Fast-food chain Wendy's (NASDAQ:WEN) announced this week that it sold all of its 24 company-operated restaurants -- plus two additional future locations -- in the Seattle area to a franchisee for approximately $15 million, or about $625,000 per restaurant.
As a result of the transaction, which is expected to close by the end of the second quarter of 2014, longtime franchisee Cedar Enterprises will become the third-largest franchise holder of Wendy's restaurants, operating 170 locations in five states, including 47 in Washington.
In July, Wendy's unveiled its system optimization initiative, which includes selling approximately 425 company-owned restaurants to franchisees by the middle of 2014 in a bid to lower company ownership from 22% to 15%. Wendy's still has about 1,350 company-owned sites, but by developing a more focused portfolio of restaurants, the chain seeks to generate higher restaurant-operating margins. The plan also includes the consolidation of regional and divisional territories.
Noting that Cedar Enterprises was an early adopter of the chain's reimaging and new restaurant development program, Wendy's President and CEO Emil Brolick said in a press release, "We are expanding our relationship with successful, well-capitalized franchisees that are proven operators with a strong commitment to our Image Activation reimaging program. Cedar Enterprises -- led by President Jim Evans and Franchise Owners Joe Karam, David Karam and Jim Karam -- has been an important part of the Wendy's system since 1975."
Included in the agreement between Wendy's and Cedar is a plan to "reimage" certain restaurants in the new Image Activation design. The agreement also includes a development plan for new restaurants.
Based in Dublin, Ohio, Wendy's has approximately 6,500 franchise and company-operated restaurants in the U.S. and internationally. It generated $2.5 billion in revenues of the trailing 12-month period ending June 30.
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