Dive Brief:
- Wendy’s global same-store sales for the quarter through March 22 were up 2.8%, according to a press release.
- For the first two months of Q1 2020, Wendy’s same-store sales were up 4% and its breakfast launch during the first week of March grew sales 15%, according to a press release.
- But as the impact of the coronavirus began to develop later in March, same-store sales dropped 20% for the week ended March 22.
Dive Insight:
While full-service restaurants have had to initiate dramatic pivots to off-premise, QSRs have already had robust off-premise channels in the form of drive-thru and carryout. Most have also set up digital ordering over the last few years due to the growing consumer shift to ordering online.
About 235 of Wendy’s restaurants, or 3.5% of its system, are temporarily closed as of March 24, and the chain has closed all of its dining rooms, except where there are specific needs or a drive-thru or pickup window is available. In doing so, drive-thru and digital ordering increased significantly during the week ending March 22. Drive-thru has grown to 90% of its sales mix while digital sales grew 4.3% compared to 2.5% of sales in 2019. This shift is inline with the overall limited-service industry, which boosted off-premise orders 30% year-over-year as of March 23, according to Black Box Intelligence.
Even with drive-thrus and delivery, QSRs will still struggle. Technomic predicts the industry is going to have its worst year on record, with sales declining a minimum of 11.4% to upwards of 27%. More people are buying food from grocery stores, which boosted sales by nearly 53% compared to the same week last year, and consumers shifted 10% of the share-of-stomach to groceries, according to Black Box Intelligence.
This shift could be particularly difficult for Wendy’s, which has invested $20 million toward its breakfast launch and was planning to invest $70 million to $80 million this year to market the new daypart, which it previously expected would make up 10% of the company’s sales. Its rival McDonald’s has already had to pull its all-day breakfast menu and limit items to popular items to streamline operations. While Wendy’s has had several failed attempts at breakfast in the past, learning this time to simplify the breakfast menu and operations, but outstanding global circumstances will likely make this attempt equally challenging.
