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Wendy's (WEN) Aims More Than $1B of Breakfast Business Sales

Wendy's WEN breakfast daypart offerings have been driving growth ever since launch on Mar 2, 2020, across the United States. Recently, the company’s CEO Todd Penegor discussed with Yahoo Finance Presents about the its prospects and market position with respect to Wendy's breakfast.

Despite the COVID-19 pandemic, the company continues to focus on becoming a major player in the fast-food breakfast business. Although the pace of achieving its target has been decelerated for the time being owing to the pandemic but it’s moving in line with its target. During the fiscal fourth quarter, breakfast remained solid at approximately 7% of sales. It also drove meaningful increase in restaurant average unit volumes (or AUV).

Wendy's CEO Todd Penegor said "We're really excited about where this business [breakfast] can go in the future and as part of our earnings, —we do believe it can be a 10% mix of our business by the end of 2022". We've been talking about how it is [breakfast] a billion plus incremental sales layer to our business — so we're a $12 billion system today so at a 10% mix, it would be $1.2 billion."

After thorough planning, Wendy's re-joined the breakfast business in March 2020, introducing a diverse range of food items, including new sandwiches, peppery potato wedges and a cold brew coffee infused with frosty ingredients.

However, owing to the pandemic, a number of Wendy’s dining restaurants shut down, impacting the food chain business across the world. Although majority of the stores have re-opened after coronavirus-led shutdown, traffic is still well below the pre-outbreak level.

Share Price Performance

Wendy’s shares have surged 24.5% in the past year compared with the Zacks Retail - Restaurants industry’s 46.3% rally. Although the company has underperformed its industry in the said period, earnings estimates for 2021 have moved up 1.5% over the past seven days, depicting analysts' optimism over bottom-line growth potential. The company is benefiting from its transition to a franchised business model. This along with focus on menu innovation, technological upgrades and international expansion is likely to benefit the company in the days ahead.

Zacks Rank

Wendy’s — which shares space with Dave & Buster's Entertainment, Inc. PLAY, Jack in the Box Inc. JACK and Yum! Brands, Inc. YUM in the same industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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