CEO Kirk Tanner says burger brand has yet to reach potential in ‘highly profitable’ menu offering
The breakfast daypart still offers The Wendy’s Co. room to increase sales, executives said Thursday during the company’s second quarter earnings call.
The Dublin, Ohio- based company, which released earnings Thursday for the second quarter ended June 30, introduced breakfast at most of the stores in its system in 2020.
“Breakfast remains an incredibly important daypart,” said Kirk Tanner, Wendy’s CEO and president. “It is highly profitable, and we have not yet reached our potential.
“We continue to outperform competitors by driving breakfast dollar growth ahead of the category in the second quarter,” Tanner said. “We have now optimized the level of our investment in 2024 to allow us to extend our existing breakfast advertising investment horizon beyond 2025.”
Tanner said Wendy’s expects breakfast sales growth will outpace other dayparts.
“Those sales continue to be accretive to overall restaurant margin for the company and franchisees,” he said, noting that sales could be $3,000 a week for individual locations.
“Breakfast is really an important opportunity for us,” Tanner said. “We've talked about this in the past as reaching our full potential, and we're about halfway there, which is the exciting part. It is certainly a tailwind in our business right now. It's growing faster than the rest of our business, and it's growing faster than the category.”
Meanwhile, Tanner said the company will continue to invest in menu innovation, such as the Frosty platform and chicken nugget sauces, and will promote its $5 Biggie Bag.
“Wendy's is the original when it comes to bundled value meal deals in QSR, and you'll see us continue to lean into this competitive advantage,” he said.
Wendy’s also plans to continue investing in digital.
“We grew global digital sales by over 40% year-over-year in the second quarter, delivering 17% global digital sales mix,” Tanner said. “Global digital sales growth was driven by the U.S. segment, which grew sales dollars over 40% year-over-year and international, which grew over 30% year-over-year.”
Tanner noted that Wendy’s added about 6% more users to its loyalty platform, which is “really important as we build a personal relationship with our customers.”
Gunther Plosch, Wendy’s chief financial officer, said the $20 million investment for digital menu boards at company restaurants in 2024 and 2025 continue.
“We are currently at 30 to 35 units installed,” he said. “We’re obviously accelerating that in the second half” of the year.
“It's a good experience for our consumer,” Plosch said. “It's a good experience for our crew members since you obviously don't have to go out anymore and change our menu boards between rest of day and the breakfast menu.”
For the second quarter ended June 30, Wendy’s net income was $54.6 million, or 27 cents a share, down slightly from the $59.6 million, or 28 cents a share, in the same period a year ago. Revenues increased to $570.7 million from $561.6 million in the prior-year quarter.
Same-store sales were up 0.8% globally, with increases of 0.6% in the United States and 2.5% internationally.
Wendy’s, founded in 1969, has more than 7,000 restaurants worldwide.
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