How Wendy’s changed the quick breakfast game
Breakfast, however, ended the year at 7% in sales, as Wendy’s reported 5.5% growth in comps in the fourth quarter. Breakfast contributed about 6.5% to Wendy’s U.S. same-store sales and “led a significant increase in restaurant AUVs in 2020,” CEO Todd Penegor said at the time.
The following quarter, breakfast remained at 7% even as Wendy’s rest-of-the-day activities increased “very, very sharply,” Penegor said, suggesting the overall recovery will drive breakfast to its sides. Comparable store sales increased 13% during this period.
And Wendy’s did all of this with a breakfast hovering around the 50% awareness mark, which means there’s still a lot of ground to pursue.
So much so that executives said they expect to grow breakfast 30% in 2021 through a combination of year-over-year comp expansion via higher average weekly sales, as well as rolling over two months where Wendy’s did not launch a nationwide breakfast. Also, increased marketing now that the discount program is over.
All told, Penegor said, Wendy’s is confident the breakfast can hit 10% of sales by the end of 2022. If it does, we’re talking about a roughly $1 billion business.
There are reasons to be optimistic. One of the best potential predictors of what’s to come could be the 300 traditional restaurants that offered breakfast before Wendy’s rolled out in March 2020. These stores have increased the daytime share to more than 10% of the mix.
It’s about creating a habit, CFO Gunther Plosch noted in May. “It’s a matter of time,” he said. “Breaking the habit is all about investments, isn’t it? That’s why we’re investing around $15 million [in 2021] to ensure we are doing the right thing – raise awareness, awareness leads to trial, trial leads to new trial, and repetition leads to growth.
In the first quarter of 2021, all of Wendy’s breakfast metrics improved. Sales dollars have increased. Raising awareness. Repeat business checked.
Wendy’s hasn’t been shy about positioning itself throughout and into the future. Wendy’s CMO Carl Loredo called the competition realm “a world of frozen arches,” a not-so-veiled reference to McDonald’s, which six years ago held just 17.4% of morning’s share, according to Euromonitor.
If you look at the reason Wendy’s was born in 1969, Kane says, “it was to be a better alternative to McDonald’s and Burger King 50 years ago. And it is still the case today. »
So in that regard, Wendy’s breakfast return mirrors some of her previous ones. Quality first is always the banner. “We needed to be a better alternative that was meaningful in their perception of food quality than the choices that were already part of their daily routine,” says Kane.
Customers have recognized this. Perceptions of quality and value have not suffered during COVID.
“We came into the morning game as an underdog,” Loredo said in January. “And we launched it in the middle of COVID. And yet, here we are, less than a year later, and we face competitors who have been in the market for 50 years. Literally going from a breakfast nobody to a breakfast someone, and thoroughly loving every minute of it.
Breakfast has quickly become Wendy’s highest-rated part of the day, in terms of guest satisfaction scores. It also enjoyed high repeat orders. All the while, Penegor said, a “pretty large percentage” of existing customers still hadn’t tried it.