The patties may be a harmless eccentricity, but the lack of a breakfast menu has put Wendy's in a seriously bad position, as this part of the day is the fastest growing in the industry, and the company's major competitors are taking steps to leave little market share for this red-headed stepchild.
Fastest is an understatement
Breakfast is actually the only growing part of the day for this industry. For the past five years, breakfast traffic has grown by 2% annually, while lunch has seen no growth and dinner has declined by 2% each year. Clearly it's a mealtime market restaurants would want to target. Even Starbucks
But then there's Wendy's
As all this was happening, Wendy's changed its menu, too -- by removing breakfast after three years of trying to get customers interested, a decision that cost the company same-store sales. The company had a similar failure in the '80s. And now? It wants to go back for thirds.
Last time, then-CEO Jack Schuessler said Wendy's offering couldn't be a "me-too" breakfast, but that's exactly what the previous breakfast became. The latest version of Wendy's morning meal sounds different, with unique items such as a grilled panini egg sandwich, fresh fruit, and premium coffee.
The company is testing the menu now in a few key markets, with plans for a systemwide rollout a full year from now. By comparison, it took Jamba
A year is a long time to be noncompetitive in a growing segment, and if this endeavor is another flop, it will be a big waste of the company's time and resources. With the company raising the dividend 33% even in the face of negative same-store sales at its Wendy's brand in the latest quarter, the company should hope the third time's the charm for this growth driver.
Fool contributor Jacob Roche owns shares of Jamba and call diagonals on Starbucks but holds no other position in the companies mentioned. Starbucks is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Jack in the Box. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.