Perhaps “the chicken wars” occurring on Twitter have eclipsed the QSR industry’s “breakfast wars.” All the same, brands like Starbucks and Burger King are competing intensely to make their restaurants top-of-mind for morning commuters. Now, another major QSR has joined the fray.
Wendy’s has announced that it plans to launch its breakfast menu, currently available in more than 300 restaurants, across the US system in 2020. The menu features popular items from the brand, such as Applewood smoked bacon, and places them in a breakfast context. Signature items include the Breakfast Baconator, the Frosty-ccino, and the Honey Butter Chicken Biscuit.
“Launching breakfast in our US restaurants nationwide provides incredible growth opportunities,” says Todd Penegor, President and CEO of The Wendy’s Company. “We are well-positioned to pursue it. We believe we have the right team and structure in place, and we put Wendy’s fan favorites on our breakfast menu to set us apart from the competition.”
To support its expansion into breakfast, Wendy’s and its franchisees plan to hire approximately 20,000 crew members across the country.
As a result of its intention to enter the breakfast wars in 2020, Wendy’s is updating its 2019 outlook as it expects to make one-time upfront investments during 2019 of approximately $20 million to support the US system in preparation of its national launch. All other elements of the Wendy’s 2019 outlook remain unchanged.
In addition, Wendy’s is removing its 2020 goals as it intends to update these goals and provide additional long-term guidance at its Investor Day on October 11, 2019, including additional details regarding the expected financial impact of entering the breakfast wars.
During 2019, as a result of the ~$20 Million breakfast investments, Wendy’s now expects:
- Adjusted EBITDA approximately flat to down 2.0 percent.
- Adjusted earnings per share down approximately 3.5 to 6.5 percent.
- Cash flows from operations of approximately $290 to $305 million.
- Free cash flow of approximately $215 to $225 million, down approximately 2.5 to 7.0 percent.
During 2019, Wendy’s continues to expect:
- Global systemwide sales growth of approximately 3.0 to 4.0 percent.
- General and administrative expense of approximately $195 million.
- Adjusted tax rate of approximately 22 to 23 percent.
- Capital expenditures of approximately $75 to $80 million.