Wendy's cashes in on leasehold sales

The decision of burger chain Wendy's to pull out of the UK made the company more than £1.5m when it sold leaseholds on its restaurants.

The results reflect the strength of competition for central London sites, especially between fast-food outlets.

Wendy's had 10 leaseholds in the UK. When a rental agreement is ended early (they are usually set for five years) the tenant may be given a payout if the property market is booming. If there is little demand for property, the tenant may have to make an extra payment to the landlord or the new tenants.

McDonald's paid about £750,000 to take over Wendy's London sites in Shaftesbury Avenue and York Way, near King's Cross. Wendy's received another £750,000 for returning its flagship restaurant in Oxford Street to landlord Norwich Union, which then leased the site to McDonald's.

The chain's Briggate restaurant in Leeds was also taken over by McDonald's, for an undisclosed sum. Wendy's was paid £50,000 for assigning the lease of its Croydon branch to sports and camping equipment chain the Outdoor Group.

The chain's Watford branch went to travel agent First Choice. In west London, KFC took over the Wendy's Acton branch and Greggs took over its Hounslow restaurant.

Wendy's was paid an undisclosed sum to return its premises in Wood Green, north London, to its landlord. The building has since been leased to the clothes shop Next.

However, the company paid out undisclosed sums to the new tenants, as well as a year's rent - about £89,000 - to return its branch in Uxbridge, Middlesex, to the landlord.

Competition was fierce for Wendy's restaurants, said Andrew Smith, of estate agent Blair Kirkman. "When you get players like Burger King and KFC in the running, there's lots of competition to gain the market share.

"Speed was especially important here - Wendy's was pulling out of the UK completely, so it wanted companies that had the financial clout to move very quickly. "There was interest from independents, but the bigger fast-food chains had the advantage."

Wendy's blamed high property and operating costs when it announced the closure of its company-operated restaurants in the UK last October.

The chain still has about 40 franchised restaurants in the UK, other parts of Europe and the Middle East.

by Linley Boniface