Wendy's (NYSE: WEN) recently agreed to be acquired by Triarc (NYSE: TRY), parent of Arby's, but that won't stop the company from efforts at innovation before the deal closes.

In a statement, the number three fast food chain announced that it's "introducing a new line of hand-spun Frosty Shakes in three flavors: Vanilla Bean, Chocolate Fudge, and, yes, Strawberry -- a company first."

The company will launch a national ad campaign in June. The Frosty was one of the original Wendy's menu items when Dave Thomas opened the first location in 1969. Since then, the Frosty has become Wendy's best-known item, with annual sales exceeding 350 million.

What can Wendy's do to keep up with the more innovative McDonald's (NYSE: MCD)? Here's an idea: an all-natural Frosty made with real milk.

As Sarah Gilbert recently wrote on WalletPop, our sister site, "Unfortunately, today's milkshake is barely recognizable compared to those of the middle of the century. Most milkshakes consumed by Americans today come from McDonald's, Wendy's or Starbucks; where they are all individually "branded", Shamrock Shake, Frosty, Frappuccino, so that it's clear the milk is but a minor player. Nonfat milk solids, corn syrup solids, guar gum, dextrose, cellulose gum, vanilla. Is this progress?"

An all-natural Frosty could really move Wendy's into the 21st century. They've demonstrated a willingness to introduce new Frosty products, so why not give it a try?

In addition to Wendy's (NYSE: WEN) management's recent hiring of JP Morgan (NYSE: JPM) and Lehman Brothers (NYSE: LEH) to help review strategic options for the company, the fast-food restaurant has decided to throw its hat into the breakfast ring by signing an exclusive deal with Proctor & Gamble (NYSE: PG). The deal allows Wendy's to be the only major fast-food restaurant chain to offer a proprietary blend of Folgers Gourmet Selections coffee and will become part of Wendy's new breakfast menu.

What's that you say, "Breakfast menu?"

Yes folks, Wendy's just isn't for lunch or dinner anymore (or dessert – mmmm Frosty's). You can now eat Wendy's for every meal of the day. By the end 2007, Wendy's expects to have 20-30% of its North American restaurants serve breakfast along with premium Folgers coffee.

Wendy's is definitely throwing its hat into a very crowded ring. The fast-food breakfast market is growing at almost three times the rate of the overall market, with Burger King (NYSE: BKC), McDonald's (NYSE: MCD), Arby's, a unit of Triarc Co. (NYSE: TRY), Carl's Jr and Hardee's, both owned by CKE Restaurants (NYSE: CKR) and even Starbucks (NASDAQ: SBUX) offering similar on-the-go breakfasts to consumers. Papa John's (NASDAQ: PZZA), Dunkin Donuts and Chick-fil-A are planning new breakfast products as well. What's going to be so different to make me go to Wendy's?

When looking at the coffee aspect, one has to recall last year's Canadian Business magazine taste test between McDonald's "Café Roast" and Starbucks coffees. I'm sure all the companies I mentioned above serve some brand of coffee. Wendy's is really walking into a competitively caffeinated situation. We also can't forget about Seattle 's "Sexpresso" baristas, but that's competition on a different level.

Where do you go to get your morning cup o' joe? And would the chance to have Folgers Gourmet change your mind?