Fast Food Franchises: Why Wendy's & Hardee's Are Closing

The quick-service restaurant (QSR) industry, a cornerstone of global dining, is currently undergoing a significant transformation, marked by an unexpected wave of restaurant closures among some of its most recognizable brands. While major players like McDonald's continue to dominate, rivals such as Burger King, Wendy's, and Hardee's are navigating turbulent waters, leading to strategic closures and a re-evaluation of their operational models. This article delves into the underlying reasons for these contractions, examining brand-specific challenges and broader industry headwinds.

Strategic Restructuring: Wendy's "Project Fresh"

Wendy's, a prominent player in the burger segment, has adopted a proactive approach to optimize its restaurant portfolio. Following a period of evaluation, the company has initiated "Project Fresh," a comprehensive turnaround plan aimed at fostering profitable growth and enhancing long-term value across its U.S. operations. This strategy signifies a notable shift in focus, as Interim CEO Ken Cook articulated during a recent earnings call: a prioritization of growing average unit volumes over mere net unit growth.

The impetus behind this strategic pivot is clear: to strengthen the overall system by addressing underperforming assets. Wendy's intends to close approximately 400 struggling locations. This isn't merely a retrenchment but a calculated move to free up capital and resources that can then be reinvested into the remaining, higher-potential restaurants. These investments are slated for critical areas such as new kitchen equipment, ensuring superior food quality, and technology upgrades like digital menu boards. Such enhancements are designed not only to boost productivity but also to empower staff to concentrate more on customer hospitality, thereby elevating the overall dining experience.

For some locations, improvements might involve operational adjustments or the deployment of advanced technology. For others, it means aligning operating hours more closely with actual demand, particularly during peak morning and late-night periods. However, for a significant number, permanent closure is the prescribed solution, a testament to the company's commitment to efficiency and profitability over sheer physical presence.

Burger King's Franchise Challenges

Burger King, another titan in the fast-food arena, has also faced substantial headwinds, particularly concerning its franchise model. The loss of key franchise operators has been a significant contributing factor to its restaurant closures. While the company has attempted to mitigate some of these losses by acquiring certain closed locations, the overall trend points to a reduction in its operational footprint. The reliance on independent franchisees, while beneficial for rapid expansion, can also introduce vulnerabilities when operators face financial distress or market shifts, leading to a cascade of closures that impact brand visibility and market share.

Hardee's: A Deeper Dive into Persistent Struggles

The challenges confronting Hardee's present a more acute case study in the difficulties facing regional fast-food chains. Unlike its publicly traded counterparts, Hardee's parent company, CKE Restaurants, is not obligated to disclose detailed closure data, yet anecdotal evidence and local news reports paint a consistent picture of a shrinking base and operational difficulties that have spanned several years, extending into 2025.

Franchisee Bankruptcy and Operational Impact

A significant blow came in 2023 when Summit Restaurants Holdings, a major Hardee’s franchisee, filed for Chapter 11 bankruptcy. This event directly resulted in the closure of nearly 40 Hardee’s locations across multiple states, primarily in the Midwest and South. The stated reasons were underperformance and a notable decline in in-store foot traffic, indicating a fundamental disconnect with consumer preferences and local market dynamics.

Closures have continued, with numerous Hardee's locations in Illinois shutting down in 2024, and further permanent closures recorded in early 2025 across states like Delaware, North Dakota, Iowa, Minnesota, Missouri, and Pennsylvania. The sister brand, Carl’s Jr., has also experienced similar fates, with over 20 closures in Australia and additional locations in the U.S.

Technology Integration and Customer Perception

Hardee's attempts at technological innovation have not always translated into improved customer experiences. The adoption of AI to assist with drive-thru operations, even with subsequent human oversight, appears to have backfired. Reports indicate that the drive-thru ordering process at Hardee's has become notably slower. While the chain once garnered praise for its speed, by 2024, it failed to rank among the top five for fastest total drive-thru times, suggesting that technological implementation did not yield the desired operational efficiencies or customer satisfaction.

This operational shortfall is compounded by a broader struggle with customer perception. Yelp data reveals an underwhelming average rating of 2.3 out of 5 across over 1,380 Hardee's locations, based on more than 9,000 reviews. Customer feedback frequently highlights issues such as small, overcooked burgers, cold cheese, stale buns, and a general decline in food quality. Such consistent negative reviews on public platforms can severely damage brand reputation and deter potential customers, contributing to declining foot traffic and sales.

Underwhelming Business Metrics

The operational and reputational challenges are reflected in Hardee's business metrics, which lag significantly behind its competitors. A typical Hardee’s location generates less than $1.2 million annually, a stark contrast to Burger King's $1.6 million, Wendy’s $2.1 million, and McDonald’s impressive nearly $4 million. This disparity is particularly concerning given that all four chains operate with similar business models, encompassing all three dayparts and featuring drive-thrus.

Furthermore, Hardee’s average unit volumes are reportedly lower than they were a decade ago, a critical indicator of long-term decline. Over the past ten years, the chain has closed approximately 200 U.S. locations, with 150 of these closures occurring in the last three years alone. Domestic system sales have also witnessed a significant downturn, decreasing by 12% since 2014, according to data from Technomic, a leading industry research firm.

Broader Industry Headwinds and Future Outlook

Hardee's struggles are not isolated incidents but rather symptomatic of broader challenges facing the entire restaurant industry. Technomic's research indicates that closures were a common theme among brands experiencing declining sales in 2024, with approximately 75% of such chains shutting down at least one location. The industry has contended with significant headwinds, including persistent inflation driving up operational costs, evolving consumer spending patterns, and an increasingly competitive landscape.

Higher menu prices, often a necessity to offset rising ingredient and labor costs, have led to a more discerning consumer base. Customers are increasingly seeking value, quality, and convenience, making the competitive environment more intense. While overall Top 500 chain sales have remained positive, climbing for the fourth consecutive year, this growth often masks the struggles of individual brands that fail to adapt effectively.

The ongoing contraction within the fast-food sector signals a period of strategic recalibration. Brands like Wendy's are demonstrating a commitment to efficiency and quality over sheer expansion, while others, like Hardee's, face an uphill battle to regain market relevance and customer trust. The future of fast food will likely favor agile brands that can innovate effectively, manage their franchise networks robustly, and consistently deliver value and a superior customer experience amidst a challenging economic backdrop.