Restaurants

Wendy's prepares for its upcoming breakfast launch by learning from past mistakes

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How Wendy's plans to compete with McDonald's and Burger King

Wendy's focus in 2020 is launching breakfast nationwide after decades of trying and failing.

Investors are skeptical. The day after Wendy's announced its breakfast plans in September 2019, its stock plummeted 10%. The fast-food chain has made three attempts over its history to serve breakfast nationwide, starting in the 1980s.

But Wendy's is confident that this time will be different.

"We're in a much different position as a brand," Wendy's CEO Todd Penegor said in a December interview.

It's not the only thing Wendy's has been doing to boost sales. It's renovating its restaurants to give them a fresher look. The chain has also been selling off its company-owned stores to franchisees. And the company plans to open restaurants in Europe, starting with the United Kingdom, by 2021.

Because franchisees operate more than 90% of its U.S. restaurants, Wendy's worked with restaurant operators to make sure that a nationwide breakfast menu would work across its entire system.

The company plans to invest $20 million in the endeavor, which means that its 2019 earnings are expected to decline. Thanks to those investments in the program, executives expect that breakfast will be immediately profitable for franchisees. Wendy's franchisees will also not have to foot the bill for equipment expenses, which previously could cost as much as $10,000.

A slimmer breakfast menu than past attempts should keep operations running smoothly. And options like the Honey Butter Chicken Biscuit are expected to lure customers away from competitors like Chick-fil-A.

Wendy's plans to spread the news of its expansion into breakfast with a nationwide ad campaign. Previous attempts to add the morning meal started regionally, which meant it relied on local advertising.

Still, Wendy's faces stiff competition when it comes to breakfast. The morning meal is already sold at many of its competitors, like Yum Brands' Taco Bell and McDonald's, and analysts believe that rival restaurant chains will step up their own marketing efforts.