As a part of its brand revitalization initiative,
The Wendy's Co.
) recently divested 24 company-operated restaurants together with
two future locations in the Seattle market to Cedar Enterprises,
Inc. The financial terms of the deal were not disclosed.
Wendy's shares a longstanding relationship with Ohio-based
Cedar Enterprise, its third largest franchisee operating 170
restaurants across five U.S. states, with 47 units in
Cedar Enterprise has been active in Washington for more than
15 years and has adequate local market knowledge. This makes it
an ideal candidate for franchising the Seattle market in
As per the National Restaurant Association, the restaurant
industry in Washington contributes considerably to the state's
revenues. According to the research organization, Washington's
restaurants are expected to record $10.9 billion in sales in
The latest deal is aimed at optimizing the company's
restaurant portfolio. Wendy's seeks to franchise about 425
company-operated restaurants in 13 U.S. markets. The entire
process is expected to end by the second quarter of 2014.
Operators who have a proven track record and conform to the
company's reimaging program are being chosen for this conversion.
The company continues to divest units, mainly in the West, with
qualified buyers expressing interest.
Franchising has got a boost of late, given the benefits of
this business model amid an anemic economy. We believe
franchising a large chunk of the system will provide another
opportunity for margin expansion. Also, the company's efforts to
reduce its capital requirements will ensure steady free cash flow
Many operators in the restaurant sector including
Burger King Worldwide
Yum! Brands Inc.
) have franchise-centric business models.
BURGER KING WWD (BKW): Free Stock Analysis
MCDONALDS CORP (MCD): Free Stock Analysis
WENDYS CO/THE (WEN): Free Stock Analysis
YUM! BRANDS INC (YUM): Free Stock Analysis
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