Meritage Hospitality Group plans to sell 42 Wendy’s restaurants for $18.6 million. The struggling franchisee hopes the deal will help cover overdue royalty payments. However, the sale may not solve its wider financial problems.
The company announced the planned sale this week. Divine Infinity Operations will acquire the restaurants in Tennessee, Arkansas, Mississippi and Missouri.
Meritage operated 314 restaurants when it filed for bankruptcy in September. After the sale and potential closures, the company could have about 200 Wendy’s locations left.
The deal comes as Meritage faces declining sales and mounting financial pressure. Wendy’s also continues to reduce its restaurant footprint across the United States.
Meritage faces challenges in expansion markets
Meritage’s struggles appear concentrated in Southern and border states. Restaurant analyst John Gordon discussed the issue with Inc.
Gordon works with Pacific Management Consulting Group. He suggested that Meritage’s expansion into distant markets may have contributed to its problems.
The company expanded into regions far from Wendy’s roots in Columbus, Ohio. According to Gordon, operating in unfamiliar territories can make profitability more difficult.
He also argued that Wendy’s could have encouraged Meritage to expand more cautiously. However, geography may not explain all the company’s financial troubles.
Declining sales and rising financial pressure have also affected the franchisee. The wider challenges facing Wendy’s add another layer to the situation.
Wendy’s closes more than 240 restaurants
Meritage is not the only business facing difficulties. Wendy’s closed more than 240 U.S. restaurants during the first half of 2026.
The chain shared the figures during its second-quarter earnings call. At the time of the report, Wendy’s had about 5,700 locations across the United States.
The closures highlight the pressure facing the fast-food chain. Wendy’s must address its restaurant footprint while working to attract customers.
Meritage has also experienced several quarters of declining sales. Fewer customers visited its restaurants during that period.
That downturn raises questions about franchise profitability. Individual operators can struggle when customer traffic falls and costs remain high.
Discounting puts pressure on profits
Wendy’s marketing strategy under its previous management may have added to the problem. Experts cited by Inc. said the strategy failed to deliver the desired results.
Heavy discounting and national promotions also squeezed Meritage’s profits. Promotions can attract customers, but they may reduce earnings on each sale.
Restaurants need enough sales volume to offset those lower margins. When fewer customers visit, that strategy becomes harder to sustain.
Meritage faced these pressures alongside declining sales. The company eventually filed for bankruptcy in September.
The planned restaurant sale could help fund overdue royalty payments. Still, the transaction may not resolve the deeper problems affecting the business.
What the $18.6 million deal means
The planned sale marks a major change for Meritage. Divine Infinity Operations will acquire 42 Wendy’s restaurants for $18.6 million, according to the report.
If the sale and potential closures proceed, Meritage could retain about 200 Wendy’s locations. That would represent a significant reduction from its 314 restaurants at the time of its initial bankruptcy filing.
Selling locations could help Meritage manage its financial obligations. However, the report does not confirm whether the proceeds will cover all overdue royalties.
The company still faces declining sales and pressure on profits. It must also navigate its bankruptcy proceedings.
Meanwhile, Wendy’s continues to deal with restaurant closures and challenges attracting customers. Those pressures could affect franchise operators across its network.
The $18.6 million deal may provide Meritage with some relief. However, selling restaurants alone will not guarantee a recovery. The company must also address the financial problems that led to bankruptcy.
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