Breakfast, despite everything, finished the year at 7 percent of sales as Wendy’s reported Q4 comps growth of 5.5 percent. Breakfast contributed roughly 6.5 percent to Wendy’s U.S. same-store sales and “drove a meaningful increase to restaurant AUVs in 2020,” CEO Todd Penegor said at the time.
The following quarter, breakfast remained at 7 percent even as Wendy’s rest-of-the-day business grew “very, very strongly,” Penegor said, suggesting overall recovery will carry breakfast right alongside it. Same-store sales rose 13 percent that period.
And Wendy’s did all of this with breakfast sticking around the 50 percent awareness mark, meaning there remains plenty of runway left to chase.
So much so executives said they expect to grow breakfast by 30 percent in 2021 through a combination of year-over-year comps expansion via higher average weekly sales, as well as rolling over two months where Wendy’s didn’t have breakfast launched nationwide. Plus, heightened marketing now that the abatement package ended.
In all, Penegor said, Wendy’s is confident breakfast can reach 10 percent of sales by the end of 2022. If it gets there, we’re talking a roughly $1 billion business.
There’s reason to be optimistic. One of the best potential predictors of what’s to come might be the 300 legacy restaurants that offered breakfast prior to Wendy’s rollout in March 2020. Those stores have grown the daypart to more than 10 percent of mix.
It’s all about creating a habit, CFO Gunther Plosch noted in May. “It’s a matter of time,” he said. “To break the habit is a matter of investments, right? So that’s why we’re investing around $15 million [in 2021] to make sure we are doing the right thing—driving awareness, awareness leads to trial, trial leads to repeat trial, and the repeat leads to growth.”
In Q1 of 2021, all of Wendy’s breakfast metrics improved. Sales dollars grew. Awareness lifted. Repeat business ticked up.
Wendy’s hasn’t been shy about its positioning throughout and going forward. Wendy’s CMO Carl Loredo referred to the competitive field as “the world of frozen arches,” a not so-veiled reference to McDonald’s, which just six years ago held 17.4 percent of the morning 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 than McDonald’s and Burger King 50 years ago. And that’s still the case today.”
So in this respect, Wendy’s breakfast return mirrors some of its past ones. Quality first is still the banner. “We had to be a meaningful better alternative in their perception on the quality of the food than the choices that were already part of their everyday routine,” Kane says.
Customers recognized it. Quality and value perceptions didn’t suffer during COVID.
“We came into the morning daypart as an underdog,” Loredo said in January. “And we launched it in the midst of COVID. And yet here we are, less than a year into it, and we’re matching competitors that have been in the market for 50 years. Literally going from a breakfast nobody to a breakfast somebody, and loving the heck out of every minute of it.”
Breakfast quickly became Wendy’s highest-rated daypart, in terms of guest satisfaction scores. It also appreciated high repeat orders. All the while, Penegor said, a “fairly large percentage” of existing customers still hadn’t tried it yet.