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Meritage Hospitality Group Inc. (OTCQX: MHGU) reported first-quarter 2026 results for the period ended March 29, 2026, with sales declining year over year and losses widening as the company continued its turnaround efforts and planned restaurant closures.
Sales: $132.6 million, down from $154.5 million in the same period last year. The company attributed the decline to approximately 40 fewer restaurants in the current period and reduced hours during the morning daypart in certain locations.
Earnings (loss) from operations: $(10.6) million, compared with $(3.7) million a year earlier. Meritage said the current period included one-time charges of $4.5 million related to planned permanent restaurant closures and restructuring costs.
Net earnings (loss): $(9.6) million, versus $(4.3) million in the prior-year quarter.
Consolidated EBITDA (non-GAAP): $(4.5) million, compared with $2.2 million in the same period last year.
Meritage CEO Robert E. Schermer, Jr. said the company’s strategic partnership with Wendy’s “Project Fresh” initiative drove “deliberate, high-conviction decisions” to optimize its portfolio. The company reported closing almost 60 select locations to date and reducing hours during the morning daypart in certain locations to optimize operating schedules.
Management said these initiatives are expected to unlock approximately $10.0 million in annualized restaurant EBITDA improvements going forward. While 2026 is described as a rebuilding year, the company cited progress in turnaround initiatives including product innovation and a marketing calendar with collaborations, and said it expects to accelerate margin performance through the remainder of 2026.
For the full year 2026, Meritage provided the following outlook:
Meritage said it is working with lenders and its franchisor on adjusted contract terms, which it said provide time to collaborate with lenders while focusing on restaurant financial performance. The company stated it is making progress toward its turnaround plan and moving toward a return to normalized contract terms.
The company’s five-year growth plan includes a rebuilding and stabilization phase, with plans to resume image activation across its Wendy’s portfolio, expand Morning Belle locations, and execute Bojangles restaurant conversions. Meritage also said it is pursuing refinancing opportunities and strategic capital partnerships as it works to normalize credit agreements and position the company for its next phase of growth.
Meritage currently operates 344 restaurants across Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, Ohio, Oklahoma, Tennessee, Texas and Virginia. The company is headquartered in Grand Rapids, Michigan, and employs approximately 9,000 people. As of March 29, 2026, Meritage reported fully diluted weighted average common shares outstanding of 6,704,000.
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