GRAND RAPIDS — Restaurant operator Meritage Hospitality Group Inc. is expanding its holdings in Florida with a deal to acquire six Wendy’s locations in Jacksonville.
The deal is expected to add $11 million in annual sales for Meritage, which generated $577.1 million in revenue last year. Executives expect the new stores will be accretive to earnings.
Meritage funded the deal with cash on hand.
As well, the six additions in Jacksonville complement the 54 Wendy’s restaurant locations the company already operates in northern Florida. The company plans to immediately integrate the newly acquired stores into its operating and accounting systems.
For Meritage (OTCQX: MHGU), the acquisitions also fit with a corporate five-year growth strategy to build its base to 400 Wendy’s franchises, according to a statement.
“The newly acquired restaurants will be added to our Wendy’s remodeling schedule, which is designed to modernize the restaurants and enhance the overall guest experience,” Meritage CEO Robert Schermer, Jr. said in a statement.
Meritage recently committed to build 51 new Wendy’s restaurants by the end of 2025 as part of a development agreement with the franchisor. To that end, the company anticipates opening a “record number of new Wendy’s restaurants in 2022 across its 16 states of operation.”
“Restaurant acquisitions, renovations and new restaurant development are important components of our growth-oriented business model, providing opportunities to employees and investors,” Schermer said.
In addition to growing its Wendy’s franchise business, Meritage also has an agreement to develop 50 stores for Taco John’s with exclusive rights to develop more than 200 locations for the Cheyenne, Wyo.-based chain of Mexican-inspired fast food restaurants.
Meritage is investing $200 million into new restaurant development combined for Wendy’s and Taco John’s, according to previous filings. Currently, the company operates 348 restaurants across a 16-state area and employs about 11,000 people.
The company, which has yet to report second quarter earnings, offered guidance for what it expects to be a “stronger second half” of 2022. Meritage anticipates revenue and dividend growth in the 10-percent to 15-percent range.
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