As per its System Optimization Initiative that began in July
The Wendy's Company
) recently announced its decision to divest 54 restaurants in
Salt Lake City to a subsidiary of NPC International, Inc. which
is the eighth-largest restaurant operator in the U.S. With more
than 1,200 restaurants, NPC International, Inc. is the
eighth-largest restaurant operator in the U.S. Currently, it owns
37 Wendy's restaurants in two states.
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Under its System Optimization Initiative, the company plans to
divest 425 company-operated restaurants in 13 U.S. markets,
mainly in the West by the end of the fiscal second quarter of
2014. To date, the company has sold or has already signed
agreements to sell 172 restaurants. These include the 54
restaurants in the current transaction with NPC International; 24
restaurants, along with two future units in the Seattle market
that were sold in Oct 2013; 30 restaurants in the St. Louis
market, 24 restaurants in Kansas City and 40 restaurants in other
Apart from opening new restaurants, the company also intends to
renovate some of its existing units as per its contemporary Image
Activation restaurant design program under the System
The company has also been closing its underperforming restaurants
to gain operational efficiency. This move will help the company
to streamline its operations while generating higher operating
margin and free cash flow. Moreover, this will help the company
to boost its top and bottom line in the form of royalty and
The positive impact of the multi-year turnaround plan,
international expansion, extensive refurbishment of units and the
company's focus on franchising keeps it well positioned. The
company presently has a short-term Zacks Rank #2 (Buy).
Other stocks worth considering in the restaurant industry are
Bob Evans Farms, Inc.
Burger King Worldwide, Inc.
Cracker Barrel Old Country Store, Inc.
), all with a Zacks Rank #2 (Buy).