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.

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