Walmart's New Health Food Push: Is It Too Hard to Swallow?
Bonds Are a 'Safe' Investment: A Big Lie Gets Even Bigger
Wendys Arbys Group's (NYSE:WEN) Wendy's Restaurant's second foray into the breakfast business appears to have failed, sending the company back to the drawing board, and leaving McDonald's (NYSE:MCD) as the clearly dominant player in the drive-through morning business. According to Advertising Age, Wendy's CEO Roland Smith told attendees at an industry conference that the company had decided that the breakfast offering have fallen short of its expectations, both in quality and profitability.
Wendy's has been carrying out a test of breakfast offerings for two years already. In this instance, I suspect that 'test' was a way of couching the rollout so that the company did not have to face the embarrassment of franchisees refusing to open for the breakfast trade. Since the breakfast 'test' was not carried out in all units, it could not be supported by a national ad campaign, a weakness that surely impacted traffic.
The company plans to overhaul the menu, a step badly needed, imho. McDonald's has set the bar very high, offering high-quality fare such as hotcakes, biscuits and English muffins. Wendy's alternatives, which I had the occasion to sample a couple of times, seemed second-rate by comparison, made worse when low traffic volume resulted in less than fresh ingredients.
Given the saturation of the drive-through burger industry, I expect that Wendy's will indeed return again to the breakfast wars in an attempt to increase returns per unit. Finding an identity and the money to elbow its way into the market, however, will be difficult tasks.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
1-14-2009 @ 4:01PM
Iridium said...
Wendy's could be in a great position if they cut prices. McDonalds has been on a price hike binge that will seriously hurt the company in the next year.
A Big Mac value meal is now $5.39 in most locations. Up from $3.85 two years ago. $5.39 is way too high for a Big Mac. In fact all of McDonalds value meals are above $5, including the McNugget meal which is insane. When McDonalds loses is value it will cease to be an option for most people.
At that price you can have a far better meal at Five Guys Burgers which are popping up everywhere in the midwest.
Transportation and grain coast are down far from thier highs. People didn't believe me when I said that prices of food would not go down when the driving factors go away. I said they would actually go up to bring in more profit. A mass corporation will never give away money on the table unless competition forces them to.
1-14-2009 @ 5:28PM
jeff said...
I love five guys.
Wendy's doesn't need to cut prices, they are well known for having a great 99 cent menu. What the need to do is start serving up less ecoli sandwiches while reducing the customers fear of getting shot molested, or otherwise hospitalized due to dining.
1-25-2009 @ 11:47PM
Harold C said...
The demand for food has overwhelmingly increased, especially now that we are in economic hardship. Wendy's has decided to cut its breakfast menu from up to 475 of its srores, despite seeing more fastfoods that are increasing their revenues.The company’s CEO says it’s trying to decrease spending by $60 million. Americans are taking out payday loans to cover basic expenses and flocking to dollar menus to save money on food. So it seems strange that Wendy’s would reduce its menu at this point. The company plans to relaunch breakfast service in 2011. The problem I see is that customers will simply go somewhere else for breakfast, and those places will gain customer loyalty while Wendy’s misses out on a portion of the market. To read or comment about this story, visit your payday loans source.
2-07-2009 @ 7:53PM
Kevan said...
Wendy's is making a huge mistake throwing breakfast out the window. The problem is not in the concept, it's in their offerings. Who really wants to keep going back for a maple egg and meat sandwich? Gross.