Wendy's scraps breakfast and thickens bacon in bid to fix falling sales

Wendy's reported a fifth consecutive drop in US same-store sales, falling 5.7% for the quarter that ended September 27. The chain is now the third-largest burger operator in the United States, having been passed by Burger King earlier this year. To reverse the trend, the company revealed a multi-year strategy called Dave's Way, named after founder Dave Thomas. The plan focuses on improving food quality, enhancing marketing, and expanding delivery services.

The new approach includes tangible changes to the menu starting now. Ingredients are being upgraded, such as thicker bacon, larger lettuce pieces, and creamier Frosty treats. The company is also removing low-volume items to simplify kitchen operations. A major shift involves breakfast. Wendy's launched breakfast in 2020, but it is now becoming optional for franchisees. Locations that discontinued breakfast sales have reported better performance during other parts of the day.

CEO Bob Wright stated that the objective is to grow customer traffic and market share while strengthening restaurant profitability. Wright previously noted that the chain had prioritized cost savings over food quality. He said the new plan directly supports stronger restaurant economics and allows operators to concentrate on their core food offerings. A fully refreshed menu is scheduled to roll out in 2027.

The announcement came as the board unanimously rejected a $1.4 billion offer from a group of investors led by former chairman Nelson Peltz. The investors proposed buying the company and taking it private. Wendy's stated that the offer undervalued the brand. Art Winkleblack, the board chair, said the company's confidence rests on Wright's track record of leading restaurant turnarounds.

Wendy's has closed nearly 300 of its 6,000 US restaurants in recent months. These closures targeted locations that were consistently underperforming. This move followed a previous wave of closures within the last two years. The chain appointed Wright in May, ending a year-long leadership vacuum after Kirk Tanner left for Hershey. Wright's background in growing Potbelly Sandwich Shops made him an attractive candidate for the board.

The sales slump has impacted franchise partners. Meritage Hospitality Group, which runs more than 300 US locations, partially blamed its bankruptcy on Wendy's declining performance. The group reported that store-level earnings dropped nearly 50% last year. Citing rising beef costs, increased discounting, and weak traffic, Meritage said the pressure was severe. Wendy's announced plans to acquire up to 163 locations from the group unless a better offer emerges.

Wright addressed questions about how this plan differs from previous transformation efforts. He noted that franchisees are currently behind this specific strategy. He emphasized that while writing a strategy is easy, execution is difficult and requires strength across all business disciplines. The company aims to fix its value proposition and reduce pressure on franchisee economics through these operational changes.