Wendy’s reported a quarterly net income that came in above Wall Street expectations and said it’s selling 425 of its restaurants to franchisees, a move that’s expected to help boost its profit margins.
Fast-food companies often own only a small percentage of their restaurants. This helps keep their operating costs in check and gives them a more stable stream of income that’s tilted toward royalty fees and rent, rather sales at restaurants.
CEO Emil Brolick said in a statement that the sale of the restaurants will also help expand adoption of the company’s new restaurant designs. That’s because Wendy’s plans to sell the restaurants to “well-capitalized” franchisees willing to pay for the remodeling.