July 1, 1985, was to be a momentous morning for Wendy's International. Eggs were on hand for made-to-order omelets, there was French toast in the works and the coffee was hot. Following months of preparation, breakfast was ready.
With lots of hoopla and a multimillion-dollar advertising campaign, the nation's third-largest fast-food feeder was making a splashy nationwide unveiling of its breakfast menu.
TV sets echoed with the Wendy's advertising theme, "Only Wendy's has breakfast like we do," sung to the Platters' 1950s classic "Only You." It was official: Wendy's was becoming an all-day restaurant chain.
Nine months later, the Ohio firm quietly retreated from the breakfast market. Today, most of the chain's 3,450 outlets across the country are dark during the early morning hours. Only about 800 now offer breakfast, after Wendy's decided early this year to leave the decision on breakfast up to individual stores.
Despite nearly a year of extensive testing and consumer surveys before the breakfast launch, Wendy's hit the dreaded glitch in the fast-food business--slow service. "The biggest problem we had was a service problem," concedes R. David Thomas, founder and senior chairman of Wendy's.
"We made every omelet to order. . . . Omelets are more complicated. Our competitors make things up and put them under a heat lamp. . . . We just couldn't compete with that. It was a brand-new procedure," Thomas added. "I think we made a mistake. I don't think our testing was as accurate as it should have been."
Wendy's launched breakfast after a phenomenally successful year in 1984 when its "Where's the Beef" advertising campaign helped catapult sales 26% at all Wendy's outlets. Unfortunately, the introduction of breakfast, besides having operational problems, coincided with an overall slowdown in fast-food sales throughout the industry.
Format Proved Cumbersome
Wendy's had hoped to carve a niche in the breakfast market by offering such items as omelets, French toast, egg sandwiches and similar items. But the made-to-order format that built Wendy's hamburger business proved cumbersome for hurried breakfast eaters.
"Wendy's differentiates itself from McDonald's and Burger King by quality," explains Charles S. Glovsky, a senior analyst at Alex. Brown & Sons in Baltimore. "As it turned out, that was a noble goal, but customers of fast-food breakfasts stress fast first and food secondarily."
Some Wendy's have succeeded with the morning meal. A Wendy's on Vermont Avenue in Los Angeles does a bustling breakfast business, and store manager Adolfo Galindo attributes the success to the fact that his Wendy's is located within walking distance of six hospitals. But only five of the 159 Wendy's located in the Southern California area still serve breakfast, the company says.
Executives at Wendy's vow that the chain will soon return full swing to breakfast--the fastest-growing segment of the otherwise lackluster fast-food business. "We can say we will be back to breakfast bigger and better than ever before," Thomas declares.
The company won't say exactly what its breakfast bill amounts to. Overall company sales and profits were up for all of 1985 and for the first half of 1986, but the average sales per restaurant fell.
Meanwhile, Wendy's has turned much of its attention to the business it knows best: burgers. Just last month, Wendy's launched its new Big Classic hamburger--its first new burger product in 17 years--in hopes of touching off a new burger war. The Big Classic is taking direct aim at Burger King's Whopper and McDonald's McDLT. Last summer, Wendy's introduced Crispy Chicken Nuggets to cash in on the chicken nuggets business that is expected to hit $1 billion this year.
Successful With Salad Bar
Wendy's is not the first fast-food operator to withdraw a national product. McDonald's took its McRib sandwich off the market. Kentucky Fried Chicken briefly added ribs to its chicken menu. And Wendy's has been successful with some products, most notably salad bars, while others have not succeeded with the greens.
By being largely absent from breakfast, however, Wendy's is temporarily missing out on an increasingly important meal for the fast-food business. Analyst Glovsky says that breakfast is a third major meal for fast-food chains and Wendy's just cannot concede it to the competition.
Meanwhile, McDonald's and Burger King are gobbling up the fast-food morning business. McDonald's was the first to introduce breakfast a la fast food in 1973 with its Egg McMuffin. It wasn't an immediate hit, and industry observers say McDonald's lost money for five years before breakfast proved profitable.
Today, breakfast accounts for 15% to 20% of the chain's sales, analysts say. McDonald's claims that one of every four Americans who eat breakfast out eat at the Golden Arches.
At Burger King, which introduced its croissant breakfast sandwiches two years ago throughout the chain, breakfast accounts for about 10% to 15% of sales.