Dive Brief:
- Breakfast and late-night sales helped Wendy’s offset the impact of pricing-related traffic declines and achieve same-store sales growth in Q3 2023, the company’s leaders said on its earnings call Thursday.
- Wendy’s saw double-digit sales growth in the late-night daypart, and many of its restaurants extended operating hours, CEO Todd Penegor said.
- Simultaneously, Penegor said the chain’s use of discounts and deployment of new breakfast menu items are driving trial in the daypart, but that Wendy’s still has a way to go in making its breakfast a part of consumers’ routines.
Dive Insight:
Value is especially important for breakfast consumers, Penegor said, but Wendy’s has worked to balance its breakfast discounting with restaurant economics.
The company has shifted away from its past “4 for $4” deal and dollar croissant promotions toward the 2-for-$3 Biggie Bundles and $4, $5 and $6 Biggie Bags during different day parts. In addition to Biggie Bundles for the morning daypart, the chain’s breakfast strength is also driven by its new English muffins sandwiches and Pumpkin Spice Frosty Cream Cold Brew.
CFO Gunther Plosch said changes in value strategy have helped improve restaurant-level margins by 80 basis points over the last quarter.
“Even when we promote we still maintain above average profitability,” Plosh said, referencing Wendy’s breakfast items.
Penegor said staffing and turnover have both improved recently, in line with a general reduction in industry turnover since March 2023. That improvement has strengthened both breakfast and late-night operations, Penegor said.
Wendy’s has extended operational hours at many stores in the late-night daypart.
“There's still a lot opportunity across various regions of the country where we know we can do even more at late night,” Penegor said.
Still, sales have grown in the mid-teens year over year in the late-night daypart, according the company’s Q3 investor presentation. This is an improvement over Q2 performance when, according to Placer.Ai, the daypart accounted for 8.4% of the brand’s traffic. Other chains have also highlighted late-night traffic as a sales driver, with Pizza Hut announcing an effort to expand operational hours across its system earlier this month.
