Wendy's breakfast, digital drive best same-store sales in 15 years

Dive Brief:

Wendy's global same-restaurant sales were up 6.1% during the third quarter, marking its highest global same-restaurant sales growth in over 15 years, driven by the company's breakfast daypart, digital business and increased consumer mobility, Todd Penegor, Wendy's president and CEO, said during a Wednesday earnings call.
Breakfast contributed about 6.5% of same-store sales in the U.S. and made up over 7% of total sales during Q3, according to an investor presentation. Its digital business came in at 5.5% of sales in the U.S., which is more than double the amount it had in 2019, Penegor said. As of September, digital sales reached over 6%, Penegor said. App downloads increased 15% since the July launch of its loyalty program.
Wendy's is bucking the trend of breakfast declines seen at chains like Taco Bell and McDonald's and still has plenty of room to grow. Consumer awareness of the breakfast menu is at about 50% and the company continues to support the daypart with incremental advertising spending to drive trial and frequency, Penegor said.

Dive Insight:

Wendy's continues to outpace its QSR counterparts during the third quarter, especially in the U.S. where systemwide sales grew nearly 8% to nearly $2.7 billion, while same-store restaurant sales were up 7% during the third quarter compared to the year ago quarter, according to an earnings release. Comparatively, McDonald's comparable sales in the U.S. were up 4.6% while Burger King was down 7% during Q3. Breakfast continues to be Wendy’s strength during the pandemic, and with good reason.

The pandemic, which shifted much of consumer traffic to the drive-thru, helped benefit Wendy's at breakfast with menu items that are handheld, according to a Technomic case study. By the end of the second quarter, 46% of orders during breakfast were done at the drive-thru. Craveability also drove consumer behavior during the daypart, with 36% saying this factored into their most recent QSR breakfast occasion. The addition of Wendy's Baconator as a breakfast item also played into this, according to Technomic.

"We're seeing great repeat with some of our heavier users so we know there's a great opportunity to get our breakfast offerings into more consumers, and, in fact, a high percentage of our existing Wendy's customers haven't even tried our breakfast," Penegor said.

Consumers are also spending more when they order breakfast, which tends to be a bit later in the morning, Penegor said, adding that many of these consumers are bringing breakfast back home.

With increased consumer mobility, Penegor said the company expects breakfast sales will only increase. The growth of breakfast has also helped the rest of the day, which is up over 5% on a two-year basis, Penegor said. The company also put $15 million in incremental advertising investments for breakfast in 2020 and expects to continue this incremental spending into 2021, Gunther Plosch, Wendy's CFO, said during the call.

"I think we are in a very good position today to continue to drive growth and ingrain the habit and drive a nice tailwind for our business for years to come," Penegor said.