Breakfast bacon and seasoned potatoes are on the breakfast menu at Wendy’s on March 2, 2020 in New York City.
David Di Delgado | Getty Images
Two years ago, Wendy’s launched a nationwide breakfast menu, finally crossing the finish line and achieving the goal it had been striving for and failing for nearly four decades. Covid lockdowns followed.
Before the pandemic, breakfast was the only meal of the day, attracting a growing number of fast food customers. Attendance at lunch and dinner declined as consumers opted for healthier options or cooked at home. For Wendy’s, entering the breakfast market would allow the burger chain to attract new sales without compromising lunch, snack or dinner attendance.
Wendy’s stuck to its plan even as Covid took over, serving up egg sandwiches and burgers for breakfast as rival restaurant chains opened later or cut back on their early morning offerings. It currently ranks third among all burger chains in the competitive breakfast category, behind Restaurant Brands International’s Burger King and the dominant McDonald’s.
By Q4 2021, breakfast sales accounted for approximately 8% of Wendy’s US sales, still falling short of the chain’s goal of 10% of total US sales. The company increased breakfast sales by about 25% last year, and Wendy’s believes there is more room for growth in this part of the day. In 2022, the burger chain expects breakfast sales to grow another 10-20%.
“For us right now, we’ve established ourselves very solidly and very quickly as number three, but we’re only a fraction behind Burger King,” Wendy’s USA president Kurt Kane said in an interview. “Our first task is to leave them behind, and we are very confident that we can do it here in the not too distant future.”
Burger King’s U.S. business has struggled in recent years, and its poor breakfast performance hasn’t helped. In the fourth quarter, Burger King’s U.S. sales grew just 1.8%, outperforming McDonald’s and Wendy’s in their home markets.
And while McDonald’s is still the dominant player in the early morning hours, Kane believes Wendy’s could eventually become number one.
“We think Frozen Arches has had a lot of time at the top of the breakfast category, but I think we will obviously continue to cut that and absorb share in the rest of the category,” he said.
In late February, Wendy’s announced that the breakfast menu would be available at all Canadian restaurants this spring.
The company’s shares are up 7.6% over the past 12 months, bringing its market value to $4.76 billion. The stock underperformed the S&P 500 but outperformed 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 eateries and switch to serving food through delivery, takeout and drive-thru.
The company has discussed with franchisees the possibility of changing their breakfast plans once the restrictions go into effect, but their operators have pledged to maintain momentum, Kane said.
“We got off to a great start, far ahead of any forecast any of us could have hoped for in those first two weeks,” Kane said. “We knew that if we could continue like this, we could develop new habits and build a lot of fans in the process.”
In any case, Wendy’s had an advantage over the competition, since the first two and a half hours of serving breakfast were calculated only on the car.
On top of that, Wall Street analysts expected its fast-food competitors to step up their own breakfast offerings and advertising to keep customers loyal. Instead, many restaurants were saving money by cutting back on advertising and ditching promotions as their sales plummeted.
Wendy’s took the opportunity to spend more on marketing and outreach.
The pandemic has affected not only the marketing plans of competitors. Some fast food restaurants have even stopped selling morning food due to staffing issues and to maintain their profitability. Many Taco Bell establishments began to open after breakfast and only resumed their previous schedule in September of this year.
However, Wendy’s isn’t immune to some of the pandemic’s pain points. Like the rest of the restaurant industry, its franchisees have struggled with staffing shortages from time to time, though Kane said efforts to hire more workers ahead of the breakfast launch helped.
Change of routine
The launch time of Wendy’s breakfast gave consumers the opportunity to start a new morning habit while the rest of their daily routine was turned upside down.
“Despite the fact that we would have written the script differently, it may have really helped us because it gave us the opportunity to really build it in a stable way,” said Kane.
Many consumers have stopped commuting to work or school, so they have changed their breakfast routine. Cereal and orange juice sales have rebounded sharply after years of declines, but restaurant demand for their breakfast has plummeted. Starbucks, for example, has seen many of its customers delay their visits by opting for afternoon coffee instead of their morning cup.
Prior to the pandemic, Wendy’s expected the busiest time to be from 7 am to 9 am, when consumers had left for work. Instead, the company faced the longest breakfast lines in its last half hour.
Of course, this pattern is changing again as more consumers return to offices and schools.
“Even though the picture has changed, breakfast mobility has largely returned to pre-pandemic levels,” he said.
September to November According to The NPD Group, online and in-person traffic to restaurants at breakfast time is up 11% from a 10% decline last year.
As early customers return, Wendy’s is using aggressive promotions to attract patrons to its restaurants and raise awareness of its breakfast offerings. From November to mid-December, he sold his egg and cheese cookie sandwiches — with your choice of sausage or bacon — for as little as $1. Kane said he expects similar deals in the coming months.
The chain also recently unveiled its first addition to the breakfast menu since its debut: Hot Chicken Honey Cookies. This is a play on honey chicken biscuits, which is related to bacon breakfast as Wendy’s best selling breakfast foods.
However, among the two favorites of the public, Kane has a clear favorite: he claims to have eaten 720 breakfast bacons since the official launch – about one a day.
“Some days you get two, some days you get none, but you have to balance that out,” Kane said.