The 2020 edition will have a very different feel, Penegor said. Firstly, Wendy’s is going to use some of that $20 million to coordinate a national launch supported by advertising. It’s not going to take a market-by-market approach. That should guard against some of its competitors’ past tactics, but it’s going to also require an all-hands-on-deck approach from franchisees that wasn’t there before. About 95 percent of Wendy’s domestic units are franchise run.
What else is changing? To address the cost issue, this iteration of breakfast only features 18 unique ingredients. Some past versions were in the mid-40s.
Wendy’s full breakfast menu will consist of nine sandwiches. Three are on croissants, including two with eggs (sausage, egg and Swiss cheese or a bacon, egg, and Swiss cheese), and a maple bacon chicken croissant. Other eggs sandwiches will be sold on biscuits and classic buns. There’s also a honey butter chicken biscuit, Breakfast Baconator, and Frosty-ccino. Sides include fruit, seasoned potato wedges, and sausage gravy. Additionally, a new blend of coffee is coming next year.
It’s also going to be a more drive-thru focused push. Test stores have tried opening the window at 6:30 for breakfast and the dining room at 9.
Additionally, Wendy’s is advertising to hire 20,000 employees to execute the vision. Penegor said Wendy’s labor model for breakfast only requires three people per restaurant. “We actually think it’s a popular daypart for people to work in,” CFO Gunther Plosch added.
With block scheduling, Wendy’s said the 20,000 figure can also help it improve staffing levels through lunch.
Assuming no royalty or advertising contribution on breakfast sales, Saleh wrote, Wendy’s franchisees could break even at about $2,850 in weekly sales if the restaurant opens four hours earlier. Drive-thru only with three crew members and one manager, which aligns with what Penegor outlined. That estimate factors hourly employees making $12 and mangers $23 per hour.
That would stir hourly labor expenses at breakfast of about $59 compared with Wendy’s average for lunch and dinner of $110.
Starting at 6, it would be about $1,008 per week for crew members and $644 for the manager, or $1,652 total.
Plosch did caution it could take some time to get breakfast humming from a profitability standpoint. But Wendy’s is committed to thinking long-term.
Currently, it’s a three-year period to make sure the company is providing funds and has “adequate national media waves on there” to drive the daypart.
He said Wendy’s would likely incur losses with its breakfast business in 2020, although less than the $20 million it’s taking in 2019 to prepare. “And you can expect that we are going to be profitable on breakfast in 2021, even more profitable in 2022,” he said.
By 2023, Wendy’s initial investment commitment should disappear and “then we are reaching full profitability on the breakfast business,” Plosch said.