Web Exclusive | October 2010 | By Barney Wolf
Wendy’s Breakfast 3.0
In an effort to grab a share of the fast-growing morning daypart, Wendy’s launched a new breakfast menu in three test markets and part of a fourth.
The nation’s No. 3 burger chain, which has operational headquarters in suburban Columbus, Ohio, is gauging customer sentiment for a quartet of distinctive breakfast sandwiches, a new coffee blend, a value menu, and a handful of side items.
“We’re very excited by the test results so far,” Wendy’s/Arby’s Group chief financial officer Stephen Hare told investors during a recent conference‚ adding that more test markets will be added this quarter with the hope of a national roll out by the end of 2011.
The trial run began more than a month ago in Kansas City, Phoenix, and Pittsburgh, all of which continued to serve breakfast after Wendy’s backed away last year from its last bid to build a national a.m. daypart. Ten hometown Columbus restaurants are also in the test.
It is no surprise that Wendy’s wants to return to morning business. During the last five years, quick-serve breakfast traffic grew 10 percent, and the daypart accounted for 60 percent of total industry growth, according to the NDP Group.
“It’s been one of the bright spots of the industry” during the recent economic downturn, says Bonnie Riggs, restaurant analyst at NPD, a global market research firm.
Twenty-two percent of all fast-feeder traffic is during the morning meal, so “for anyone not serving breakfast, it’s a missed opportunity,” Riggs says.
Not surprisingly, operators are increasingly pointing development and marketing dollars into that daypart, and new entrants, including Subway, have engaged in the breakfast battle.
“It’s a very competitive segment,” Hare says. Industry leader McDonald’s “has a very strong position,” and the space is crowded with seasoned quick-service players and fast-casual brands such as Panera Bread.
But “the size of the prize is amazing,” says Dennis Lombardi, executive vice president of foodservice strategies for global design firm WD Partners, also based in Columbus.
Wendy’s averages $1.4 million in sales per store annually, so if it can obtain breakfast receipts of “even 15 percent of total sales, that amounts to more than $150,000 per store,” he says.
Breakfast has proved elusive for Wendy’s. The new a.m. menu is version 3.0, following a casual-style breakfast in the mid-1980s and a “me-too” effort from 2006 to 2009.
The morning meal continued afterwards at a handful of the chain’s units, including those in markets hosting the newest test and in dozens of contract locations such as airports, malls, and highways. Only 2 percent of Wendy’s sales are from breakfast.
This time, the company plans to break through in breakfast by delivering products consistent with its “real,” high-quality brand positioning. That means “fresh-cracked eggs, fresh-cooked bacon in the store,” and a new coffee program, Hare says.
Pricing has been consumer-friendly.
The Artisan Egg Sandwich features a cracked egg, asiago cheese, hollandaise sauce, and Applewood bacon on a square honey-wheat artisan muffin. The Fire Roasted Burrito is grilled and has eggs, roasted peppers, poblano chiles, and Applewood bacon stuffed into a multigrain tortilla with a signature hot sauce. Both are $1.99.
The Morning Melt Panini, which is $2.99, includes an egg omelet, cheddar and asiago cheeses, and bacon or sausage between slices of sourdough bread. The Fresh Baked Biscuit is a Southern-style biscuit with an egg omelet and melted American cheese for $2.29.
Side items can be purchased separately or for $1 as an add-on to the sandwiches. These include a Good To Go Bar that is similar to an oatmeal-and-fruit cookie, home-style potatoes, sliced fruit, and small coffee, soft drink, iced tea, or orange juice.
The menu is akin to “Panera light,” says Tom Forte, director and senior research analyst for Telsey Advisory Group, a New York–based independent equity research firm. “Most of its competitors are focused on value, but Wendy’s is going to more high-quality,” he says.
The menu also offers items for value consumers, ranging from 99 cents for a Sausage and Egg Biscuit to $1.99 for the Sausage and Gravy Biscuit. The Classic Breakfast Platter offers eggs, a biscuit, and bacon or sausage for $3.99.
Data developed from the breakfast test will help create an operational plan to be presented to the Wendy’s system for approval in advance of “a national launch, hopefully by the end of next year,” Hare says.
Food & Beverage
ANNOUNCING: Incredible Breakfast Trends
The morning daypart is still going strong and continues to offer the most opportunity for incremental sales and customer loyalty. What has changed are the sophisticated – and jaded – palates that consumers bring with them when eating at your operation. Keeping taste buds intrigued requires finesse, creativity and lots of trend awareness. So if you weren’t listening before, the time to do it would be now: we have done something to help you.
The American Egg Board knows breakfast. I think you know we know breakfast. If not, why weren’t you paying attention? We talk about it a lot.
But the more we learned and the more we talked, the more we realized there was much more to say. Here are two facts about complexity – first, it’s interesting, and second, it’s hard to explain in 140 characters or less.
So we’ve undertaken to create mini-studies to offer the reader a good grounding in various trends that are either emerging or at the point of evolving into something different.
NOTE: If people call your place retro or old-fashioned and that was the vibe you were going for, congratulations! But if that wasn’t your intention, well, then you should make sure to read our brief studies. It really couldn’t hurt.
Our first three Incredible Breakfast Trends focus on:
- Breakfast food trucks and what keeps them on top. Truck operators often enter this segment as an economical way to break into the business. Some have even started trends that used to be expected from white table cloth restaurants. Today’s successful food truck operation could soon move into a building on your block. You should have an idea who he is.
- Emerging trend of Asian-influences in the morning. An honest interest in better-for-me cuisine, a growing passion for kimchi throughout the day, the popularity of Sriracha sauce (even Subway uses it) and the fascination with the many different Asian cuisines – China has over 30 alone – makes knowing a little more about this topic a good idea.
- The continuing impact of Latin on breakfast. It used to be that Tex-Mex was all we had. Then it became Mexican, and now it’s Peruvian, Cuban and Oaxacan, to name only a few. Latin cuisine is so much a part of the American table that many children have no idea it came from another culture. This is a moving target and you should have some idea of where it is today.
If we’ve intrigued you, go to bit.ly/LidG5V to read the first three mini-studies. Then come back every quarter for three new examinations of news you can use.
For more, visit www.AEB.org.