Wendy’s to Invest $55M in Breakfast Advertising Campaign

Wendy’s is ramping up its efforts to bolster breakfast sales with a $55 million investment in advertising over the next two years, the company revealed in its Q4 2023 earnings report.

Newly appointed CEO Kirk Tanner, who assumed the role less than two weeks ago, expressed optimism that the significant advertising push could drive breakfast sales in the U.S. and Canada up by 50%. This initiative follows a strategic focus on the breakfast daypart initiated by former CEO Todd Penegor.

Tanner outlined the company’s expectations, projecting that the intensified marketing efforts would eventually elevate North American breakfast sales to approximately $6,000 per store per week. Achieving such a sales rate across Wendy’s 6,010 U.S. locations would translate to $312,000 in sales per store annually, contributing nearly $1.9 billion to the company’s U.S. store system revenue.

Despite continued growth in late-night dining, with high teen sales growth in 2023 according to CFO Gunther Plosch, the company does not anticipate a recurrence of such robust growth for late-night sales in 2024.

Wendy’s has faced sluggish sales growth in recent years compared to its main competitors, with U.S. comparable sales rising by 3.7% in 2023 and 3.9% in 2022, compared to larger increases of 8.7% for McDonald’s in 2023 and 5.9% in 2022. Challenges such as the closure of Reef Kitchens units in 2022 and 2023, shifts in consumer spending habits impacting store traffic, and financial strains on franchisees have prompted Wendy’s to pivot towards emphasizing late-night and breakfast offerings as potential drivers of sales growth.

CEO Tanner emphasized the potential of breakfast as a strategic focus for Wendy’s, highlighting the ability to significantly grow the breakfast business without adding incremental labor costs. The company has expanded its breakfast menu lineup, introducing items like English muffins, to drive customer trial.

In addition to the breakfast advertising campaign, Wendy’s plans to invest $30 million in digital menu boards to enhance order accuracy and sales growth through upselling and consistent merchandising execution. There are also plans to explore dynamic pricing with these new menu boards by 2025. Furthermore, Wendy’s continues to test its Wendy’s FreshAI, a drive-thru chatbot developed in partnership with Google, with franchisees expected to pilot the technology this year.