer traffic weakens. The franchisor controls important parts of the brand identity, national advertising, menu direction, franchise standards, and systemwide strategy.

That division of responsibility can create tension when results deteriorate.

In Meritage's case, the supplied report describes a legal fight over termination, approximately $147 million in asserted claims, and competing views about which restaurants should close. Those claims and the parties' legal positions remain disputed; they should not be mistaken for final judicial findings.

But the broader lesson is clear: Franchisees need a stronger voice in the strategic decisions that determine whether their restaurants can succeed.

Why should operators settle for defending their share of a shrinking or stagnant market when they could demand a credible plan to expand consumer demand?

Market share is not the same as market growth. A brand can maintain its share while the category weakens. It can also gain share while individual restaurants struggle with unprofitable sales, excessive costs, or poor local execution.

The better measure is whether the brand is winning more relevant occasions, increasing repeat visits, and generating sustainable average unit volume and restaurant-level profitability.

Franchisees should organize around common business objectives rather than waiting until financial distress forces them into individual disputes. Within their contractual and legal rights, they can press for transparent performance reporting, franchisee advisory participation, evidence-based marketing tests, product-development input, and clear accountability for systemwide growth initiatives.

They should also ask corporate leadership to report progress against measurable goals, including:

·       Same-store sales and transaction growth.

·       Average unit volume by comparable market and restaurant cohort.

·       Customer satisfaction, order accuracy, and service speed.

·       New-product trial and repeat-purchase performance.

·       Promotional return on investment and franchisee profitability.

·       Digital engagement that converts into profitable visits and orders.

Not every weak restaurant can be saved. Some locations have structural disadvantages that no campaign can overcome. Nor should a franchisor be expected to preserve every unit regardless of its economics.

But closing restaurants should be part of a comprehensive strategy, not a substitute for one.

The goal should be to distinguish restaurants that need operational improvement, restaurants that need a stronger consumer proposition, restaurants that need local market repositioning, and restaurants that genuinely need to close.

That is a much more useful conversation than arguing only over which locations disappear first.

The Grocerant Guru® bottom line: Fight for relevance, not just survival

Wendy’s has publicly acknowledged the need to strengthen brand positioning, improve the customer experience, and increase average unit volume. Its reported 2025 U.S. same-store sales decline demonstrates why those priorities matter.

For franchisees, the Meritage situation is a reminder that contractual rights and financial restructuring are important, but they cannot replace consumer demand.

The brand they bought must continue to earn its place in the consumer's consideration set. It must communicate a relevant promise, deliver compelling food, provide credible value, and make the experience worth repeating.

Franchisees should not accept market share as the ultimate measure of success. They should push for a brand that grows transactions, strengthens customer loyalty, and improves unit economics.

Three Grocerant Guru® Insights

1. Relevance drives the visit; value helps close the sale.

Consumers do not owe a legacy brand their loyalty. They reward brands that meet current needs with the right food, price, convenience, and experience. Franchisees should demand evidence that marketing investments turn relevance into repeat purchases and profitable sales.

2. A closure plan is not a consumer-growth plan.

Closing money-losing restaurants may be necessary, but it does not answer why consumers are choosing competitors. Every turnaround should distinguish between a bad location, poor execution, an outdated offer, and a brand that is losing relevance in a particular market.

3. Franchisees bought a business opportunity, not a museum piece.

A legacy brand's history is an asset only when it helps attract today's customers. Franchisees should push harder for better products, sharper messaging, credible pricing, stronger service, and measurable unit-sales growth. The objective is not merely to defend a share of the market. It is to make the brand more relevant to an evolving consumer and grow the business profitably.

Steven Johnson is the Grocerant Guru® and founder of Tacoma, Washington-based Foodservice Solutions®. His perspective focuses on the convergence of restaurants, grocery prepared foods, convenience retail, and evolving consumer meal occasions.

