The QSR “breakfast wars” redux looks to be more of a marathon than a sprint because of the way COVID-19 has altered morning schedules.
In the meantime, Wendy’s seems to be off to a strong start.
On March 2—before the coronavirus took over news headlines nationwide and prompted widespread home containment—Wendy’s made its nationwide foray into the profitable and highly coveted breakfast daypart.
The chain had pulled out all the stops: carpet-bombing social media with critiques of competitors’ breakfast menus, taking a billboard in Manhattan’s Times Square that posed the question “You up for this?” and running television ads with similar messaging.
“Through our marketing efforts, both on social media and on air, we quickly achieved over 50% awareness” of the breakfast launch, Wendy’s president and CEO Todd Penegor told analysts during a May 6 conference call.
From all indications, it was the success Wendy’s had hoped for. Breakfast helped to increase U.S. same-restaurant sales more than 16% in the first week—accounting for 8% of U.S. sales throughout April without cannibalizing other sales, according to Penegor.
“Out of all the fast-food chains analyzed, Wendy’s is the only brand that saw a significant increase during the morning rush” hours of 8 a.m. through 11 a.m. during March and April, Jocelyn Bauer, communications manager at place-based data provider Placer.ai, wrote in a recent report.
Wendy’s saw 3.4% of its total visits during those hours and months in 2019, but that percentage rose to 5.7% in 2020.
“It’s clear that Wendy’s new breakfast menu is driving traffic and intrigue, even during a time of uncertainty,” Bauer noted.
To help its franchisees achieve profits with breakfast, given the added costs of training and cooking maintenance, Wendy’s has “abated” its marketing fund contributions for the breakfast daypart for the rest of 2020.
“We have withdrawn... our company investments from breakfast and we're evaluating the situation on a go-forward basis,” said CFO Gunther Plosch.
Wendy’s franchises typically pay a royalty of 4% of gross sales, along with 3.5% for national advertising and 0.5% for local advertising.
“We believe that we have a strong marketing plan in place for the rest of 2020,” Penegor explained. “We remain fully committed to breakfast, and as part of this plan, we will continue to apply media pressure in this area, which we have also found to help our lunch and dinner dayparts.”
A Wendy’s rep tells Marketing Daily, “We’re continuing the momentum by offering breakfast via delivery and restaurant drive-throughs, and continue to have several breakfast offers in the Wendy’s mobile app, such as a free Breakfast Baconator with purchase.”
Wendy’s executives have made it clear they have no plans right now to extend breakfast to an all-day offering.
“There is complexity that goes along with that as you shift from the breakfast daypart into the lunch daypart with how we're managing the grills to prepare the food and to prepare it freshly,” said Penegor.