Wendy's Disrupts Fast Food Breakfast Market as Traditional Behemoths Struggle
With many eateries being forced to close down either temporarily or permanently, the restaurant industry is struggling to stay afloat amid the current global pandemic.
Launching anything new would be a risky move for any business during this time.
So one might imagine that Wendy’s wouldn’t see great success after launching its breakfast menu in early March, just weeks before the coronavirus pandemic forced most restaurants to close for in-person dining.
Sales at McDonald’s, Taco Bell and Burger King dropped by 20 to 35 percent in the last two weeks of March, according to Business Insider, while Wendy’s reported same-store sales were down 29 percent in the final week of that month.
But breakfast offerings from Wendy’s appear to have struck a chord with consumers.
The well-known hamburger chain’s new menu surpassed expectations, with breakfast items quickly coming to account for 8 percent of the chain’s sales, CNN reported earlier this month.
The breakfast wars had begun.
“Breakfast’s immediate popularity helped boost same-store sales to 16% the week it launched,” Business Insider reported in May. “Wendy’s sales have recovered since the late March slump, with same-store sales down 2% in the most recent week.”
During an earnings call in February, Chief Financial Officer Gunther Plosch said Wendy’s had invested $17 million toward promoting its breakfast menu launch. He said he believed that Wendy’s would be “America’s favorite breakfast nationally across the U.S.”
“I could not be more proud to say that we have achieved our ninth consecutive year of North America same-restaurant sales growth, which is a streak we plan on keeping alive in 2020 and beyond,” Plosch added.
Fast food joints have made plenty of changes amid the pandemic, with many offering drive-thru-only service (with plastic shields put up at the window) or cashless transactions.
The competition, however, hasn’t stopped.
According to Restaurant Business Online, Dunkin’ and Starbucks — both predominantly known as breakfast chains — reported deep declines in second-quarter U.S. revenue, as the higher share of Americans working from home translated to fewer morning commutes.
Indeed, Starbucks CEO Kevin Johnson has noted that the “disruption to the weekday morning routines, notably commuting to work and school, is a headwind.”
Similarly, less customers are appearing at Dunkin’ between 6 a.m. and 9 a.m., but “some are visiting from 11 am to 2 pm for snacks or non-coffee drinks,” CNN reported.
It’s not just Starbucks and Dunkin’ — McDonald’s same-store U.S. sales took an 8.7 percent dive last quarter in comparison to 2019.
The crispy hash browns and flaky breakfast sandwiches of McDonald’s that many have come to know and love were up for a challenge against Wendy’s Breakfast Baconators and Frosty-ccinos.
McDonald’s is considered the world’s largest fast food chain, but even prior to the pandemic, it had struggled.
McDonald’s CEO Chris Kempczinski said during an earnings call in July that breakfast was “one area of pressure.”
In late March, the chain temporarily pulled its all-day breakfast menu, among other changes made in an attempt to adjust to economic pressure that COVID-19 brought to the U.S.
Meanwhile, Taco Bell removed its breakfast menu from some locations altogether.
But the launch of the Wendy’s breakfast menu in March took exactly the opposite approach.
And with many people opting for drive-thru or delivery rather than shopping for food in grocery stores, Wendy’s decision appears to have been a success, with same-store U.S. sales dropping by just 4.4 percent in the second quarter and actually rising in June and July.
There’s no telling when the pandemic will end the abnormal cycle the fast food industry is facing, but it’s no secret that the crisis is hurting even the largest of chains.
Whatever happens in the coming months, it appears 2020 will continue to be the year of the breakfast wars.
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