DUBLIN, OHIO — The Wendy’s Co. is in discussions to sell its bakery operations in Zanesville, Ohio. Emil Brolick, chief executive officer of the Dublin-based fast-food chain, said the bakery is no longer a core asset for the company as it transitions to more artisan buns.
Wendy’s purchased the New Bakery Co. in Zanesville in 1981. The bakery, which makes buns and bread for the restaurant chain’s outlets, employs 320 between two plants in Zanesville. As of December, the bakery was supplying 715 company-owned Wendy’s and 2,232 franchised restaurants, or about half of Wendy’s chain. New Bakery Co. also makes products for other grocery and food products businesses.
The company plans to close on the sale of its bakery operations this month.
“We believe this divestiture will provide us with greater sourcing flexibility as our use of artisan buns has increased with our premium limited-time-only offers,” Mr. Brolick said during a May 6 conference call with analysts to discuss first-quarter results. “In addition, the divestiture will focus our resources on our core restaurant business and eliminate future bakery capital expenditures.”
Todd Penegor, chief financial officer, said during the call that Wendy’s generated about $62 million in sales from the bakery in 2014. He also noted that the company spends about $7 million a year in capital expenditures at the bakery.
“It is one of those things that we have lines that need to be maintained and upgraded,” Mr. Penegor said. “We do direct distribution to the restaurants and to the freezers. And it is one of those investments that over time is going to need some more CapEx put into the facility to continue to keep that facility upgraded. As we looked at the long-term outlook for the business, and looked at where the uses of cash needed to go, and with the evolution of moving from high-speed buns to artisan buns, we looked at that as a non-core asset and thought the appropriate thing to do would be to put it in the hands of a true bakery operator to support our business appropriate moving forward. Then, get a nice return for the sale of that bakery.”Wendy’s plans to update investors on the bakery sale, refranchising restaurants and debt refinancing on June 3.