Wendy’s plans nationwide breakfast launch for 2020
Wendy’s Co. is gearing up to win a much bigger bite of the U.S. breakfast business with an expansion plan that might boost business in the long run but will eat into near-term profitability.
The burger chain said Monday that it plans to bring breakfast items across its U.S. restaurants in 2020. Wendy’s has about 5,800 U.S. locations but currently serves breakfast only in more than 300 of them. Items on Wendy’s breakfast menu include a Breakfast Baconator, a take on one of the company’s well-known hamburgers, with the addition of an egg; a Frosty-ccino drink that looks like a coffee syrup-enhanced take on its signature Frosty frozen dessert, and a honey butter chicken biscuit.
The Breakfast Baconator fits a lot into a bun: an egg, six strips of Applewood smoked bacon, one square breakfast sausage patty, two slices of American cheese and a Swiss cheese Hollandaise sauce.
Frosty-ccino combines cold brew coffee with either chocolate or vanilla Frosty cream.
The Honey Butter Chicken Biscuit is pretty self-explanatory. It's a buttermilk biscuit sandwich with crispy (read: fried) white meat chicken breast and whipped honey butter.
Expanding its breakfast business nationwide gives Wendy’s a chance to entice its current customers to visit more often, and might attract diners who already buy fast-food egg sandwiches and other fare elsewhere. Wendy’s could use the boost. Sales at Wendy’s have been growing at a slower clip than at larger burger rivals McDonald’s and Burger King, which have both offered breakfast items for years. And, of course, all the chains face competition from people opting to eat breakfast at home or grabbing quick meals from numerous other restaurants, including Starbucks, Dunkin' and Chick-fil-A.
"Launching breakfast in our U.S. restaurants nationwide provides incredible growth opportunities," Wendy’s President and CEO Todd Penegor said in a statement, adding that having Wendy’s “fan favorites” on the breakfast menu will set it apart from the competition.
To support the breakfast launch, Wendy’s said, the company and its franchisees plan to hire about 20,000 employees.
All of this work carries upfront costs. Wendy’s said it plans to spend about $20 million this year as it prepares for the 2020 introduction of nationwide breakfast. The company now expects adjusted earnings per share to decline 3.5 percent to 6.5 percent this year, after targeting an increase of about 3.5 percent to 7 percent as recently as last month. Wendy’s now expects its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to be about flat to down 2 percent this year, after previously targeting adjusted EBITDA growth of about 2.5 to 4.5 percent.
Wendy’s also said it is no longer sticking to its 2020 goals, as it will have to update them to include the expected impact of the breakfast plan. Wendy’s plans to give more financial guidance at an Oct. 11 investor meeting.
Shares of Wendy's fell more than 3.6 percent to $21.15 in after-hours trading following the company's announcement.