Meritage Hospitality files for Chapter 11 bankruptcy

Meritage Hospitality Group, among the biggest Wendy's franchisees in the United States, filed for Chapter 11 bankruptcy protection Thursday, blaming financial strain tied to prolonged weakness in the Wendy's brand.

The Grand Rapids, Michigan-based company's portfolio includes 314 Wendy's locations spread across 15 states, plus a single Bojangles restaurant and five stores operating under independent brands. Meritage said it plans to keep all restaurants open during the restructuring and intends to continue paying its roughly 9,000 employees their wages and benefits without interruption, subject to court approval.

"Because the substantial majority of Meritage's restaurant portfolio operates under Wendy's brand, those system-wide pressures have had a significant impact on the Company's financial position," Meritage said in a statement. The company said it worked with its lenders and franchisor for more than a year before determining that a court-supervised restructuring was the best path forward.

Court documents show Meritage put the value of its assets somewhere between $10 million and $50 million, with its liabilities falling into the same bracket, according to CNBC . Quality Is Our Recipe LLC, which serves as the legal name for Wendy's franchising arm, holds the largest unsecured claim against Meritage — $24.9 million tied to unpaid franchise fees. The case was filed in the U.S. Bankruptcy Court for the Western District of Michigan.

Meritage CEO Bob Schermer Jr. told investors at a conference in June that store-level earnings before interest, taxes, depreciation, and amortization had dropped 48% in 2025, according to CNBC. The franchisee's bottom line was squeezed by a combination of higher beef prices and a heavier reliance on promotional discounts, according to CNBC.

The bankruptcy comes as Wendy's has struggled to retain diners focused on value. Wendy's cut its quarterly dividend in half and withdrew its full-year financial outlook in August, as incoming leadership works to reverse a prolonged sales slump. U.S. comparable restaurant sales fell 7.0% in the second quarter. Earlier in the year, first-quarter U.S. same-restaurant sales dropped 7.8% , marking six straight quarters of same-store sales declines, according to CNBC. Wendy's shares have shed roughly two-thirds of their value over the last three years.

The company is in the process of obtaining debtor-in-possession financing and expects that funding, combined with cash from ongoing operations, to cover its obligations through the restructuring. McDonald Hopkins LLC is serving as legal counsel and Fort Dearborn Partners as restructuring advisor.