Fast food chains, which frequently had to close early during the pandemic and its labor-shortage-filled aftermath, are opening longer hours and finding more sales during late-night hours.
Wendy’s, for instance, started a push into late-night hours earlier this year, saying that it wants a share of that business. Nearly 90% of the chain’s restaurants are open until midnight or later.
Late-night hours feature higher average checks and customers are more likely to order delivery. “We believe the daypart will expand even further as customers come to know that Wendy’s is reliably open for the high-quality late-night experience they deserve,” Wendy’s CEO Todd Penegor said.
They aren’t the only ones. Jack in the Box, for instance, credited an improved late-night business for its 7.9% same-store sales growth last quarter, as its restaurants got back to their normal operating hours. Late-night transactions have accelerated each of the past three quarters, the company said.
The company kicked off a national marketing campaign targeting that daypart, which helped generate those sales. Jack in the Box used the rapper Snoop Dogg to promote the chain’s Munchie Meal which included a Spicy Sauced and Loaded Chicken Sandwich, a baked brownie and, for some, Snoop air fresheners.
“Our restaurants are in much better shape related to staffing and hours to the point where a national late-night activation such as this was even possible,” CEO Darin Harris told investors, according to a transcript on the financial services site Sentieo/AlphaSense.
He added that the promotion helped other operators extend their hours more quickly than they would have otherwise. And, Harris said, “it enhanced our belief that Jack can truly own late-night.”
Late night was a valuable daypart for a number of chains, particularly those courting younger consumers looking for a bite to eat before or after a night on the town. While many fast-food chains remained open during the pandemic, that daypart was an easy cut, given that the events driving that late-night business—concerts, sporting events and the bar scene—were not open. Restaurants also needed to cut costs wherever they could.
The return of those events did not bring an immediate reopening of late-night business for another reason: Labor made it almost impossible. With availability at an all-time low in 2021 and 2022, restaurants continued to close their doors early.
But many of them are now reopened as more workers are willing to take those late shifts. That has reopened the market.
This time, however, brands are finding the market different. The surge in popularity of delivery, for instance, has opened up new business opportunities many might not have had before. Customers that might have ordered pizza delivery, for instance, may now want a couple of Biggie Bags.
For Wendy’s, the daypart is particularly attractive because it’s not a business it has traditionally had. That means the chain could use late night to build its average unit volumes, which last year were $1.9 million. “It is highly incremental,” Penegor said. “It’s a business that we don’t have today. It’s a strong category that’s been growing consistently the past couple of years.”
As such, the company plans to continue promoting the daypart, which can inform customers that its restaurants are available during those hours. That can build more sales without adding more in the way of labor.
“The more we drive awareness and the more we get customers to us and see us reliably open in the late-night daypart, the more we become part of that routine,” Penegor said. “We see a lot of opportunities there.”
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