First, Wendy’s conquered breakfast. Now it wants to conquer the end of the day, too.
The Dublin, Ohio-based burger chain plans to focus on late night this summer, company executives said on Wednesday, as labor is more available, traffic during the daypart normalizes and the company looks to build average restaurant sales and unit economics.
“When I start to look at where we have some big growth drivers, late night is going to be one of those,” CEO Todd Penegor told investors, according to a transcript on the financial services site Sentieo/AlphaSense.
“When you look at overall traffic at late-night, it is back to prepandemic levels,” he added. “Our opportunity is to make sure we’re getting our fair share of that.”
Restaurants largely pulled back on the late-night business during the pandemic, as the business came to a screeching halt when concerts and sporting events ended. It was slower to recover, as the labor shortage made workers less apt to take those shifts.
But business is normalized. And companies are reporting that they’ve been able to fill positions, which has enabled them to remain open later in the day.
Wendy’s hasn’t necessarily been as big a player in late night. But the chain sees an opportunity to grow that business. The company has already seen a sales “uptick” during that period as restaurants are open later and Wendy’s used some local marketing to drive business.
“We’ve leaned in on late night for a while in the company restaurants and we’ve seen some great success,” Penegor said. “We know when we look at the rest of the system … we know there is an opportunity. Some of that comes from operations. Some of that is the result of not having staffing we need.”
“But now that we’ve got ourselves staffed appropriately,” he added, the company believes it can grow the daypart.
Wendy’s believes that its drive-thru business, which accounts for 80% of its restaurants’ sales, coupled with the rise of delivery, can help build that daypart. Wendy’s often closes its dining rooms at 10 p.m., focusing on those channels. That enables a restaurant to operate with fewer people.
Penegor said the company could also examine its menu to ensure its restaurants are more efficient during that time of day. “There is a lot of profit to be had,” he said. “It can be a nice contribution to the restaurant economic model.”
Wendy’s has had some success with the breakfast daypart that it introduced in 2020, though the company is no longer providing data on those breakfast sales. Yet it was approaching 10% of a typical restaurant’s sales. Company executives believe more growth is to be had in the morning, as its sales percentage remains well below its biggest competitors, notably the giant McDonald’s.
For the company, growing demand can help boost overall unit volumes, which may improve profitability and prompt operators to build more locations—a key goal of the chain. Wendy’s unit volumes approached $2 million per store last year, according to data from Restaurant Business sister company Technomic.
Those volumes are higher than, say, the $1.5 million at a typical Burger King or the $1.1 million at Hardee’s. But it remains well behind that of McDonald’s.
“When I start to look at where we have some big growth drivers, late night is going to be one of those and breakfast will continue to be one,” Penegor said. “And we will continue to win like we have been at lunch and dinner.”
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