In a crowded field of competition, Wendy’s (NASDAQ: WEN) strategy to win over breakfast customers includes spending big on advertising and poking fun at rivals.
Within the fast-food industry, breakfast is the only meal that is seeing more customers return to restaurants compared to a year ago. For chains like McDonald’s (NYSE:MCD) and Dunkin’, the early morning meal plays an important role in their overall business. Breakfast accounted for 16% of fast-food chains’ traffic in the 12 months ended Nov. 2019, according to data from the NPD Group.
Wendy’s is betting that breakfast will eventually account for 10% of its U.S. sales. To drive those sales, Wendy’s will use national advertising campaigns to promote the meal for the first time, starting Monday to coincide with the nationwide launch. Its past attempts at breakfast never expanded beyond regional tests, which meant it could only use local advertising to draw in customers.
Wendy’s CFO Gunther Plosch told analysts on Wednesday that the chain plans to spend between $70 million to $80 million in 2020 on advertising for breakfast, increasing its total media spend by about 30%. The company will contribute between $40 million to $50 million. The chain is not planning on pulling any advertising dollars for lunch or dinner.
McDonald’s, which has been trying to reverse weak breakfast traffic trends, started offering a national 2 for $4 promotion Feb. 24 on several of its breakfast sandwiches. The Chicago-based company has declared Monday "National Egg McMuffin Day" and plans to give away free Egg McMuffins.
WEN shares gained 22 cents, or 1.2%, first thing Monday morning, to $19.10, while those for McDonald’s surged $1.15 to $195.32
