One of Wendyâs largest U.S. franchise operators has filed for Chapter 11 bankruptcy protection after a sharp drop in restaurant profitability, rising costs and more than a year of efforts to repair its finances.
Meritage Hospitality Group, based in Grand Rapids, Michigan, filed voluntarily on September 17, 2026, in the U.S. Bankruptcy Court for the Western District of Michigan. The company currently operates 314 Wendyâs restaurants across 15 states and employs about 9,000 people.
The filing does not mean Wendyâs itself has filed for bankruptcy. Meritage is an independent franchise operator, and the company says its restaurants are expected to continue operating while it restructures its finances.
Wendy's franchisee files for Chapter 11 bankruptcy protection as burger chain struggles https://t.co/EwqNiMddOl
— CNBC (@CNBC) September 18, 2026
Restaurant Profitability Fell Sharply
Meritage entered Chapter 11 after financial pressure intensified across its Wendyâs portfolio. Store-level EBITDA fell 48% in 2025 to about $36.2 million, while restaurant-level profitability reached what the company described as a 30-year low.
Higher beef costs, aggressive discounting and marketing challenges were among the pressures cited by the operator. Meritage also pointed to weaker Wendyâs sales, with U.S. same-restaurant sales down 7.8% during a period examined in a company presentation.
The strain was also visible in recent results. Second-quarter sales fell to $150 million from $163.5 million a year earlier, although the previous period included roughly 40 more restaurants. Restaurant operating income declined from $15.2 million to $10.3 million, while Meritage recorded a $13.6 million net loss.
Meritage Had Already Closed 60 Restaurants
The bankruptcy filing followed months of restructuring. Meritage closed about 60 underperforming Wendyâs restaurants and cut more than $7 million in general, administrative and operating expenses.
The company also stopped or modified breakfast service at approximately 120 weaker locations. Restaurant industry reporting says that move produced an immediate EBITDA margin benefit of more than $11 million.
Similar pressures have affected other large franchise operators. A major Applebeeâs franchisee bankruptcy placed dozens of restaurants at risk earlier this year, while a Carlâs Jr. franchise operator entered Chapter 11 amid losses and possible restaurant closures in California.
What the Filing Means for Customers and Workers
Meritage has not announced plans to close all 314 Wendyâs restaurants. According to Meritageâs official Chapter 11 announcement, restaurant-level operations are expected to continue during restructuring.
The company also intends to continue paying wages and benefits to its approximately 9,000 employees without interruption, subject to court approval of customary bankruptcy motions.
Meritage additionally operates one Bojangles restaurant and five independently branded concepts. Its Wendyâs locations, however, make up the overwhelming majority of its portfolio and account for roughly 5% of Wendyâs U.S. restaurant system.
Wendyâs Affiliate Is a Major Creditor
Bankruptcy reporting identifies Wendyâs affiliate Quality Is Our Recipe LLC as Meritageâs largest unsecured creditor, with approximately $24.9 million in deferred franchise fees owed.
Meritage had already obtained temporary relief from lenders and operated under a forbearance arrangement earlier in 2026. It later resumed full interest payments but ultimately determined that a court-supervised restructuring was needed to address its balance sheet.
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Chapter 11 Gives Meritage Time to Restructure
Chapter 11 allows Meritage to continue operating while reorganizing debt and negotiating with creditors under court supervision. The company is also seeking debtor-in-possession financing to provide additional liquidity during the restructuring process.
For customers, the filing does not mean every Meritage-operated Wendyâs will immediately close. Individual locations could still be reviewed as the restructuring progresses, particularly after the operator already closed weaker restaurants and changed operating hours at others.
The case highlights how falling sales, higher food costs and debt can put pressure on large franchise businesses even when the national restaurant brand itself remains in operation. Meritageâs restructuring will now focus on reducing financial strain while maintaining as much of its restaurant network as its business can sustainably support.
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