Wendy’s breakfast menu continues to carry it through a rough consumer environment.
CEO Kirk Tanner called it “an incredibly important daypart” and “highly profitable.” The chain drove breakfast dollar growth ahead of the category in the second quarter. Yet, Wendy’s morning offering hasn’t reached its potential. Currently, breakfast earns about $3,000 per week per store or roughly $156,000 per year. Wendy’s earned an AUV of $2.06 million in 2023, meaning breakfast mixes about 7.5 percent. The burger giant’s goal is to raise breakfast to $6,000 per week per store.
Breakfast sales are expected to keep outpacing the rest of the day for Wendy’s. Those sales are accretive to overall restaurant margin for company stores and franchises.
The chain announced in February that it would spend $55 million worth of incremental advertising on breakfast in the U.S. and Canada, split evenly across 2024 and 2025. Tanner told investors on Thursday that the company has optimized its level of investment this year to allow for an extended advertising investment beyond 2025. Originally, the plan was $27.5 million in 2024 and 2025. Now, Wendy’s will spend $22 million in 2024.
“We are obviously winning in the category,” said CFO Gunther Plosch during Wendy’s Q2 earnings call. “We have outgrown the category in the first half, so we are happy about that. But in the context of the whole environment, we absolutely believe, and we worked this a little bit with the media agencies, we believe that in that environment we are better off stretching the investment over. Our planning assumption is now three years into 2026, and obviously the reduction this year allowed us to stretch the investment out.”
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Wendy’s launched its breakfast platform in March 2020 and has paid great attention to the daypart ever since. Some innovations include French Toast Sticks and Cinnabon Pull-Apart.
“Breakfast is really an important opportunity for us,” Tanner said. “We’ve talked about this in the past as reaching our full potential, and we’re about halfway there, which is the exciting part. It is certainly a tailwind in our business right now. It’s growing faster than the rest of our business, and it’s growing faster than the category. We’re gaining share in this daypart. We continue to invest. We will continue to invest through the horizon of 2025 and beyond in breakfast. What I really like about breakfast is it’s more profitable. It’s incremental to our business. It leverages the restaurant’s labor model, and we’ve got a great menu. So, it is something that we’ll continue to stay focused on. We’ll continue to build momentum on, and it will be a tailwind for our overall [same-restaurant sales] performance.”
U.S. same-store sales rose just 0.6 percent in Q2, although the burger giant said it remained competitive with dollar and traffic share and held steady with the QSR burger category. Those comps consisted of 4 percent pricing, negative traffic of a little less than 2 percent, and a slightly negative mix of a little more than 1 percent.
For the past couple of quarters, the chain has seen lower-income guests reduce frequency (below $75,000) and higher-income customers (above $75,000) increase frequency. Plosch said the brand is competing with both income cohorts and is maintaining share. He attributed the lower mix to Wendy’s lapping a push on premium menu items last year. A 6 percent increase in the loyalty base—which comes with an app full of value deals and offers—created a mix headwind as well.
“Yes, the sales over the quarter, there was some ebb and flow overall, but pretty consistent,” Tanner said. “I would just say, if you look at our business, we continue to compete extremely well in this environment. We talked about holding share and the proposition that we have for consumers on our balance across value, our core business innovation. I think that kept our business fairly steady through that cycle that we just went through.”
With consumers tightening wallets, the restaurant industry has responded with an influx of value offers to draw back customers. Two of the biggest examples are McDonald’s and Burger King, each of which debuted new $5 meal deals available nationwide.
Wendy’s didn’t need such an announcement. It’s boasted the $5 Biggie Bag—the choice of a Jr. Bacon Cheeseburger or Crispy Chicken Sandwich paired with a 4-piece nugget, small fries and a small soft drink—since before the pandemic.
“We have traction with that value proposition that’s relevant,” Tanner said. “Our franchisees are certainly on board with that. And of course, that is a concern for everyone. But our franchisees are on board. They helped build this platform over the years. This has been a very effective tool. And it is in line with the rest of the things that we offer on our menu. We’re very focused on three things: delivering our core, having exciting innovation that drives traffic, and relevant value. The balance of our portfolio and our menu allows us to work really hard in times like we’re in. And we’re really excited about the traction that we have and the balance that we have across our menu.”
The brand is continuing to engage customers with its growing digital business. Global digital sales grew by over 40 percent year-over-year in Q2, delivering a 17 percent mix. In the U.S., digital sales dollars lifted more than 40 percent. Internationally, they lifted more than 30 percent. Also, loyalty is almost as big as the third-party delivery business. Wendy’s now has about 42 million loyalty members.
In terms of development, Wendy’s met expectations. The chain opened 99 new stores in the first half of 2024, a 20 percent increase versus the first half of 2023. The brand believes it’s on track to reach 250 to 300 openings in 2024, with plans to accelerate in 2025 and beyond. Wendy’s has added more than 250 global new restaurant commitments year-to-date, including growth opportunities in Ireland, Romania, New Zealand, Australia, India, and Canada.
Wendy’s finished Q2 with 6,013 restaurants in the U.S. and 1,248 internationally.
