Wendy’s has quietly ended breakfast service at hundreds of locations, a shift tied to financial struggles and a major franchisee’s bankruptcy, as the fast-food chain grapples with declining sales and strategic reevaluation.
The Shift in Breakfast Strategy
Breakfast, once seen as a growth opportunity for Wendy’s, has become a financial burden. The chain began offering breakfast nationally in May 2020, aiming to boost revenue during off-peak hours. However, sales have since declined, with breakfast accounting for just 5.5% of total sales in the second quarter—down from 8% in 2020. The decline in U.S. same-restaurant sales was driven by a 12.5% decrease in traffic, which included the impact of less discounting and reducing or eliminating breakfast operating hours at certain locations,
said CFO Steven Cirulis during the second-quarter earnings call.
The company has allowed franchisees to opt out of breakfast service, a move that some found beneficial. The large majority of the system continues to serve breakfast. We did have some opt-out activity. And frankly, it was very helpful for some of the franchisees that took advantage of that opt-out because it was a drag on their business,
Robert Wright said. However, the CEO, Robert Wright, acknowledged the complexity of the decision. Breakfast is important to us, and it's a complex topic that, frankly, we're still analyzing very deeply. It can't be disconnected from the broader strategy and the work that we're doing there,
he stated.
Meritage Hospitality Group, one of Wendy’s largest franchisees, exemplifies the challenges. The company, which operated 314 Wendy’s locations, filed for Chapter 11 bankruptcy in September 2026, listing assets between $10 million and $50 million. Meritage closed 60 underperforming stores that helped strengthen its system and exited breakfast or altered that daypart in about 120 underperforming locations,
reported Retail Dive.
The Meritage Bankruptcy and Its Implications
Meritage’s bankruptcy highlights the broader struggles facing Wendy’s. The franchisee defaulted on payments in 2025, leading to a restructuring effort. The filing in the U.S. Bankruptcy Court for the Western District of Michigan underscores the financial strain on both the company and its partners. For some franchisees, the opt-out was really helpful and provided a little bit of a relief valve, but it's still a key area that's under evaluation for us,
Robert Wright said, indicating ongoing uncertainty about breakfast’s role in the chain’s future.
The impact of Meritage’s actions extends beyond its own operations. As one of the brand’s largest operators, its struggles reflect broader challenges in the fast-food sector. Wendy’s has closed 289 U.S. restaurants in the first half of 2026, a move aimed at strengthening its system. Global systemwide sales declined 6.5% on a constant currency basis, primarily driven by U.S. same-restaurant sales, which declined 7.0% and the impact of 289 U.S. restaurant closures in the first half of the year,
Cirulis noted.
Financial Strains and Strategic Adjustments
Wendy’s financial struggles are compounded by a shift in consumer behavior. The decline in breakfast traffic—driven by reduced discounting and changes to operating hours—has forced the company to reassess its strategy. “The decline in U.S. same-restaurant sales was driven by a 12.5% decrease in traffic, which included the impact of less discounting and reducing or eliminating breakfast operating hours at certain locations, partially offset by a 5.6% increase in average check,” Cirulis explained.
The company’s efforts to revitalize its brand have been met with mixed results. While some franchisees have found relief in opting out of breakfast, the broader challenge remains. We need to get our footing on the remainder of the strategy before we start deciding exactly where breakfast fits into that,
Wright said. This uncertainty has led to a cautious approach, with Wendy’s balancing short-term adjustments against long-term goals.
As the fast-food landscape continues to evolve, Wendy’s must navigate these challenges while maintaining its position as a key player. The company’s ability to adapt its strategy—particularly around breakfast—will be critical in addressing its financial hurdles and regaining market share. For now, the focus remains on stabilizing operations and reevaluating the role of breakfast in its overall plan.