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Wendy’s is making the case that breakfast is the most important meal of the day, at least when it comes to lifting profits.
The fast food chain reported second-quarter earnings on Thursday that revealed its customers are fans of breakfast at Wendy’s. So much so that the chain plans to invest millions to keep growing its breakfast segment.
“Breakfast remains an incredibly important daypart,” said Kirk Tanner, CEO of Wendy’s, during the earnings call. “It is highly profitable, and we have not yet reached our potential.”
As consumers seek out seek deals, Wendy’s is proving that its bundle value meals are giving it a competitive edge. In May, the chain launched its $3 breakfast bundle. Just a month later, the chain re-introduced its $5 Biggie Bag. The promotions are separate from the 4 for $4 meal deal the chain still offers.
But what appears to be hitting the spot is breakfast, and according to Tanner, the early bird menu “continues to outperform competitors.”
The chain said it has optimized the level of its 2024 investment to allow it to extend its existing “breakfast advertising investment horizon beyond 2025.” The company plans to invest over $25 million in breakfast during that time period, in part because it is very bullish in the segment.
“We continue to expect that breakfast sales growth will outpace the rest of the day at Wendy’s,” Tanner said, adding that sales are improving profits for both company-owned Wendy’s locations, as well as those operated by franchisees.
Breakfast stands to be very big business for Wendy’s. Tanner said that each location has the potential to make about $3,000 a week just on breakfast sales.
“Breakfast is really an important opportunity for us,” he told investors. “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.”
In the meantime, Wendy’s plans to remix menu items such as its Frosty platform and chicken nugget sauces, while also enhancing existing promotions like the $5 Biggie Bag.
All the breakfast and bundle chatter didn’t keep Wendy’s from missing Wall Street’s expectations. During the second quarter, the chain reported revenue of $570 million, about 27 cents a share. Analysts expected it to report $577 million, or 28 cents a share.
Wendy’s, which boasts a footprint bigger than 7,000, has opened 99 new restaurants this year thus far. It plans to build and open between 250 and 300 locations by the end of 2024.