Wendy’s (WEN) is getting back into the breakfast wars at long last.
Seeking the most logical way to jump-start its traffic, the bacon burger and fried chicken sandwich slinging Wendy’s said Monday evening it will hire 20,000 people to drive a nationwide rollout of breakfast in 2020. The menu will feature two premium-priced sandwiches that appear to be very differentiated relative to McDonald’s McMuffin and Burger King’s Croisan’wich: Breakfast Baconator and the Honey Butter Chicken Biscuit.
Wendy’s will also lay the groundwork to a possible coffee platform rollout, starting with an iced drink coined the Frosty-ccino (Wendy’s Frosty and coffee).
"Launching breakfast in our U.S. restaurants nationwide provides incredible growth opportunities," said Todd Penegor, president and CEO of Wendy's in a statement. "We are well-positioned to pursue it. We believe we have the right team and structure in place, and we put Wendy's fan favorites on our breakfast menu to set us apart from the competition."
Wendy’s has more than 5,900 restaurants in the U.S., so this is no small product rollout. It will require not only the hiring of new workers, but likely new equipment and the training of existing employees. Wendy’s only sells breakfast in some 300 of its locations and the menu is limited to a few simple sandwiches.
The company had to adjust its sales and profit guidance to account for the breakfast expansion. Wendy’s sees 2019 earnings per share declining 3.5% to 6.5% — previously it expected 3.5% to 7% growth.
Wendy's stock fell 9% in pre-market trading Tuesday on the guidance cut. Many on Wall Street voiced concern about Wendy’s getting into breakfast so late.
“While it [breakfast] could lead to longer term system sales, we view the day-part expansion as a sign of slowing near-term momentum in the core lunch and dinner business,” said Guggenheim Securities analyst Matt DiFrisco.
DiFrisco downgraded his rating on Wendy’s to hold from buy, citing risks associated with the breakfast launch.
Breakfast not a new thing
Wendy’s is no stranger to the broader breakfast game. The company made unsuccessful forays into breakfast in 1985 and 2007. Both times, the mighty McMuffin won out.
But the decision makes so much sense today that it’s almost silly to explain why. For starters, breakfast continues to be one of the strongest times of the day for fast-food chains. That’s a prime reason why a Dunkin’ Brands has recently launched egg white bowls and new iced coffee lines. Starbucks has vastly improved its breakfast food, hoping to capture more sales from morning coffee drinkers. Even McDonald’s has sought to improve the ingredient quality for the McMuffin.
Meanwhile, the ability to order food via mobile devices and have it delivered should instantly put Wendy’s in the breakfast conversation. Wendy’s not being in breakfast is almost unacceptable in the age of digital.
Next headline for Wendy’s: A shiny new share repurchase program, which could come at the company’s October 11 investor day.