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Its largest operator just filed for bankruptcy, four years after winning the brand’s growth award. The lesson isn’t about burgers.

EXPERT OPINION BY MICHAEL TASNER, FOUNDER & CEO Sep 22, 2026 LinkedIn Facebook X Bluesky Link

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Wendy’s ended 2025 with 5,969 U.S. restaurants. It ended the second quarter of 2026 with 5,724. That is a net decline of 245 locations in six months, and that number already accounts for 44 new openings, so the actual count of doors that closed is higher than it looks.

The company is calling the program Project Fresh, and the target is 5 to 6 percent of U.S. restaurants. Then-interim CEO Ken Cook told investors that some of these restaurants “do not elevate the brand.” If you want to see where the map has thinned out the most, Inc. has tracked the closures state by state.

That is the corporate version of the story as I call it. Now let’s look at the operator version.

On September 17, Meritage Hospitality Group filed for Chapter 11 in federal court in Michigan. Meritage operates 314 Wendy’s locations across 15 states and employs roughly 8,850 people. It had already closed about 60 underperforming locations and cut $7.3 million in operating expenses before it ever filed.

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What’s crazy is that in 2022, Wendy’s gave Meritage a Momentum Award for visionary growth and expansion. Meritage had spent roughly $400 million growing its portfolio past 370 units, including about 100 new builds and redesigns of older locations. Four years later, it is in bankruptcy.

CEO Bob Schermer Jr. told an investor conference in June that store-level earnings fell 48 percent in 2025, pointing to rising beef costs and heavier discounting to get people in the door. When a brand can’t save an operator

Wendy’s has now posted six straight quarters of U.S. same-store sales declines. In its most recent quarter, U.S. same-restaurant sales fell 7 percent. The company pulled its 2026 outlook and cut its dividend in half, which is never a great sign. It also lost its long-held No. 2 burger spot to Burger King, which has been making a real resurgence. And the company has had a revolving door at the top, with Kirk Tanner leaving for Hershey right in the middle of the turnaround. My colleague Peter Economy laid out five leadership realities behind the closure decision earlier this year, and the line that stuck with me was that your brand will not carry you forever.

So Meritage was running 314 restaurants while the brand above it lost its menu direction, its pricing position, and its CEO.

This is not an isolated story either. There have been at least 10 significant multi-unit restaurant franchisee bankruptcies in 2026, spanning several hundred locations across Hardee’s, Subway, Popeyes, Carl’s Jr., Moe’s Southwest Grill, and Applebee’s. Overall U.S. business bankruptcy filings rose about 17 percent year over year through June 30, climbing from roughly 23,000 to nearly 27,000. Could marketing have saved these locations?

Almost every week I walk into my local Subway and ask the same question: “How are things going?” I get the same answer almost every time. Hanging on by a thread.

I have been preaching from the mountaintop for years that marketing is the surest way to grow a business. I still believe that. But I want to be honest about something this story makes clear, because it would be easy for me to write “they should have marketed better” and move on.

Meritage was not under-marketed. It was under-priced. Discounting is what owners reach for when marketing stops working, and in the food business it is a marketing decision that comes with an operations bill. You discount to drive traffic; the traffic shows up, and so do your food and labor costs. Between the discounting and rising input costs, 48 percent of Meritage’s store-level earnings evaporated in a single year.

When you look at the math, it is brutal. The food industry is already challenging, and labor and food costs have been rising consistently. When you start to look at how this adds up, a typical franchisee might have 3 to 5 percent of runway at the end of the day. When you start to factor in deep discounts, the 4 percent margin is quickly absorbed. Many others have written about discounting for years, and franchisees have been saying it out loud since at least 2024, when McDonald’s owner-operators pushed back on the $5 meal deal because corporate set the price and operators had to eat the cost.

Here is the uncomfortable part for anyone in a franchise system. Meritage did not control the menu. It did not control the ad calendar. It did not control national pricing strategy. It controlled 314 buildings and 8,850 paychecks. When you buy into a franchise, you buy into someone else’s marketing, and you agree to absorb the consequences of decisions you will most likely never be in the room for. I have seen this time and time again with many of the franchisees we work with at our marketing agency who call us for help, saying they’re just not getting the level of marketing they need from corporate. 4 questions to ask before you open your next location

What does a discount actually cost you at the store level? Take your average ticket, subtract the discount, then subtract food and labor on that item. Most owners I talk to know exactly what a promotion did to traffic and have never once calculated what it did to contribution margin. If each discounted transaction contributes less than your fixed cost per transaction, you are not buying customers. You are buying volume with your own profit.

Anytime I’ve considered opening another location, or consulting with people who are looking to do so, one question you have to ask is: Is adding more locations making your existing units or your existing portfolio more valuable, or are you simply growing the number?

What I see is someone opens a new location, then starts splitting their management attention, and one of their profitable stores starts struggling. Another huge issue that I’ve seen is they take that same marketing budget, and they spread it across more locations, ultimately adding revenue but cannibalizing profit at other locations. Anytime you’re looking at signing a lease, make sure you know the numbers to crunch before buying a franchise, and most of it applies to your second location as much as your first.

Who actually controls what customers hear about you? In a franchise, it is not you. That means your job is to win on the variables you do own: speed, cleanliness, staffing, local presence, community relationships. Every operator waiting for corporate to fix demand will be waiting a long time.

What is your growth funded by? Profit, or the belief that profit is coming? Meritage grew on the second one for four years, and it had a national award to justify it the whole way. Like this column? Sign up to subscribe to email alerts and you'll never miss a post.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.