By Rajwa Quasim
Meritage Hospitality Group, a major U.S. franchisee of Wendy’s, filed for Chapter 11 bankruptcy last Thursday in the U.S. Bankruptcy Court for the Western District of Michigan.
The Grand Rapids, Michigan-based company has been part of Wendy’s franchise network for more than 25 years. It operates about 314 Wendy’s restaurants across 15 states, along with one Bojangles location and five independently branded stores. The company employs about 9,000 people.
A day before the bankruptcy filing, Wendy’s franchising division issued a notice seeking to immediately terminate Meritage’s franchise rights and lease agreements. Wendy’s said Meritage owed about $27.4 million in royalties and other fees, along with $119.5 million in continuing operations fees.
Meritage filed for Chapter 11 bankruptcy the following day. The filing allows the company to reorganize while the case proceeds and, subject to court approval, continue operating its restaurants rather than shutting them down.
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“Because the substantial majority of Meritage’s restaurant portfolio operates under Wendy’s brand, those system-wide pressures have had a significant impact on the Company’s financial position,” Meritage said in a press release announcing the filing.
The bankruptcy comes as the franchisee faces several challenges, including higher beef prices, declining customer traffic and pressure from discounting and promotional strategies.
Meritage CEO Bob Schermer Jr. said at an investor conference in June that store-level earnings fell 48% in 2025, while revenue declined 7.6% to about $617.7 million. The company reported a $31.5 million net loss in 2025, compared with an $8 million profit the previous year.
In response, Meritage began closing about 60 underperforming locations in late 2025 and modified its breakfast offerings at several restaurants. The company expected those changes to improve annual earnings by about $11.2 million.
Meritage Hospitality Group was founded in 1986 as Thomas Edison Inns.
Wendy’s faces broader challenges
Meritage’s bankruptcy also comes as Wendy’s faces declining sales and attempts to turn around its U.S. business.
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Wendy’s has reported declining U.S. same-store sales for six consecutive quarters, including a 7% decline in domestic same-store sales in its most recent quarter. The burger chain has also fallen to third place among the largest U.S. burger chains, according to the company’s reported results.
The company has gone through several leadership changes in recent years. Longtime CEO Todd Penegor retired in 2024, and his successor, Kirk Tanner, left after just over a year to become CEO of Hershey. CFO Ken Cook then served as interim CEO before Wendy’s appointed former Potbelly CEO Bob Wright as its permanent CEO in May.
Wright is now leading a turnaround effort aimed at improving Wendy’s performance and returning the chain to growth.