How Wendy’s Came To Whalley

A new restaurant has opened on Whalley Avenue. No officials cut a ribbon. No jubilant developer hired a p.r. firm to celebrate a multimillion-dollar private investment, the creation of dozens of jobs, and the boost to the tax rolls.

But New Haveners have been showing up to come to buy hamburgers, fries, and milkshakes.

The story of how one humble chain restaurant quietly came into New Haven, while just as relevant as highly publicized store openings to the city’s bottom line, reveals how multi-million-dollar decisions affecting our economy are sometimes made: In this case, because of expansion plans of a Michigan company as well as the need for New York real-estate investors to dump some cash because of an exemption buried in the federal tax code.

The new restaurant is Wendy’s. It’s just the latest fast food franchise to open on a a stretch of Whalley Avenue dotted with national chain outletss serving up cheap, often unhealthy eats.

On Dec. 30, 2018, the Wendy’s opened at 67 – 81 Whalley Ave. The 0.61 acre lot formerly housed a vacant one-story building and parking lot, formerly the home of a Midas auto-repair facility.

The Wendy’s sits on a half-mile stretch of Whalley Avenue already teeming with fast food restaurants. There’s a Popeye’s Louisiana Kitchen at the corner of Dwight Street, a Papa John’s Pizza near the corner of Webster Street, a Burger King and a Subway near the corner of Orchard Street, a Kentucky Fried Chick near the corner of Sherman Avenue, and a McDonald’s right across the street next to the Stop & Shop.

Ana Pelhank, a project engineer with the restaurant’s Michigan-based developer Meritage Hospitality Group, said her company decided to build out a new Wendy’s on the vacant Whalley lot between Dwight and Webster as part of its recent expansion in the state of Connecticut.

“We recently bought a bunch of other Wendy’s in the state of Connecticut,” Pelhank told the Independent. ​“We’re new to the Connecticut market, but now that we’re in this market, we’re looking for new location. Our real estate team found this property.”

Meritage is a fast food restaurant development and management company based out of Grand Rapids, Michigan. Pelhank said the company currently operates 309 restaurants in 16 states. Most of those restaurant’s are Wendy’s. Its website says that Meritage’s restaurants employee more than 9,400 people.

Meritage first started gathering city administrative approvals for the new restaurant in June 2018, when it worked with the Meriden-based architecture company BL Companies to receive a special exception from the city’s Board of Zoning Appeals (BZA) to build a drive-in restaurant located less than 250 feet from a residential use in a BB (automobile sales) zone. The BZA granted the special exception on the condition that the developers build a fence along the property’s western boundary per the neighboring property owner’s request.

At that time, the vacant Whalley Avenue property was stilled owned by Providence, Rhode Island-based developer Eugene Goldstein through his holding company 67 Whalley Avenue LLC. Matthew Bruton of BL Companies submitted the special exception application on behalf of the applicant Inspired by Opportunity LLC, a holding company owned by the Michigan-based Meritage, as well as on behalf of the landlord, 67 Whalley Avenue LLC.

On July 18, Meritage received its next, and final, administrative approval before going ahead with the actual purchase of the property and subsequent development.

On that date, the City Plan Commission (CPC) signed off on the project’s site, as presented by BL Companies’ Bruton, again working on behalf of the applicant Inspired by Opportunity LLC and the landlord 67 Whalley Avenue LLC.

“I’d like to put all of my support and the community’s support behind this Wendy’s project,” Dwight Alder Frank Douglass told the commission at that July meeting.

Step 1: Getting It Built

The commission approved the development of the 2,170 square-foot restaurant and drive-thru along with its 22 paved parking spaces. The developers promised in their application to install concrete sidewalks and a subsurface stormwater detention system, and to drop the site’s impervious ratio from 98 percent to 72 percent.

After getting the necessary BZA and CPC approvals, another holding company owned by the Michgan-based Meritage, this one called Restaurant Holdings LLC, purchased the property at 67 – 81 Whalley Ave. for $850,000.

“We started pretty much right away,” Pelhank said about construction of the new Wendy’s. ​“We started that the end of August, and our construction was finished int he middle of December.” The store opened on Dec. 30.

Pelhank estimated that the entire construction and development of the site cost roughly $1.6 million to complete. She said the new restaurant employs around 30 people.

She also said that the building’s design is brand new to the Wendy’s franchise. Only one other Wendy’s that Meritage operates in Michigan has this same design, she said, which is tiered, with wooden slates and glass paneling, and is a little less boxy than the standard design.

Step 2: Flip, Reinvest

Just a week after the restaurant opened, Meritage sold the developed property for $3.1 million to a New York City-based real estate investment company that specializes in upscale multifamily apartment complexes on the Upper East Side.

On Jan. 7, 2019, Meritage’s Restaurant Holdings LLC sold the 67 – 81 Whalley Ave. property to GPG New Haven LLC, a holding company owned by New York developers Randy and Jason Glick.

Then on Jan. 16, GPG New Haven signed a 20-year lease with Meritage’s Inspired by Opportunity LLC. The lease runs through Jan. 31, 2029, and grants the Michigan-based fast food operator five consecutive five-year options to extend the initial term of the lease.

“This is very typical of us,” Pelhank said. ​“We usually buy a property, build it out how we want it, then we sell it and try to build more restaurants” or do renovations to existing properties with the proceeds.

Jason Glick, one of the owners of GPG (or Glick Property Group), said that investing in fast food restaurants is not his company’s usual business. Rather, GPG bought the Wendy’s property to fulfill an investment requirement necessary to avoid having to pay capital gains tax on a $232 million worth of mostly vacant buildings on the Upper East Side that the investors sold in August 2018 to make way for a new medical complex.

An IRS loophole called a 1031 exchange allows real estate investors like GPG to defer paying taxes on capital gains, that is, on when they sell investment properties, so long as they use the proceeds from that sale to buy up new investment properties within 180 days of the sale.

“We very much like the location relative to Yale,” Glick said about why they chose this particular Wendy’s out of all the potential properties they could have bought to satisfy the 1031 exchange. ​“The triple-net business is not our typical business. But this fit our particular requirements.”

“Wendy’s Is Good Food”

At the new Wendy’s on Tuesday, customers and employees alike praised the new fast food joint for providing both tasty chicken nuggets and jobs for locals at an easily accessible location.

“I am so happy they put this here,” said Naila Smalls, who picked up a Junior Bacon Burger and 10 chicken nuggets with her mom, Wenona Hollby.

“Wendy’s is good food,” said Hollby. ​“They use real chicken.”

Ron Gowie agreed as he finished up his 10-nugget meal and unlocked his bike from the rack in front of the store.

“It’s a good thing for the community,” he said about the new Wendy’s. He praised it for bringing more jobs to that stretch of Whalley, and for being right off the 243 bus line.

Inside the store, store manager Ory Sharpe and crew member Jessie Garrett said that the new location has 44 employees.

“We add employment to the community,” said Sharpe.

Garrett said she moved from the Wendy’s in Derby to work at the one in New Haven. She has worked for the franchise for 14 years. ​“The crew,” she said in response to what she likes most about Wendy’s. ​“The managers. And the food.”