Wendy's Taking a Break From Breakfast

Will Cut Test in Half to Improve Products, Work on Marketing

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CHICAGO (AdAge.com) -- Wendy's is taking a step back from the fast-food breakfast wars. The chain, which has been testing a breakfast concept since 2006, announced this morning that it's going back to the drawing board to improve its products and work on its marketing mix.

Wendy's said it would retool in-store displays and marketing messages to make its breakfast products, like the maple-baked 'frescuit,' stand out from those at McDonald's.
Wendy's said it would retool in-store displays and marketing messages to make its breakfast products, like the maple-baked 'frescuit,' stand out from those at McDonald's.
"Breakfast is a significant opportunity for us," Wendy's CEO Roland Smith said at the Cowen and Co. Consumer Conference. But he admitted the items being tested "weren't high quality and didn't meet the consumer's expectations." As a result the chain is cutting the test nearly in half, to run instead in only about 450 stores in three markets: Kansas City, Phoenix and Pittsburgh.

Wendy's merged with Arby's last year, under the direction of investor Nelson Peltz. The parent company, once known as Triarc but now simply called Wendy's/Arby, has pointed to breakfast as a key opportunity for the brand. However, the chain has had some difficulty making its products stand out from those at McDonald's, which is the fast-food industry's breakfast leader. For instance, Wendy's breakfast items have included a maple-baked "frescuit," which is a sweet biscuit with sausage, egg and cheese; and a breakfast burrito. Mr. Smith added that the chain will use the additional time to retool in-store displays and marketing messages.

Doing it the right way
Wendy's spokesman Bob Bertini said the chain is looking to make a better case for incremental profitability in the breakfast business. "We want to do it the right way," Mr. Bertini said of the chain's breakfast offerings. "We want to offer better-tasting products with the goal of a higher level of store profitability."

Wendy's plans to add to the number of locations participating in the breakfast test by the end of 2009. They're now targeting 2011 for a national launch. The chain first introduced breakfast in the mid-1980s as a more full-service concept. The meal proved unprofitable for the system as a whole, and it was quickly pulled. The chain's founder, Dave Thomas, was a staunch opponent of breakfast as part of Wendy's business, which has presented an additional hurdle in selling the meal to franchisees.

In the meantime, Wendy's will focus on quality and value messaging in its advertising. Recent TV work, via agency Kirshenbaum Bond & Partners, focuses on Wendy's "trio" of value-menu sandwiches, a "Double Stack" cheeseburger, fried-chicken sandwich and junior bacon cheeseburger.

'Commitment to quality'
"We have a significant commitment to quality, which means we must serve better products every single day," Mr. Smith said. "We need to see improvement in some of our products."

Wendy's will attempt to re-establish its authority in quality by focusing on its chicken, french fries, and the bacon and buns used for its iconic burgers.

While the fast-food category has grown as a whole in the past year, Wendy's has continued to lose share. During the third quarter, company and franchised same-store sales both declined slightly, by 0.2%. McDonald's, on the other hand, reported November same-store sales were up 5% in the U.S. alone.

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