Restaurants Simplify by Selling Real Estate

NEW YORK ( TheStreet) -- In the restaurant business, companies that own significant real estate are seeing the benefits of selling it, converting it into cash and simplifying operations in the process. 

Denny's (DENN) -- which has staged a somewhat remarkable comeback over the past several years -- has reduced its company-owned locations by about 24% over the past five years. For Denny's, selling real estate helped it pay down debt. But it was also part of the company's efforts to "re-franchise," or move away from company-owned restaurants, toward franchising. That removes some of the risk, and cost, allowing the parent company to collect franchise fees, but stay out of day-to-day restaurant operations.

DENN Chart
DENN data by YCharts

Wendy's (WEN) has also joined the act, reducing company-owned locations by more than 100 over the past year. That is welcome news to shareholders who are finally seeing some upward momentum in the stock, which did little during the first four years following the company's 2009 merger with Triarc.

Wendy's still owned 523 locations (land and building) and an additional 404 buildings on leased land at the end of last year, but Wendy's is not done yet. The real estate sales are just part of Wendy's efforts to also put more restaurants in the hands of franchisees with the goal of getting to about 1,000 company- operated restaurants by the end of 2014's second quarter. As of year-end 2013, there were 1,183 company-operated restaurants, down from 1,406 five years ago.

If you liked this article you might like

Eating McDonald's Stock Might Make You Sick

Investors in Restaurant Stocks Still Need Strong Stomachs

Olive Garden Takes Its Never Ending Pasta Pass to a Whole New $200 Level

Hurricane Irma Is Causing Destruction to Restaurant Stocks

Did Applebee's Ever Have a Shot With Millennials?