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Meritage Hospitality Group filed for Chapter 11 bankruptcy protection last week, pointing to deteriorating beef economics and what it called "reduced frequency and effectiveness of Wendy's brand marketing" during the chain's prior leadership as central causes of its collapse.

The Grand Rapids, Michigan-based company, which operates 314 Wendy's locations across 15 states as well as a Bojangles restaurant and several other outlets, reported approximately $651 million in liabilities against $725.9 million in assets. The company said its roughly 8,850 employees will continue to receive wages and benefits, and its restaurants will remain open during the restructuring.

According to a sworn statement submitted by Chief Restructuring Officer Kevin Cleary, the company shuttered 60 Wendy's locations it deemed underperforming late last year and intends to exit additional sites โ€” through closures or sales โ€” as the Chapter 11 case proceeds. Court papers also reveal an active "franchise termination dispute" with Wendy's Co., which is claiming it is owed roughly $147 million in total โ€” broken down as $27.3 million in unpaid royalties and fees and a separate $119 million in operations fees.

Meritage said its costs were compressed from several directions at once: beef prices surged by close to 19% over the April-through-June quarter relative to the same period a year earlier, a spike the company tied to import tariffs and an unusually depleted national cattle supply. The company also attributed some of the sales disruption to winter weather tied to the La Niรฑa cycle across its southern markets. It added that "deep discounting and national promotional strategies at the brand level" weighed on its margins.

As reported at the time of the filing, Meritage CEO Bob Schermer Jr. told investors at a conference in June that store-level earnings before interest, taxes, depreciation, and amortization fell 48% in 2025. The company worked with its lenders and franchisor for more than a year before concluding that a court-supervised restructuring was its best path forward.

The bankruptcy arrives as Wendy's Co. itself is navigating a prolonged downturn. Same-store sales across Wendy's U.S. system have now fallen for six consecutive quarters โ€” down 7.8% in Q1 of this year and 7.0% in Q2 โ€” and the chain has surrendered its long-held status as the country's second-biggest burger brand, with Burger King having reclaimed that ranking, according to Bloomberg. New Wendy's CEO Bob Wright pulled the company's 2026 financial outlook and cut its dividend last month as he works to reverse the slide. A Wendy's spokeswoman said the company focuses on working with franchisees experiencing difficulties "to identify the best and most sustainable path forward."

The case is filed in the U.S. Bankruptcy Court for the Western District of Michigan.