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Reuters//Jo Yong-Hak
There just aren’t enough cattle.
THE BEEF WITH PRICES

Why Wendy’s has to get off its burger dependency

By Svati Kirsten Narula

Like McDonald’s and Burger King, Wendy’s started out as a hamburger joint. Unlike the other two, Wendy’s has continued to prize burgers over all other menu items—which means that while McDonald’s and Burger King are focused on the war for breakfast, Wendy’s has a different kind of fight on its hands, a fight against rising beef prices.

Just yesterday, Wendy’s cited the climbing cost of beef as the prime culprit behind its less-than-stellar third-quarter results.

Other restaurants are facing the same challenge, of course. But while some chains plan to respond with adjustments to their menus—Arby’s CEO Paul Brown told the AP this week that his chain is “looking at opportunities to do more in chicken” because beef is so expensive—Wendy’s won’t give up the burger war.

Doing so would no doubt mark a major departure for Wendy’s. The chain’s North American marketing slogans specifically referenced beef and burgers throughout the 1980s, 90s, and early 2000s.

More recently, while McDonald’s was getting ready to launch a breakfast dollar menu in 2009, Wendy’s was busy reinventing its patties and buns, in an initiative known internally as “Project Gold Hamburger.”

Unfortunately for Wendy’s, the US cattle herd has been shrinking and now beef is more expensive than ever.

Beef is more expensive than ever.

And still Wendy’s is resisting a break in its burger dependency, with CEO Emil Brolick telling investors yesterday, ”I don’t see us in the near term jumping back into the breakfast market fray, in part because I think that the commitment that would take in terms of resources would not be the appropriate thing to do at this period of time.”

But it will take years for cattle herd sizes to grow back, so beef prices likely won’t come down for a while. This suggests that it’s time for fast-food chains to start marketing their non-beef products more aggressively. Burger King’s latest quarter was saved by Chicken Fries. Wendy’s may want to start counting on its chicken, too.