Leading quick-service restaurant chain,
The Wendy's Company
) started a transitioning to a franchise-based model in Jul 2013
to boost business. As per this system optimization initiative,
the company intends to divest nearly 415 company-operated
restaurants by the end of first-quarter 2014 across 13 U.S.
markets, of which 314 units have already been sold.
Wendy's expects to earn proceeds of $235 million from the
sales of these restaurants. Earlier, the restaurateur has
expected to complete the divestiture by the end of second-quarter
In connection to this initiative, recently the restaurateur
divested 70 outlets in Dallas-Fort Worth, Texas to an existing
franchisee, MUY Hamburger Partners, LLC. The financial terms of
the deal were not disclosed.
MUY Hamburger Partners has been associated with Wendy's for
quite some time. Following these divestments, the franchisee will
manage as many as 87 Wendy's units across its home court -
Texas. Adequate local market knowledge and financial
position make MUY Hamburger Partners a perfect franchisee for the
Dallas-Fort Worth metroplex area.
Wendy's continues to divest its units, mainly in the West.
These initiatives aim to boost the company's restaurant
Apart from divesting restaurants, the company also plans to
renovate some of its existing units based on the Image Activation
format. Operators with a proven track record and confirming to
the company's reimaging program are being chosen for this
The brand transformation initiative also includes expansion,
closure of underperforming units and several other growth
initiatives. These moves will help the company to streamline its
operations while augmenting its operating margin and generate
more free cash flow. Moreover, this will help the company to grow
through franchising, thus driving earnings and top-line expansion
in the form of royalty and rental income.
Other Stocks to Consider
Wendy's currently sports a Zacks Rank #2 (Buy). Some
better-ranked stocks in the restaurant industry include
Fiesta Restaurant Group, Inc.
Brinker International, Inc.
Buffalo Wild Wings Inc.
). While Fiesta Restaurant sports a Zacks Rank #1 (Strong Buy),
Brinker and Buffalo Wild Wings carry the same Zacks Rank as
BUFFALO WLD WNG (BWLD): Free Stock Analysis
BRINKER INTL (EAT): Free Stock Analysis
FIESTA RESTRNT (FRGI): Free Stock Analysis
WENDYS CO/THE (WEN): Free Stock Analysis
To read this article on Zacks.com click here.