Breakfast went well for Wendy’s, but so did the rest of the day
Wendy’s same-store sales rose 13.5% in the United States in the first quarter, the company said on Wednesday, a performance that “significantly exceeded” its expectations for the first three months of the year as consumers continued to try its new breakfast offering.
But they also ordered food at other times of the day. The company’s business for the remainder of the day “has grown very strongly,” CEO Todd Penegor said, allaying investor concerns that the company’s breakfast might take business at other times of the day. day, especially lunch.
Breakfast accounts for 7% of Wendy’s sales, suggesting improved same-store sales growth during lunch and dinner.
Wendy’s same-store sales on a two-year basis, which compares the quarter to the pre-pandemic first quarter of 2019, increased 13.5% and her two-year figure has been in double digits for three consecutive quarters. Executives expect this to continue this quarter, as executives said its sales strength has continued so far in the current period.
The results were strong enough that Wendy’s raised its expectations for this year. He also sent his stock higher on Wednesday. Wendy’s share price rose 3% in morning trading.
“In the United States, sales accelerated well in the first quarter on the strength of the remainder of the day,” Penegor said Wednesday.
Fast food sales have recovered strongly from the pandemic, and many chains posted strong results in early 2021, including direct competitors to Wendy, McDonald’s and Burger King.
Consumers armed with stimulus checks are entering restaurants more often, ordering more at drive-thru, and more mobile orders and deliveries. The good results of fast food have come even though consumers eat more often in casual restaurants.
Wendy added breakfast in March 2020 with fanfare, just before the pandemic closed dining rooms across the country and caused a massive change in consumer behavior. The company’s breakfast generated sales for the chain even though consumers worked from home.
Executives want to increase breakfast sales by 30% this year and get to a point where the time slot accounts for 10% of the company’s sales by the end of 2022.
Wendy’s restaurants that tested the breakfast before the nationwide launch are already here, “giving us confidence in our long-term goals,” said Penegor. He said breakfast sales were “ahead of expectations” and the company is committed to advertising the time slot.
But customers also ordered much of the chain’s classic chicken sandwich with its Jalapeno Popper Chicken Sandwich. Penegor said Wendy’s share of breaded chicken sandwiches in the quick service restaurant market has grown despite “significant competitive activity.”
Digital sales have also generated a lot of business. About 8% of the chain’s sales were made through digital channels such as mobile delivery and ordering and the company expects that figure to reach 10% by the end of the year. Its loyalty program has 13 million members.
Wendy’s sales results improve restaurant profits. Restaurant margins in the quarter increased seven percentage points to 17% of sales despite rising labor costs, largely due to improved sales.
“Our sales far exceeded our expectations and fueled our restaurant business model, leading to outsized profits,” said Penegor.