DUBLIN, OHIO – The Wendy’s Co. is planning to invest an additional $15 million during the second half of fiscal 2020 to drive greater awareness of its breakfast program. Breakfast has been a bright spot for the quick-service restaurant (QSR) chain as it has adapted to challenging business conditions caused by the coronavirus (COVID-19) outbreak.
“We could not be more pleased with our breakfast daypart since its launch in early March,” said Todd Allan Penegor, president and chief executive officer, during an Aug. 5 conference call to discuss second-quarter results. “Despite breakfast being the hardest hit daypart in QSR since the beginning of the pandemic, our businesses continue to grow each month with sales coming in at approximately 8% of total US sales in Q2.”
Consumer awareness that Wendy’s offers breakfast was hovering at 50% during the second quarter, according to the company.
“We believe that we have a huge opportunity to continue to drive that number higher,” Penegor said. “This is why we have made the decision to add incremental dollars into advertising to further accelerate our breakfast business and capitalize on the significant momentum we have.
“As mobility improves, coupled with our incremental investment in marketing, we believe that this business has a ton of upside moving forward.”
Ninety-eight percent of Wendy’s restaurants are open in some fashion and same-restaurant sales have grown to the high single digits in the United States for the month of July, Penegor said.
“As we moved into June, we continued to see our sales accelerate as restrictions began to lift and as mobility began to increase slowly across the country,” he said. “Within the quarter, we have seen significantly improved customer counts since the lows of COVID. We continue to see very strong average checks as ordering sizes have remained elevated, which is helping to drive restaurant margins across the system.”
Net income for the quarter ended June 28 totaled $25 million, equal to 11¢ per share on the common stock, and a decline when compared to the same period during fiscal 2019 when the company earned $32 million, or 14¢ per share.
Sales for the quarter fell to $164 million from $181 million the year prior.
“Our global same-restaurant sales accelerated each month during the quarter on the strength of our breakfast daypart that continues to build, a growing digital business and increased mobility around the globe,” said Gunther Plosch, chief financial officer. “These gains were more than offset by the declines that we saw as a result of COVID-19 … ultimately landing with same-restaurant sales down 5.8% for the quarter.”
Digital sales grew to approximately 5% of sales, double the amount the company achieved in 2019.
“We have expanded both our delivery and mobile ordering businesses in the US as safety and convenience are paramount concerns for consumers in the current environment,” Penegor said. “We have now successfully added Uber Eats, so you can now order Wendy's from all of the major delivery providers in the US. As we have stressed before, frequency remains an opportunity for us. And it will be more important than ever as normal routines resume in the months to come.”
Management suspended its guidance earlier this year and did not offer an update.
“Given the continued volatility and uncertainty surrounding the future impact of COVID-19 on the global economy and its impact to our company, we are still unable to provide a 2020 and long-term outlook,” Plosch said.