Wendy's selling 640 restaurants

Wendy's plans to sell 640 restaurants in the U.S. and Canada to franchisees to generate cash and reduce expenses, the company said Wednesday.

It will also sell its bakery operation, based in Zanesville, Ohio, this month.

Wendy's shares -- WEN -- sizzled on the news, gaining 7.2% in regular trading.

Wendy's had previously announced plans to sell some restaurants to reduce the number of company-operated locations. It will now sell 380 restaurants this year, including 100 in Canada, and 260 restaurants in 2016. The company said the move will result in $400-$475 million in pretax proceeds and "significantly reduce future capital expenditure requirements."

"Going forward, we intend to buy and sell restaurants opportunistically to act as a catalyst for growth by further strengthening our franchisee base, driving new restaurant development and accelerating Image Activation adoption," CEO Emil Brolick said in a statement.

The fast food chain announced first quarter earnings of $27.5 million, or 7 cents a share, compared to $46.3 million, or 12 cents a share, a year ago. Wendy's beat Wall Street expectations for earnings of 5 cents a share. Revenue fell to $466.2 million, down 10.9% from the year-ago quarter primarily due to selling off restaurants.

Sales at North America stores open at least a year increased 3.2%.