The Next Restaurant Battle Is Bigger Than Food: McDonald’s, Red Bull and the Fight for Consumer Occasions

 

McDonald’s is getting into the energy-drink business with Red Bull, but from my perspective as the Grocerant Guru®, the bigger story is not caffeine.

The bigger story is consumer evolution.

Consumers are no longer willing to define a restaurant visit by the traditional three meals a day, a limited beverage menu and a single transaction. They want more choices, more convenience, more portability and more reasons to visit—or order—from the brands they already know.

Restaurants that evolve with those expectations can create new revenue streams.

Those that don't risk losing customers to competitors, convenience stores, coffee chains, grocery stores and increasingly sophisticated foodservice retailers that are willing to give consumers exactly what they want.

McDonald's is betting that Red Bull can help open another door.

Beginning August 17, participating McDonald's restaurants will offer the Red Bull Dragonberry Energizer, combining Red Bull with raspberry syrup and freeze-dried dragonfruit. Customers looking to reduce calories can substitute Red Bull Zero, and participating restaurants will also sell an 8.4-ounce can of Red Bull.

McDonald's is simultaneously expanding its "dirty soda" strategy with the Vanilla Swirl, which combines Coke, Diet Coke or Coke Zero with vanilla and cold foam.

That may sound like two beverage launches.

I see something much bigger.

McDonald's Is Expanding the Day, Not Just the Menu

The restaurant industry has historically thought about dayparts in fairly rigid terms:

Breakfast. Lunch. Snack. Dinner. Late night.

Today's consumer does not.

An afternoon customer may want an energy drink rather than coffee. A teenager may want a customized dirty soda. A parent may want a meal and an energy drink for the road. A worker may want something cold and caffeinated at 3 p.m. without sitting down for another traditional meal.

That creates an enormous opportunity for restaurant chains.

Energy drinks are particularly interesting because the category has experienced significant growth at retail since 2020, with sugar-free products helping drive the expansion. Consumers increasingly view energy drinks as an alternative to coffee, and afternoon consumption gives restaurants an opportunity to create a new occasion between lunch and dinner.

That is precisely where daypart expansion becomes strategically important.

McDonald's isn't simply selling another beverage.

It is attempting to create another reason to visit McDonald's.

CPG Is Becoming Restaurant Foodservice's New Frontier

The other important piece of this strategy is the blending of CPG and restaurant foodservice.

For years, the restaurant industry largely separated itself from packaged consumer products.

Restaurants sold prepared food.

Grocery stores and convenience stores sold packaged food and beverages.

That distinction is rapidly disappearing.

Today, restaurant consumers increasingly expect recognizable CPG brands inside restaurants—and restaurants are increasingly recognizing that CPG partnerships can provide credibility, variety and incremental occasions.

Red Bull is an especially powerful example because McDonald's doesn't have to convince consumers what Red Bull is.

The consumer already knows.

That dramatically lowers the educational burden.

The restaurant gets the traffic opportunity while the CPG brand gets another distribution channel.

That is a powerful symbiotic relationship.

McDonald's Needs More Than Traffic—It Needs More Transactions and Bigger Baskets

The timing is also important.

McDonald's reported only 0.8% same-store sales growth in the second quarter, despite beverage initiatives and marketing promotions, while restaurant traffic remained weak.

That makes this beverage expansion more than a menu experiment.

It is an attempt to create incremental demand.

And that is exactly how restaurant executives should be thinking.

The question shouldn't simply be:

"What new food should we add?"

The better questions are:

What new occasion can we own?

What existing customer need can we satisfy?

What product can bring a customer into the restaurant who might not otherwise come?

What product can increase the average check without substantially increasing labor or complexity?

Those are very different questions.

The Drive-Thru May Be the Most Important Asset in This Strategy

There is another opportunity hiding in plain sight.

The drive-thru isn't simply a faster restaurant entrance.

It is a high-speed distribution platform.

