Wendy's cuts breakfast service at 120 locations following franchise bankruptcy

Fast-food chain Wendy's has quietly cut breakfast service, reduced hours, and permitted franchise opt-outs across numerous restaurants following a major franchisee bankruptcy, highlighting broader operational struggles within the morning daypart (Miami Herald). The developments underscore a turbulent period for the brand as it battles sliding sales and traffic declines, while the wider food and retail sectors experience massive supply shakes, including major beverage realignments at Costco and Marriott.

Wendy’s originally rolled out breakfast nationally in May 2020 to capture sales during traditionally closed hours, eventually reaching an 8.5% sales mix in the fourth quarter of 2021. However, momentum has slowed. According to Wendy's CFO Steven Cirulis, global systemwide sales dropped 6.5% on a constant currency basis in the first half of the year, driven by a 7.0% decrease in U.S. Same-restaurant sales alongside the impact of 289 U.S. Restaurant closures. Cirulis noted that the U.S. Downturn stemmed from a 12.5% decrease in customer traffic — partly influenced by reduced discounting and trimmed breakfast hours — though partially offset by a 5.6% increase in the average check. By the second quarter, breakfast accounted for just 5.5% of overall sales, down significantly from 8% in the second quarter of 2020.

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CEO Robert Wright acknowledged that the company has not yet perfected the morning meal, describing breakfast as a complex topic still under deep evaluation (Miami Herald). While the vast majority of the system continues to serve breakfast, the company permitted franchise opt-outs to serve as a relief valve for struggling operators. Compounding these pressures, Meritage Hospitality Group Inc., which operated 314 Wendy's locations, representing about 5% of the brand's total U.S. Footprint, filed for Chapter 11 bankruptcy on Sept. 17, 2026, after nearly 11 months of defaulting on franchise agreements for failing to remit payments. Meritage and its 14 affiliates listed between $10 million and $50 million in assets and liabilities, ultimately closing 60 underperforming stores and eliminating or altering breakfast at approximately 120 locations (Miami Herald).

Industry analysts have pointed to strategic gaps in how the fast-food chain launched its morning operations. BTIG analyst Peter Saleh noted that while Wendy's national rollout avoided the piecemeal errors of past attempts, the company made a critical misstep by failing to center its initial push around coffee (Miami Herald). Because coffee drives high margins and brings in regular customers who might add sandwiches, omitting it as a primary focus made changing deeply ingrained consumer habits exceptionally difficult. RTM Nexus CEO Dominick Miserandino observed that while dropping the daypart makes economic sense, it remains a disappointment for patrons fond of items like chicken biscuit sandwiches (Miami Herald).

As fast-food operators grapple with shifting margins, parallel upheavals are reshaping the beverage industry through high-stakes corporate switches (Daily Mail). Marriott International dropped Pepsi as its official drinks supplier after more than 30 years, replacing staples like Mountain Dew and 7 Up with Coca-Cola products across roughly 9,700 hotels in 143 countries, including 6,200 U.S. Properties (Daily Mail). The deal deals a heavy blow to PepsiCo, which held the Marriott contract since 1992 and is currently navigating its own pressures, including activist investor stakes and plans to slash portions of its product lineup (Daily Mail).

Simultaneously, warehouse giant Costco has rolled out a complete transition from Pepsi to Coca-Cola across its food courts (Fox Business). The swap, which began in early July and is slated to reach all food courts by the fall, sparked intense online debate among shoppers attached to the previous menu (Fox Business). Manhattan psychotherapist Jonathan Alpert noted that the fierce reactions stem from consumers viewing the carbonated beverage rivalry as a deep cultural dividing line rather than a simple supply change (Fox Business). Amid these shifts, Pepsi continues to defend its market standing by reviving the Pepsi Challenge and cutting prices on snack brands to combat consumer friction around affordability (Daily Mail).

What to Watch Next

• Wendy’s leadership evaluates the long-term viability of breakfast and whether to permit permanent opt-outs as part of its broader strategic review (Miami Herald).
• Meritage Hospitality Group proceeds through U.S. Bankruptcy Court for the Western District of Michigan to reorganize its debt and restructure operations following its September filing (Miami Herald).
• Costco prepares to release its fourth-quarter financial results while completing the final phase of its food court beverage transition (Fox Business).