So why, then, is Wendy's only reluctantly waking up to a market test of breakfast that its management and analysts predicts could reap $160,000, or 11% more of sales per store annually within three years?
One answer lies in the spectacular failure Wendy's suffered two decades ago after an exhaustive five-year test, followed by a $10 million glitzy ad push to launch a menu for the eggs-and-coffee crowd. TV spots crooned "Only Wendy's has breakfast like we do" to the 1950s Platters' classic "Only You."
Back then, Wendy's biggest-ever launch effort touted a quality-positioned menu including made-to-order omelets and pancakes served on platters. But it was the wrong proposition for the daypart, as the culture was increasingly becoming grab-and-go. In February 1986, Wendy's was getting only 8% of sales from breakfast, compared to 11% for Burger King and 18% for McDonald's. By March that year, Wendy's made breakfast optional for its then 3,300 restaurants. Management blamed operational complexity, the softness of the restaurant industry and competitors using assembly-line items put under heat lamps.
It's understandable, then, why franchisees have been reticent to jump back in. Some franchisees have expressed concern over equipment costs (a coffee machine alone is estimated to cost $7,000) and other costs, and they fear cannibalizing other dayparts. Others have questioned the operational challenges amid Wendy's most aggressive new-product campaign in years.
McDonalds and Burger King
Nor does breakfast come cheap. The month McDonald's launched McGriddles, it spent $69 million in measured media -- with more than $30 million of that estimated to have gone into promoting the product. Burger King, which relied mainly on PR to flog its Enormous Omelet in March 2005, still laid out some $21 million in media that month.
So Wendy's is going ahead, cautiously. It's been testing the effects of morning menus since April on operations at three units in Raleigh, N.C., and in a store near its Dublin, Ohio, headquarters. Now, the No. 3 burger chain plans to be up and running in Kansas City by Labor Day.
"We are gearing up for a full-market test," a Wendy's spokesman said. Once the food and equipment are in place, the chain will begin in-store merchandising, later adding TV and radio support via Interpublic Group of Cos.' McCann Erickson, New York. He said the menu would feature some different items than those in the earlier tests, but he wouldn't identify what changes would be made.
Low-priced breakfast test
This time, Wendy's breakfast is portable. Menu items in the Dublin and Raleigh tests included breakfast sandwiches on pan breads, rolls and biscuits ranging from $1.99 to $2.49.
At least one rival is watching closely. One legend holds that when Wendy's launched its Dublin test, a parade of Town Cars pulled up and out piled a crew of McDonald's executives. Without attempting to conceal their identity, they ordered multiple menu items and took notes in notebooks branded with the Golden Arches. (A McDonald's spokesman could not confirm or deny the report.)
"It was so blatant," said an executive relaying the story. "When McDonald's people play, they play with rocks."