Most chains continue to think about the drive-thru as a way to fulfill one order at a time.

The Grocerant Guru® sees an opportunity to think much bigger:

How many meals can one vehicle deliver?

A consumer picking up dinner for a family could potentially leave with meals for four people, an afternoon snack for tomorrow, beverages for the car and packaged products for later.

That turns the drive-thru from a transaction point into a mini foodservice distribution center.

And CPG partnerships can help make that possible.

Imagine ordering a family meal and adding an energy drink, packaged dessert, snack, bottled beverage or another ready-to-eat item for later.

The restaurant has just expanded the transaction beyond the immediate meal.

That is daypart expansion, basket expansion and channel expansion happening simultaneously.

Three Drive-Thru Ideations From the Grocerant Guru®

1. The "Add One More" Drive-Thru

Build the ordering experience around one simple question:

"What else do you need for later?"

At the speaker, app or kiosk, customers could receive highly targeted add-ons based on the order and time of day.

Breakfast could trigger an afternoon beverage.

Lunch could trigger a snack.

Dinner could trigger tomorrow's breakfast.

A family meal could trigger additional beverages or desserts.

The goal isn't to push more food.

The goal is to anticipate the next consumption occasion.

2. Multi-Meal Drive-Thru Bundles

Restaurants should create bundles specifically designed for customers picking up food for multiple people or multiple occasions.

For example:

Tonight's Dinner + Tomorrow's Breakfast + Road Beverages

The customer orders once and receives multiple consumption occasions in one drive-thru transaction.

That could increase average check while requiring relatively little incremental selling effort.

It also gives restaurants an opportunity to compete more directly with grocery stores and convenience stores for the consumer's next meal.

3. The Drive-Thru "Grab-and-Go Market"

The final opportunity is to turn part of the drive-thru experience into a miniature CPG marketplace.

Imagine a designated pickup area containing high-margin, highly portable products that customers can add to their order:

·       Energy drinks

·       Bottled beverages

·       Packaged snacks

·       Desserts

·       Breakfast items

·       Family-size add-ons

·       Ready-to-eat products

·       Limited-time CPG collaborations

The restaurant doesn't have to become a grocery store.

It simply needs to recognize that the consumer's need doesn't end when today's meal is consumed.

The Grocerant Guru® Bottom Line

McDonald's move with Red Bull is about much more than energy drinks.

It is another signal that the restaurant industry is becoming increasingly channel-blurred, daypart-blurred and occasion-blurred.

Consumers don't think in restaurant categories.

They think in needs, occasions, convenience, value and experiences.

The winning restaurant chains will increasingly look outside their traditional menus for ways to satisfy those needs.

CPG partnerships can provide restaurants with recognizable brands, incremental occasions and potentially attractive margins without requiring the restaurant to invent every product itself.

And the drive-thru may ultimately become one of the industry's most underutilized assets.

The restaurant industry spent decades teaching consumers that the drive-thru was the fastest way to get one meal.

The next generation of restaurant operators should be asking how to make it the fastest way to get several meals, beverages and consumption occasions at once.

That is where the real growth opportunity may be.

The consumer is evolving.

Restaurant chains must evolve with them—or risk watching those customers evolve right out of their brand.

Three Grocerant Guru® Takeaways

1. Own more occasions.
Don't just compete for breakfast, lunch and dinner. Build products and partnerships that create afternoon, snack, beverage and "for later" occasions.

2. Use CPG to expand the menu without reinventing the kitchen.
Strategic CPG partnerships can add recognizable products, new consumption occasions and incremental revenue while potentially limiting operational complexity.

3. Turn the drive-thru into a multi-meal distribution channel.
The next evolution of the drive-thru isn't necessarily serving more cars faster. It is serving more consumption occasions per car. The brands that learn how to put multiple meals and occasions into a single transaction could discover a powerful new source of top-line sales and bottom-line profit.

Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter