Franchising

Inside Meritage Hospitality’s bankruptcy: Beef costs, closures and a battle with Wendy’s

Meritage Hospitality Group’s Chapter 11 filing reveals mounting pressures behind one of Wendy’s largest franchise operators, from declining sales and soaring beef costs to a dispute over its franchise agreements. The restructuring leaves the future of more than 300 Wendy’s restaurants in question as Wendy's fights back.

Photo: Shutterstock

September 29, 2026 by Valerie Gritton

Summarize with

When Meritage Hospitality Group, one of the nation's largest Wendy's franchise operators, filed for Chapter 11 bankruptcy protection, the company cited declining sales, rising costs and broader pressures facing the burger chain as reasons for the filing.

The Grand Rapids, Michigan-based company filed for bankruptcy protection Sept. 17 in the U.S. Bankruptcy Court for the Western District of Michigan. Meritage operates 314 Wendy's restaurants across 15 states, along with one Bojangles and five independently branded restaurants, and it employs approximately 9,000 people.

The filing came one day after Wendy's moved to terminate Meritage's franchise agreements, according to an article in Inc.com, setting up a dispute over the future of the operator's restaurants and whether Meritage has a right to continue to operate as a Wendy's franchise partner.

According to court filings, Wendy's sent Meritage a termination notice Sept. 16 that it said was effective immediately. Why? Wendy's claims Meritage owes approximately $146.9 million, including $27.4 million in past-due royalties and other fees and $119.5 million in continuous operations fees associated with restaurant closures. Meritage disputes that the termination took effect and maintains that its franchise agreements remain in place while the bankruptcy case proceeds.

Meanwhile, Wendy's said in Inc. that it had worked with Meritage and its lenders for more than a year in an effort to find a working resolution before deciding to terminate the agreements.

What's the beef?

Meritage has attributed its financial difficulties, in part, to what it described as sustained system-wide pressures affecting the Wendy's brand, which makes up nearly all of its restaurant portfolio.

The company reported a 7.6% decline in revenue in 2025, to $617.7 million, and a $31.5 million net loss compared with $8 million in net income the previous year. Store-level earnings fell 48% in 2025, according to company and court filings. Meritage cited rising beef costs, aggressive discounting and reduced effectiveness of Wendy's marketing under prior leadership as among the many factors squeezing its restaurant margins.

Beef costs have been a particular pressure point for Meritage. The company said in court filings that its average beef cost increased 18.9% year over year during the three months ended June 28. The increase comes amid tight U.S. cattle supplies stemming from a cyclical contraction of the cattle herd, according to the USDA. And the pressure extends across the Wendy's system: Wendy's executives said during the company's second-quarter earnings call that commodity costs at its U.S. company-operated restaurants increased approximately 9%, driven largely by higher beef prices and investments in product upgrades.

Meritage's challenges continued into 2026 as revenue declined another 14% during the first half of the year. To help assuage the effects, Meritage closed approximately 60 underperforming Wendy's restaurantsbeginning in late 2025 and eliminated or modified breakfast service at some locations, and reduced general, administrative and operational expenses. Additional closures are expected as part of the restructuring. Court records indicate Meritage could close at least 30 more Wendy's restaurants on a rolling basis through Oct. 16. Of those closures, five locations in Florida, Oklahoma, Texas and Virginia have been the first identified.

Who is Meritage Hospitality Group?

Meritage Hospitality Group traces its roots to 1986, when the company was incorporated as the owner of three hotels. It exited the hotel business in 1998 and entered the Wendy's system with the acquisition of 28 restaurants in Michigan.

The company subsequently grew into one of Wendy's largest franchise operators through a combination of acquisitions and new restaurant development. Meritage expanded outside Michigan in 2009 with the acquisition of 20 Wendy's restaurants in Jacksonville, Florida, the first of what the company says became 27 acquisitions within the Wendy's system. By 2015, it had reached 150 restaurants.

Its growth accelerated over the following decade. Meritage said it acquired 234 Wendy's restaurants and built 35 more between March 2011 and March 2018. By 2022, it operated 350 Wendy's locations, and a 2023 acquisition of 25 North Carolina restaurants brought the portfolio to 375 locations before subsequent closures reduced the Wendy's footprint to its current 314 restaurants.

Today, Meritage's Wendy's restaurants span Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, Ohio, Oklahoma, Tennessee, Texas and Virginia. Michigan remains its largest market.

Meritage's restructuring now puts the future of one of the Wendy's system's largest franchise portfolios in focus. The bankruptcy process is expected to determine not only how Meritage addresses its debt and underperforming restaurants, but also whether the company ultimately continues operating hundreds of restaurants under the Wendy's name.

The bankruptcy comes as Wendy's itself works to reverse declining U.S. sales and traffic. The company reported a 7% decline in U.S. same-restaurant sales during the second quarter of 2026 and has been closing underperforming restaurants as part of a broader effort to strengthen its system.