Meritage Hospitality Group, one of the largest Wendy’s franchisees in the United States with 314 restaurants, filed for voluntary Chapter 11 bankruptcy protection on September 17. As part of an ongoing restructuring, the company has closed 60 underperforming locations and exited or altered breakfast service at approximately 120 others, citing a 48% collapse in store-level EBITDA over the past two years.
Meritage Hospitality Group (OTCQX: MHGU), headquartered in Grand Rapids, Michigan, operates 314 Wendy’s franchise restaurants across 15 states, representing roughly 5% of Wendy’s entire U.S. system, plus one Bojangles and five independently branded concepts. The company employs approximately 9,000 people.
The filing was made in the United States Bankruptcy Court for the Western District of Michigan. Meritage said it expects debtor-in-possession financing to support operations throughout the restructuring process and has stated it intends to pay wages and benefits without interruption, subject to court approval.
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A Bankruptcy Years in the Making
Meritage’s filing follows a period of severe financial deterioration tied directly to system-wide headwinds at Wendy’s. Beef inflation, aggressive discounting under prior Wendy’s corporate leadership, and marketing missteps led store-level margins to reach what Meritage’s CEO described as a 30-year low in a May 2026 report to investors.
Store-level EBITDA fell by 48%. By the first half of 2026, the company had reported a net loss of $13.6 million in the second quarter alone. Meritage spent more than a year negotiating forbearance with its lenders before concluding that a court-supervised restructuring was the most viable path forward.
60 Closures and 120 Breakfast Exits as Part of the Restructuring
Before and concurrent with the Chapter 11 filing, Meritage undertook a series of operational moves designed to stabilize cash flow. The company closed 60 underperforming restaurants and exited or altered breakfast operations at approximately 120 locations. The combined effect of those actions delivered an immediate EBITDA margin improvement of more than $11 million, according to the company’s CEO presentation.
Wendy’s corporate has permitted its franchisees to opt out of breakfast, a daypart that has faced persistent headwinds across the system since the chain relaunched it nationally in 2020. Meritage also launched a catering partnership with ezCater at 150 restaurants in March 2026, with average checks of approximately $500, as part of its effort to increase revenue per location.
What This Means for the Wendy’s Franchise System
Meritage’s filing is the largest Wendy’s franchisee bankruptcy since NPC International in 2020, which resulted in the sale of its 393 Wendy’s units. Unlike NPC, which filed at the height of the COVID-19 pandemic, Meritage’s collapse has occurred in a post-pandemic environment marked by consumer spending pullbacks and sustained commodity cost pressure. Restaurant Dive noted that 2026 has seen a broader surge in multi-unit franchisee bankruptcies, with operators from Hardee’s, Carl’s Jr., and Popeyes also filing for Chapter 11 protection this year.
For prospective Wendy’s franchisees, the Meritage situation illustrates how system-wide brand performance directly shapes individual unit economics. Wendy’s parent company, The Wendy’s Company (WEN), is currently executing a brand turnaround under new CEO Robert Wright.
How that turnaround progresses, and how Wendy’s corporate supports its remaining franchisee base during the process, will be closely watched by the industry. The fate of Meritage’s 314 restaurants, including whether they are sold, restructured under new ownership, or gradually closed, has not yet been determined.
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