Dive Brief:

• Wendy’s plans to start rolling out its breakfast menu during the first quarter of 2020, Wendy’s U.S. President and Chief Commercial Officer Kurt Kane said during Investor Day 2019 on Friday. 
• The company expects sales from this daypart to drive 10% of the company’s total daily sales, and for this daypart to be profitable for franchisees early on, he said. 
• The company claims this breakfast venture won't be a repeat of its previous failed attempts. Wendy's worked with a group of franchisees to develop an effective strategy that includes no additional equipment costs (compared to $10,000 in additional costs previously), 18 unique SKUs (compared to 45 previously) and three employees dedicated to making breakfast (compared to four that were needed previously). It will also offer only pick-up when they first open, because the combination of pick-up and dine-in caused operational complexities during previous breakfast attempts, Kane said.

Dive Insight:

Breakfast is the fastest growing daypart for restaurants, so getting the category right this time will be key to Wendy’s ability to grow additional revenue. The company appears to have learned its lesson in breakfast the hard way.

"We just didn’t build it the right way," Kane said. "It was way too complicated operationally." 

This time breakfast production will use fewer employees, cost less and be less complicated operationally. The company also launched a national media campaign instead of local advertising plans done in previous attempts. It also used 300 restaurants where breakfast was still being served as a testing ground for the new menu and figure out the best way to produce the food with minimal cost, Kane said.

Initial customer feedback has been positive, especially when it comes to the perception of value, he said. Diners were buying the premium breakfast sandwiches at a high rate, reflecting the overall food quality and price points being right, he said.

If Wendy’s does breakfast well this time around, it could spell bad news for McDonald’s, which has been struggling with its breakfast daypart for several quarters. McDonald’s has a popular all-day breakfast menu, which is not something Wendy’s will offer with its initial breakfast launch. Kane told an investor that it could consider this in the future, however. Wendy’s Honey Butter Chicken Biscuit will also compete against Chick-fil-A's popular chicken biscuit breakfast sandwich, one of the chicken chain’s most popular items.

Wendy’s will also be rolling out its own blend of coffee that it developed with coffee partners, Kane said. This could make its breakfast menu more competitive as well, especially against the likes of McDonald’s McCafe program. Given its clear strategy and experience gained from past stumbles in the morning daypart, Wendy’s could be on its way to becoming a force in breakfast.