Wendy’s has the best breakfast in fast food, in my opinion, but consumers have not responded well to it.
Back in Sept., the chain shared some troubling signs about its morning daypart.
CFO Steven Cirulis shared that breakfast sales had been falling during the chain’s second-quarter earnings call.
“The decline in U.S. same-restaurant sales was driven by a 12.5% decrease in traffic, which included the impact of less discounting and reducing or eliminating breakfast operating hours at certain locations, partially offset by a 5.6% increase in average check,” he added.
Breakfast, in Q2, accounted for 5.5% of overall sales. That’s down from 8% in the second quarter of 2020.
At the time, the chain had allowed a few hundred locations to opt out of serving breakfast based on their locations. Now, Wendy’s has made breakfast optional for all U.S. restaurants.
Wendy’s makes breakfast optional for franchise operators
In the second quarter, Wright admitted that Wendy’s had not fully figured out breakfast.
“Breakfast is important to us, and it’s a complex topic that, frankly, we’re still analyzing very deeply. It can’t be disconnected from the broader strategy and the work that we’re doing there,” he said.
Now, while he’s not throwing in the towel, he has decided to make a major change.
“We’ve revised our breakfast strategy to be location-specific. That means we’re making breakfast optional for all U.S. restaurants, allowing franchisees to focus on the dayparts with the greatest opportunity for profitable growth in their business,” he said.
Wright tried to spin the change as a positive, and not a defeat.
“This option directly supports stronger restaurant economics, improves the employee experience, and importantly, allows operators to concentrate on the food offerings and dayparts that have always been at the heart of Wendy’s,” he shared.
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It was the previous locations that opted out that helped him decide to give all franchise operators that choice.
“We’ve studied restaurants that have previously exited the breakfast daypart, and here’s what we’ve learned. They have improved profitability across lunch, dinner, and late night, and they’re recapturing sales later in the day. In fact, many restaurants have already fully recaptured all of their breakfast sales,” he added.
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Why Wendy’s breakfast failed
While I prefer Wendy’s breakfast to McDonald’s and its breakfast sandwiches to Starbucks’, it never occurs to me to go there. Starbucks is a daily habit, but usually just for drinks, while my travel partners often suggest McDonald’s for breakfast when we’re driving home from a trip.
I should argue, “Wendy’s is actually a lot better,” but McDonald’s is familiar, and Wendy’s isn’t enough better to fight for it. And, while it’s purely anecdotal, I’ve never had a friend suggest Wendy’s for a quick breakfast.
That’s a marketing problem that food quality can’t overcome.
Placer.ai shared some data about Wendy’s breakfast in a June report.
“The data suggests that the brand’s breakfast challenges are not solely a function of weakening consumer demand for QSR breakfast – Wendy’s morning traffic has fallen substantially faster than the category as a whole, pointing to a meaningful share loss,” the website shared.
Leaving breakfast, however, comes with its own risks.
“Even though breakfast accounts for a relatively small share of overall visits (less than 9% of Wendy’s visits take place between 6 a.m. and 10 a.m.), abandoning the daypart risks accelerating traffic declines, and it is not clear that consumers who stop visiting Wendy’s for breakfast will simply shift their visits to lunch or dinner,” Placer.ai shared.
A bigger concern might simply be customer confusion. If you can’t assume Wendy’s has breakfast, then you might not consider it a safe option if you’re driving somewhere unfamiliar.
Related: Starbucks is pulling a breakfast sandwich it launched six years ago
The company said the breakfast decision could unlock up to $200 million in restaurant-level EBITDA across the system.
