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Wendy’s Franchisee Files For Bankruptcy Reorganization

August 27, 1987

AKRON, Ohio (AP) _ A company that operates 81 Wendy’s restaurants in Ohio and New York is seeking protection from creditors in a filing under Chapter 11 of the U.S. Bankruptcy Code in U.S. District Court in Columbus.

Sam Federico, president of Wendy’s Food Systems Inc., said losses from 25 stores in the Buffalo and Niagara Falls, N.Y., areas forced his company to file Tuesday for bankruptcy reorganization, according to reports carried by the Akron Beacon Journal and the Plain Dealer of Cleveland.

Those losses have made it difficult for the company to repay its debt and meet operating expenses.

Federico said those 25 units are for sale. The company, which has annual sales of about $50 million, will continue operating its 56 restaurants in Akron, Canton, Cleveland and Youngstown, which Federico said are profitable.

Federico said there will be no loss of jobs among the 3,000 employees of Wendy’s Food Systems. The bankruptcy petition, however, included a list of workers who claimed they are owed back wages.

″It is a slightly softer economy (in western New York) than in this area,″ said Federico, explaining why his Ohio restaurants have been more profitable than those in New York. ″We started later and we expanded very rapidly. Sales did not hit projections and we experienced cash flow problems.″

The bankruptcy petition listed assets of $11.7 million and debts of $27 million.

Although the filing was made in Columbus, the company’s operations headquarters is in the Akron suburb of Fairlawn.

The franchisee’s frustrations to some extent mirror the woes suffered by its franchiser, Wendy’s International Inc.

Profits of the Dublin-based fast-food chain, which plummeted from $76.2 million in 1985 to $46.9 million last year, are expected to fall another 47 percent to about $25 million this year, according to analysts’ projections.

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