Wendy's Selling Restaurants: 640 Company-Owned Locations Up for Grabs

Wendy's, the country's third-largest burger chain, announced Wednesday plans to sell 640 of its company-owned restaurants franchises as a way to reduce locations operated by the main headquarters.

According to CNN Money, all the outlets for sale are located in the United States and Canada. The plan is an attempt to "drive further growth opportunities for expanded restaurant ownership to strong operators," CEO Emil Brolick told CNN Money.

Wendy's reported that it will also sell its bakery in Zanesville, Ohio, where it makes bun.

"We believe this divestiture will provide us with greater sourcing flexibility, focus resources on our core restaurant business, and eliminate future bakery capital expenditures," Brolick said in a statement.

"Our balance sheet recapitalization remains on schedule, and we intend to return the net proceeds from our debt refinancing to shareholders via a share repurchase program," Brolick added. "Based on our operating results through early May, we are reaffirming our 2015 Adjusted EBITDA and Adjusted Earnings Per Share outlook."

The Wall Street Journal reported that Wendy's effort to sell company-owned restaurants follows similar moves by its two biggest competitors, McDonald's Corp. and Burger King Worldwide, Inc.

Wendy's shares gained 4.84 percent Wednesday with the announcement of the news, The Journal noted. Shares of Wendy's stocks improved 30.5 percent in 2014.

"Margins in company-owned restaurants were better than expected and the company also took down its food inflation costs," RBC Capital Markets analyst David Palmer told Reuters.

Wendy's currently owns about 943 of its nearly 6,500 outlets worldwide. The company also stated that it will build 80 new restaurants in 2015, the most it has planned to build in eight years.

"We believe the sale of our domestic restaurants will result in pretax cash proceeds of approximately $400 to $475 million and significantly reduce future capital expenditure requirements, as reflected in our long-term free cash flow outlook," Brolick said in the Wendy's statement.

"Going forward, we intend to buy and sell restaurants opportunistically to act as a catalyst for growth by further strengthening our franchisee base, driving new restaurant development and accelerating Image Activation adoption," he continued.

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