Breakfast bacon and seasoned potatoes are part of the breakfast menu at Wendy’s restaurants on March 2, 2020 in New York City.
David Dee Delgado | Getty Images
Two years ago, Wendy’s launched its breakfast menu nationwide, finally crossing the finish line for a goal it’s tried and failed for nearly four decades. Then came the Covid lockdowns.
Before the pandemic, breakfast was the only meal that was attracting increasing numbers of customers to fast food chains. Lunch and dinner traffic was declining as consumers chose healthier options or prepared their meals at home. For Wendy’s, getting into breakfast would allow the burger chain to attract new sales without cannibalizing its lunch, snack or dinner traffic.
Wendy’s stuck to its plan even when Covid took hold, serving egg sandwiches and burgers for breakfast as rival restaurant chains opened later or reduced their early morning offerings. It now has the third-largest market share of any burger chain in the competitive breakfast category, behind Restaurant Brands International’s Burger King and a dominant McDonald’s.
In the fourth quarter of 2021, breakfast sales accounted for approximately 8% of Wendy’s sales in the United States, still below the chain’s goal of 10% of total sales in the United States. Last year, the company increased its breakfast sales by about 25%, and Wendy’s thinks the daytime portion has more room to grow. In 2022, the burger chain expects its breakfast sales to grow another 10-20%.
“For us, right now, we’re very solidly and very quickly established as number three, but we’re only a full point behind Burger King,” Wendy’s U.S. president Kurt Kane said in a statement. interview. “Our first job is to leave them behind, which we are very confident we can do here in the not too distant future.”
Burger King’s U.S. business has struggled in recent years, and its weak breakfast performance hasn’t helped. In the fourth quarter, Burger King’s U.S. same-store sales rose just 1.8%, lagging McDonald’s and Wendy’s metrics for their home markets.
And even though McDonald’s is still the dominant player in the early morning game of the day, Kane said he thinks Wendy’s could eventually become number one.
“We think Frozen Arches have had a lot of time at the top of the breakfast category, but I think we’ll obviously continue to stifle that and gobble up share in the rest of the category,” he said. .
In late February, Wendy’s announced that it would be bringing its lunch menu to all of its Canadian restaurants this spring.
Shares of the company have risen 7.6% over the past 12 months, bringing its market value to $4.76 billion. The stock underperformed the S&P 500, but fared better than shares of McDonald’s and Restaurant Brands International.
Become a Pandemic Winner
Wendy’s Breakfast was only available nationwide for about two weeks before states and localities ordered restaurants to close their dining rooms and switch to serving their food through lanes. delivery, take-out and drive-thru.
According to Kane, the company discussed changing its breakfast plans with franchisees once the lockdowns came into effect, but their operators pledged to keep the momentum going.
“We’re off to a fantastic start, well ahead of any projections any of us could have hoped for in those first two weeks,” Kane said. “We knew if we could keep going, we could form new habits and build a lot of fans along the way.”
Wendy’s was a step ahead of the competition anyway as it had already designed the first two and a half hours of its breakfast service to be drive-thru only.
On top of that, Wall Street analysts had predicted its fast-food rivals would increase their own breakfast offerings and advertising to retain customers. Instead, many restaurants found themselves hoarding money, cutting advertising and eliminating promotions as their sales plummeted.
Wendy’s took the opportunity to spend more on marketing and awareness.
The pandemic hasn’t just impacted competitors’ marketing plans. Some fast food outlets have even stopped selling the morning meal due to staffing issues and to maintain profitability. Many Taco Bell locations began opening after breakfast hours and didn’t resume their previous schedule until September.
Still, Wendy’s has not been immune to some of the pandemic’s pressure points. Like the rest of the wider restaurant industry, its franchisees have at times faced staff shortages, although Kane said efforts to recruit more workers ahead of the breakfast’s launch have helped.
The timing of Wendy’s breakfast launch gave consumers the opportunity to start a new morning habit just when the rest of their daily routines were upended.
“Even though it wasn’t how we would have written the playbook, maybe it helped us because it gave us the opportunity to really build it up on a regular basis,” Kane said.
Many consumers have stopped going to the office or school, so they have changed their breakfast habits. Cereals and Orange juice sales have exploded after declining for years, but restaurants have seen demand for their breakfast plummet. Starbucks, for example, has seen many of its customers delay their visits, opting for a coffee after lunch instead of a morning cup.
Before the pandemic, Wendy’s predicted its busiest hours would be 7 a.m. to 9 a.m., when consumers commuted to work. Instead, the company saw its longest breakfast queues in the last half hour of service.
Of course, that pattern is changing again as more consumers return to offices and schools.
“Even though the pattern is different, breakfast mobility is pretty much back to what it was before the pandemic,” he said.
From September to November, Online and in-person traffic to restaurants during breakfast hours increased 11%, compared to a 10% decline a year ago, according to The NPD Group.
As early bird customers return, Wendy’s has used aggressive promotions to drive traffic to its restaurants and raise awareness of its breakfast offerings. From November to mid-December, he sold his egg and cheese cookie sandwiches — with a choice of sausage or bacon — for just $1. Kane said he expects similar deals in the coming months.
The chain also recently launched its first addition to the breakfast menu since its debut: the Hot Honey Chicken Biscuit. It’s a play on the Honey Chicken Cookie, which is tied with Baconator Breakfast as Wendy’s top-selling breakfast items.
Between the two crowd favourites, however, Kane has a clear favourite: he claims to have eaten 720 breakfast bacons since official launch – roughly one a day.
“Some days you have two, other days you don’t, but you have to balance it,” Kane said.