Wendy’s to Exit Japan

Wendy’s/Arby’s Group Inc. (WEN - Analyst Report), one of the leading quick-service restaurant companies, recently declared that it will not renew its agreement with its Japanese franchisee, Zensho Co Ltd, after both of them failed to reach an amicable solution on the development of Wendy’s brand in Japan. 

The contract, which expires on Dec 31, 2009, will result in the closure of 71 outlets by the end of the year. Most of these restaurants are located in and around Tokyo. However, the shutdown of these stores will not have a significant impact on the company’s results. 

Zensho Co Ltd, a large food retailer, said that it would now concentrate on its other businesses, such as its Sukiya beef bowl chain. In fiscal year ended Mar 2009, Wendy's in Japan generated $70 million (6.2 billion yen) in sales. 

The company entered the Japanese market in 1980, and opened its first outlet in Tokyo’s Ginza district. Initially, the operations were administered by supermarket chain Daiei Inc., but later in 2002, Zensho Co Ltd, took over control. Other big guns operating in the Japanese market are McDonald’s Corporation (MCD - Analyst Report) and Burger King Holdings Inc. (BKC). 

McDonald's, the world's largest quick-service restaurant operator, had entered the Japanese market in 1971, and opened its first burger shop in Tokyo’s Ginza district. McDonald's, which holds about 65% of the market share in the country, operates more than 3,700 restaurants. Burger King, which operates 16 locations had earlier exited the Japanese market in 2001 but re-entered in 2007.

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