America, it's almost time for your breakfast Frosty.
That's essentially what The Wendy's Company (WEN 3.38%) has said by releasing its plans to bring its breakfast menu to its entire lineup of stores in the United States in 2020. The menu, which has been tested in 300 locations, includes the Breakfast Baconator, a version of the sandwich that replaces the hamburger with an egg/sausage patty combo; the Honey Butter Chicken Biscuit; and, of course, the Frosty-ccino, a frozen coffee treat.
Wendy's expects to hire 20,000 new employees to support its rollout of breakfast. The chain also expects to spend $20 million in one-time investments in its nearly 5,500 U.S. restaurants.
Wendy's has used its regular menu to inspire its breakfast menu. Image source: Wendy's.
Where's the beef?
Wendy's has tried this before. The chain had a breakfast menu in the 1980s, and tried again as recently as 2012. But its previous breakfast efforts lacked anything to make them distinct. In many ways, the 80s and 2012-2013 breakfast lineup seemed a bit like when a pizza place at an airport serves breakfast. Sure, an egg sandwich is an egg sandwich -- and a mediocre one can be fine when there are no other options -- but with McDonald's, Chick-fil-A, and even Yum! Brands Taco Bell having unique breakfast menus, it's hard for any sort of basic lineup to standout.
And, of course, any new entrant in the breakfast space has to deal with Starbucks and Dunkin'. Coffee sales may drive people to buy pastries, breakfast sandwiches, and, yes, doughnuts, and it's unlikely too many people will stop at one place for a beverage then hit a fast food joint for their meal.
It's that heavy level of competition that has caused Wendy's to lean heavily on its regular menu. People know the Baconator and Frosty brand, and may want to try them for breakfast. Because who doesn't want permission to have a shake for breakfast?
Will this work?
Wendy's model has generally been to offer a higher-quality version of what's on the menu at McDonald's and Burger King (a Restaurant Brands International company). Its breakfast lineup -- at least the small part of it that has been introduced -- looks to do that, while also being distinctive.
If the chain hopes to win market share from much more established companies, it needs to beat them in quality and creativity. The current fast food leaders in breakfast rely mostly on being guilty pleasures. Nobody ever confused an Egg McMuffin or a Croissanwich with a high-quality, fresh-made morning meal.
Wendy's can use gimmicks like the Breakfast Baconator and the Frosty-ccino to lure people in. That might get curious consumers to sample the chain's morning menu -- but they'll only come back if the rest of the overall lineup stands out from that of its rivals, while being offered at roughly the same price point.
That's a very challenging needle to thread, but it's one the company has done a good job with in recent years. Wendy's no longer stands out as the only burger chain using non-frozen meat (even McDonald's does that with some of its burgers), but it still maintains a high standard for the category, while luring in customers with creative limited time offers.
With breakfast, the chain may have finally found an appealing product mix that includes items that are both familiar and unique. Whether that can turn sampling into sustained market share depends upon whether it can deliver a menu that stands out in a space that's crowded with other options.
