For breakfast, Wendy’s made good on its promise to emerge from 2020 on the marketing offensive. Promotions drove “significant trial” in Q4, Penegor said, which was clear through a meaningful increase in buyer penetration. Breakfast awareness, which held at about 50 percent through the early months of COVID, reached “record levels,” he added.
“This culminated in another quarter of morning meal traffic share growth in the [quick-service restaurant] burger category,” Penegor said.
In other words, Wendy’s gained ground on McDonald’s and Burger King.
The chain grew breakfast sales by about 25 percent last year. Trial-driven campaigns, continued increases in customer repeat, two additional months of the daypart (given it didn’t launch until March the previous year), and the support of Wendy’s $25 million incremental investment in breakfast advertising, moved the needle, Penegor said.
In 2022, Wendy’s will support growth through menu innovation, like the Hot Honey Chicken Biscuit. While marketing is coming down to $16 million, trial-driving offers aren’t going anywhere. Penegor believes breakfast, stateside, will accelerate by about 10–20 percent, taking average weekly U.S. breakfast sales to $3,000–$3,500 per restaurant by year’s end.
Penegor said Wendy’s will shift aim to dollars per week as a success metric versus percentage of sales (the previous aim was 10 percent of mix). Additionally, the chain will soon launch breakfast in its largest international market—Canada—in Q2, bringing breakfast coverage to about 95 percent of Wendy’s global system.
The playbook in Canada will look much like the U.S.: minimal franchisee investment, familiar items and biscuit-focused options, and company advertising support.
Already, Wendy’s spent more than $1 million in Q4 to ensure the launch cleared. The end result, like the U.S., should provide a roughly 3–4 percent lift to international same-store sales this coming year.
Of the $16 million Wendy’s set aside for incremental breakfast advertising in 2022, $5 million will go to Canada.
One important example to note is what’s taken place at legacy restaurants that offered breakfast pre-2020 introduction. Those stores, Penegor said, are running north of $4,500 per week. “And those are the restaurants that had a little more reps on how you manage breakfast operationally, put a lot more time to ingrain the habit and the communities that they serve, which gets us really excited about where the growth can continue to go,” he said.
In the $3,000–$4,500 per restaurant realm, breakfast clocks in significantly above breakeven profitability, Penegor added. That historically was the final blow with past attempts.
“We think there’s a lot of leg room, a lot of opportunity to grow the breakfast in the future,” he said. “As morning routines come back, as folks start to routine move back into the office a little more, kids all getting back into school, all of those things … continue to drive our business quite hard. And the disruptive promotions do get folks’ attention. It allows us to talk about the Wendy’s brand and talk about the quality at a very great price point, and it does drive a lot of people in for trial.”
Breakfast traffic in Q4 returned to pre-pandemic levels. Customer mobility is bouncing back, albeit a little later in the morning. Peak hours, Penegor said, are coming in the last two hours of the block.
Meanwhile, Wendy’s international digital sales mix exceeded 15 percent. In the U.S., it eclipsed 9 percent in December, thanks mainly to mobile ordering and delivery.
The brand’s loyalty program, launched in July 2020, grew total members by about 75 percent over the course of 2021. It expanded monthly active users by 25 percent.
For the full fiscal year, Wendy’s digital sales growth jumped 75 percent compared to the prior 12 months. It saw more active users and higher average checks across all digital platforms.
Penegor said Wendy’s will keep pushing customers into its app with compelling offers.
It’s a critical element given Wendy’s pace of innovation against the labor market. Curbside, while it will continue, has proven a labor strain on the brand’s digital experience. “And we’re really trying to get folks to move to mobile grab-and-go and putting some racks in the restaurants to make it a little bit easier operationally for our teams in the restaurant,” Penegor said.
Operations tablets continue to roll out to help Wendy’s automate menial tasks around scheduling and inventory management ordering in the back of the house.
The more customers who tap mobile ordering, the better. It takes pressure off of the order point and speeds payment, Penegor said. “All of those things are all little things that add up to make the restaurant more operationally efficient,” he said. “And we’ll continue to lean into what the flow of the restaurant looks like, not only for today but into the future as we drive more folks into digital.”
Another executive call-out was Wendy’s ongoing investment in a double-sided grill. The brand will transform about 40 percent of its grill footprint in company units this year before finishing up in 2023. About a third will be converted at that point. Plosch said the update, which cooks faster, juicier burgers, should lead to increased sales since consumer satisfaction should increase in tandem. “It also will drive some labor efficiencies,” he said.