(MENAFN- Live Mint) American fast-food giant Wendy's is preparing to close hundreds of its outlets by 2026 as economic pressures and shifting consumer habits take their toll.

Popular food chain Wendy's to close hundreds of stores

The decision marks a significant downsizing for the brand, long recognised for its commitment to quality and its position between traditional fast food and casual dining.

Founded in 1969 in Columbus, Ohio, Wendy's operates more than 7,300 restaurants worldwide, including roughly 6,000 in the United States.

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The company employs around 225,000 people and reported system-wide sales of $14.5 billion in 2024 - a 3.1% year-on-year increase. Despite the growth, rising operating costs and changing market dynamics are forcing the chain to make difficult strategic adjustments.

Why is this happening?

Wendy's has never positioned itself as a low-cost alternative. Its strategy to prioritise quality ingredients, fresher produce, and more substantial menu offerings helped it carve out a loyal customer base distinct from rivals McDonald's and Burger King.

However, this middle-ground niche is now becoming a disadvantage as inflation and aggressive pricing strategies from competitors erode its value proposition.

Casual dining chains, particularly Chili's, have intensified competition by lowering prices to attract cost-conscious diners. The company's“3 for Me” deal - which includes an appetiser, beverage, and entrée for as little as $10.99 - is priced directly against Wendy's signature Dave's Combo, which typically costs around $12 in many markets.

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Chili's even takes a direct swipe at McDonald 's with its marketing line:“With two slices of American cheese, ketchup, mustard, pickles, sliced onions and 85% more beef than a Quarter Pounder with Cheese. The Big QP really does make other burgers look tiny.”

This aggressive pricing, coupled with sustained food inflation, has squeezed Wendy's operating margins. According to data from the USDA Economic Research Service,“food away from home” inflation stood at 4.1% in 2024, following 5.8% in 2023, 7.7% in 2022, and 3.9% in 2021.

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As costs continue to climb, Wendy's has found itself caught between cheaper fast-food rivals and increasingly affordable casual dining options. Analysts suggest that the planned closures could allow the company to streamline operations, focus on high-performing locations, and reassess its long-term positioning in an increasingly price-sensitive market.

Despite the challenges, Wendy's maintains that its commitment to quality remains unchanged - even as it faces one of the toughest periods in its 55-year history.

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