Wendy’s venture into morning and late-night business has helped boost sales at a time when customers are coming in less often during the rest of the day.
The Dublin, Ohio-based fast-food chain on Thursday said that its same-store sales increased 0.6% in the U.S. in the second quarter, matching its performance from the first three months of the year.
Breakfast and late-night helped the chain generate positive same-store sales, despite weakening customer counts.
“Breakfast remains an incredibly important daypart,” CEO Kirk Tanner told analysts on Thursday. “It is highly profitable. And we have not yet reached our potential.”
“We continue to expect that breakfast sales growth will outpace rest-of-day at Wendy’s,” he added, noting that the sales lead to better profit margins for both the company and its store owners.
Still, consumer weakness led Wendy’s to cut its outlook for systemwide sales growth this year, to 3% to 5% from 5% to 6%.
Traffic at the chain declined 2% in the period. And consumers bought cheaper or fewer menu items in the quarter, suggesting that some diners are more budget conscious. The chain’s same-store sales growth came from a 4% increase in menu prices.
Much of the fast-food sector is engaged in a value war this summer, as they look to regain customers who have slowed their dining over prices. Wendy’s has one of the longest-running value offers in the fast-food burger segment with its Biggie Bag bundled deals.
That offer is the most popular among major fast-food value deals, according to Civic Science. A quarter of customers surveyed said they’ve tried the Biggie Bag promotion and would try it again, compared with 9% who tried it and won’t try it again.
Wendy’s expects to lean further into that promotion. “We’ve got this nationally recognized, famous platform called Biggie Bag that we’ve had on the menu prior to others coming in and doing something similar,” Tanner said. “This has been a very effective tool, and is in line with the rest of the things we offer on our menu.”
But the company also talked more about menu innovation as a traffic driver. Wendy’s generated sales with its “Saucy Nuggs” promotion in the second quarter as well as its Triple Berry Frosty. Tanner promised more of that. “You can expect to see a continuous stream of innovation from us in the second half of the year,” he said.
It was breakfast, however, that stood out. The company introduced breakfast nationwide in 2020 after years of failed efforts. That morning meal has grown in prominence since then, backed by Wendy’s own contributions to marketing.
Tanner believes the chain could generate $3,000 in sales per store, per week in the mornings, which comes out to $156,000 per year.
“It is certainly a tailwind in our business right now,” Tanner said. “It’s growing faster than the rest of our business and it’s growing faster than the category.”
He said the company plans to continue to invest in that business into next year “and beyond.”
“What I really like about breakfast is it’s more profitable,” Tanner added. “It’s incremental to our business. It leverages the restaurant’s labor model and we’ve got a great menu.”
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