To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. In 2022, Wendy's International awarded Meritage Hospitality Group, one of the chain's largest franchisees, a Momentum Award for "Visionary Growth and Expansion." Over several years, the operator spent $400 million of capital growing its Wendy's portfolio to more than 370 units, including developing about 100 new restaurants and redesigning older, underperforming units. At the time, all indicators pointed to ongoing growth for the franchisee.
But four years later, Meritage is facing significant financial strain and filed for Chapter 11 bankruptcy protections last week, showing how quickly even the largest franchisee's fortunes can change. After several quarters of declining same-store sales across Wendy's system, Meritage has been unable to maintain profitability, Kevin Cleary, chief restructuring officer, said in a first-day motion. Revenue declined 7.6% to $618 million in 2025 compared to about $669 million in 2024.
Revenue continued to drop during the first half of 2026, falling 14% to $274 million compared to $318 million in the year-ago period, Cleary said. Meritage's same-store sales also declined 7.2% during 2025 and 8.3% during the first half of this year. An $8 million net income in 2024 flipped to a nearly $32 million net loss in 2025, and a net loss of $23 million in H1 2026.
"After more than a year of working constructively with its lenders and its franchisor toward a solution, the Company's Board of Directors and management team determined that a voluntary, court-supervised restructuring is the most effective and proactive path to strengthen Meritage's finances, address these headwinds directly, and protect the long-term interests of its stakeholders, team members, guests, and communities," the company said in a press release about its bankruptcy. Meritage wasn't always in this position. It was originally incorporated in Michigan in August 1986 as a hotel operating platform, but entered the quick-service restaurant industry in 1998 with the purchase of 28 Wendy's restaurants after selling its hotel platform, per the court filing.
Meritage began trading on the OTCQX in 2007 and completed the first of 28 acquisitions in 2009 when it purchased 20 Wendy's restaurants in Florida. At the time, Meritage aimed to reach 150 restaurants by 2015. It ended up operating 166 restaurants in 2015.
From 2011 to 2018, Meritage acquired 234 restaurants that brought its portfolio to 317 units. In addition to the 314 Wendy's restaurants it owns today, the company also operates one Bojangles and five independent concepts. At one point Meritage operated seven Taco John's restaurants, but they closed in September 2024.
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