News

Wendy's selling 54 restaurants to franchisee

November 20, 2013

The Wendy's Company announced plans to sell 54 restaurants, including one in development, in the Salt Lake City market to a subsidiary of NPC International Inc. The franchisee currently has 37 Wendy's restaurants in two states and is also the largest Pizza Hut franchisee in the world.

Wendy's announced plans in July to geographically concentrate its restaurant ownership through the sale of about 425 company-operated restaurants in 13 U.S. markets, primarily in the West.

According to a news release, restaurants are being sold to qualified operators on a market-by-market basis, with the completion of this process targeted by second quarter 2014. Included in these agreements are specific plans to reimage certain restaurants in Wendy's Image Activation restaurant design. They also include development plans for new restaurants.

Emil Brolick, Wendy's president and CEO, said the company expects to generate a higher operating margin and stronger free cash flow from the remodeled restaurants, and a more predictable revenue stream from a higher percentage of royalty and rental income from the sale.

"We are very pleased with the strong interest in system optimization that we're receiving from our franchisee community," Brolick said. "We view this as an excellent opportunity to grow our business with new and existing franchisees that are focused on operational excellence, have a strong balance sheet, and are fully committed to our restaurant reimaging effort."

As part of its system optimization initiative, the company has now sold or has signed agreements for 172 total restaurants this year.

Transactions to date include:

• 24 restaurants, along with two future locations, in the Seattle market to Cedar Enterprises Inc., a long-time Wendy's franchisee;
• 30 restaurants in the St. Louis market to BB St. Louis LLC, a partnership headed by current Wendy's franchisee and former NBA player Junior Bridgeman, along with current NBA player Chauncey Billups;
• 24 restaurants in the Kansas City, Mo., market to a subsidiary of NPC International; and
• A total of 40 restaurants to eight franchisees in other markets.

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