In 2010, Wendy’s selective market test made it harder to use wider-reaching media channels, and easier for competition to aggressively counter Wendy’s gains. Essentially, not going all-in on day one diluted the scale benefits Wendy’s typically enjoys.
McDonald’s, for one, grabbed outdoor advertising in Wendy’s test markets and aggressively discounted items to defend its breakfast turf.
This time, though, “2020 was going to be the year of breakfast for us,” Kane says. And everybody at Wendy’s knew it.
The company initially planned to deploy $70 million to $80 million to raise awareness, with corporate funding up to $50 million. Instead, as Wendy’s abated marketing fund contributions on breakfast sales from franchisees in the face of COVID, the number ended up closer to $15 million.
Yet to Kane’s earlier point, Wendy’s breakfast commitment didn’t break apart.
Previously, he says, Wendy’s approached breakfast as an attempt to validate the idea. “We made it really easy for our competitors to come in and do a test market and really tsunami-ed the test market with media and advertising dollars that made it hard to get a read,” Kane says. “It really got us stuck at the start line for far too long.”
Wendy’s built out breakfast in direct partnership with franchisees and its operator community. The company invited a handful of franchisees early on to talk about the history. What worked. What hadn’t. What needed to change.
Some of the $20 million was used to coordinate a national launch supported by advertising. Wendy’s didn’t go market-by-market with its message.
“That really opened the door for getting the entire Wendy’s system supportive of what we needed to do when they saw how the program had been built,” Kane says.
Importantly, the company also created a breakfast menu with 18 unique ingredients. Some past versions were in the mid-40s. It’s breakfast sandwich focused (nine at launch) with some spins on classics, like the Breakfast Baconator and Frosty-ccino.
The 2020 iteration of breakfast was also drive-thru centric, with stores opening the window at 6:30, but keeping the dining room closed until 9.
The profitability and execution angle of Wendy’s latest run was essential, Kane says. And it’s one of the core reasons it held up against COVID—the bottom line never exited the equation.
In fact, one of Wendy’s pandemic response tactics was to reduce breakfast’s staffing requirement to two employees. Alongside the marketing abatement, breakfast breakeven dropped by about 35 percent, on average, which helped keep it profitable despite lowered sales volume.
“I think what worked was a focus on profitability from the very outset,” Kane says. “In the past, we thought about what does it take and how long do you have to be willing to lose money at breakfast to be able to really earn your way into it. And we built [this version] with a very different mindset. Which was, how do we get out of the gate really quickly with a program that’s going to be profitable from the word-go? That’s the biggest difference in the way we thought about it.”
Also, it positioned Wendy’s to think bigger. By March 2021, with stores getting back on line and the overall landscape improving, the company was able to close its fiscal calendar with its two highest global same-store sales quarters in the last 15 years.