Another Store Sale For Wendy's


Wendy's is making a lot of money selling its own stores. The Dublin, Ohio-based QSR chain said today it has sold 70 more locations, in the Dallas market, to Muy Hamburger Partners, the Wendy's-owning subsidiary of Muy Companies, which also owns numerous Pizza Hut and Taco Bell locations.

With the sale, Wendy's said it has completed the sale of 315 of the 415 restaurants it plans to sell through its "System Optimization" initiative.

That initiative, the company said, is expected to generate $235 million in proceeds, or about $566,000 per location. But the real value in the deal is the store remodels. The company has been able to get acquiring franchisees to agree to remodel a certain number of locations as part of their agreements. Wendy's remodels can cost about $600,000 per store. And the company gets to kick-start the effort to remodel its store base, which can boost sales.

Wendy's refranchising has been a boon for the company, and indirectly its franchisees, by driving up the value of the locations. The company has been able to generate considerable interest in the brand by a group of highly qualified operators, who also happen to have significant financial backing. That kind of competition has driven up the prices Wendy's is receiving for its locations—while also driving up the perceived value of the Wendy's brand.

As one operator told me once: It's like the housing market. All homeowners feel wealthier when housing values go up. In this case, Wendy's operators have been feeling good about their business, because the value of their restaurants has been increasing.

But don't discount the operations value of the effort. The System Optimization is also attracting strong operators that can stabilize the brand and even drive sales. So all of the buyers have been large, existing franchisees. Muy is no exception. Led by CEO Jim Bodenstedt, the company is a longtime Yum Brands operator, and has recently been on an acquisition spree—it bought Pizza Hut locations in Texas and Minnesota.

It's now in the Wendy's business. With the acquisition of the 70 locations, Muy has 87 Wendy's units in the Dallas market.


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