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Why Wendy’s breakfast will work, and why it won’t

The chain is a potentially formidable competitor in the mornings, but it has made some compromises, says RB’s The Bottom Line.
Photograph courtesy of The Wendy's Co.

The Bottom Line

Wendy’s officially began serving breakfast on Monday, even though it has actually been open in the morning for days to prepare

The introduction is one of the more closely watched and hotly competitive daypart moves in years, one made all the more interesting given the fact that this will be the fourth time Wendy’s has made such an effort.

Wendy’s is confident in its ability to generate quick sales and is investing millions behind the daypart and believes it can quickly grow into a $1 billion annual business. But it is also making some compromises to make breakfast palatable for its franchisees. Here’s a look at why Wendy’s breakfast might work. And why it might not.

Wendy’s marketing is strong. The Dublin, Ohio-based chain is investing $70 million to $80 million in the coming years to market and advertise this new daypart. It has deployed its popular Twitter feed, and even recruited former McDonald’s corporate chef Mike Haracz to endorse its products.

The national scope and marketing might could drive customer visits in a way that past efforts, which were worked in gradually, region by region, never could.

But so is McDonald’s. The Chicago-based burger giant is hell-bent on defending its breakfast turf. “We have to win at breakfast,” CEO Chris Kempczinski said in January. As a result, it brought back a two for $4 breakfast sandwich offer late last month. And on Monday it gave away Egg McMuffins to customers who downloaded its smartphone app.

Wendy’s franchisees are on board. The burger chain took care to make sure that its breakfast is profitable for operators. It is only open at first in the drive-thru, which reduces the number of employees needed to run a restaurant. It also has a lot fewer items unique for the morning daypart, which reduces overall complexity. Not surprisingly, all but a few of Wendy’s locations are running with breakfast even though the chain gave operators the ability to opt out.

But it might have made too many compromises. The restaurants are only opening in the drive-thru until 9 a.m., meaning it will be passing on customers that want to eat inside. While that’s generally a small percentage, it’s still passing up sales. It is also opening at 6:30 a.m., which is something of an odd time—most other fast-food restaurants start at 6 a.m. or earlier. Again, they’re bypassing customers. In addition, franchisees have the ability to opt out of serving breakfast, which could be problematic if sales aren't as strong as expected.

Wendy’s is using its brands to boost breakfast. The chain’s attention-getting anchor product is the Breakfast Baconator, a morning version of its popular Baconator sandwich. And it is using its popular Frosty brand for its Frosty-ccino beverage. The chain isn’t reinventing the wheel in the morning.

But Wendy’s isn’t built for the mornings. Breakfast comes with some unique challenges for restaurant chains. In particular, it is the most habitual of dayparts, and customers will only go so far to try breakfast. For instance, commuting customers might not want to turn left to get their breakfast. Wendy’s might not have located its restaurants with right-in, right-out morning commuters in mind. That alone might be the biggest barrier between Wendy’s and a successful breakfast.

None of this is to say that Wendy’s breakfast will or will not work. It’s evident the chain is a potentially strong competitor for the morning daypart—otherwise, why would McDonald’s bother giving away Egg McMuffins on Monday? But it’s not easy for a well-established concept to break into the most habitual of dayparts.

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