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Wendy's Sets its Sights on a Key McDonald's Stronghold

The fast-food giant has passed Burger King as the number two US burger chain and now it has a plan to gain even more ground.

Wendy's (WEN) - Get Free Report has always had a simple message for fast-food fans. While McDonald's (MCD) - Get Free Report and Restaurant Brands International's (QSR) - Get Free Report Burger King prize fast over fresh, the Dave Thomas-founded chain has always sought to offer something better.

Using, "fresh, never frozen" beef, Wendy's has made its mission being better than its rivals. That's something the company explains on its "Square Deal" blog.

"Ever wonder why a Wendy’s hamburger is square? Our founder Dave Thomas started Wendy’s in 1969 in Columbus, Ohio with a simple idea. Great food, served hot and fresh, by nice people. And the square burger thing? That came from his childhood role model, Grandma Minnie, who told him to Never Cut Corners," the company shared.

It's a sort of very basic philosophy that has been key in helping Wendy's carve out a unique niche in the fast-food space. The strategy has helped it move past Burger King in the U.S., leaving it number two behind McDonald's.

Now, Wendy's wants more and it's putting a major effort into taking over the top spot in an area where McDonald's has dominated -- breakfast.

Wendy's breakfast Lead JS

Wendy's Has a Fresh Take on Breakfast  

The fast-food chain has slowly grown its breakfast business despite having the misfortune of launching it during the pandemic. Wendy's built its breakfast menu around the same recipe as its lunch/dinner menu. That means using fresh, cracked eggs as a counter to the weird, formed eggs McDonald's uses.

Wendy's CEO Todd Penegor talked about some of the nuances of the chain's breakfast plan during its third-quarter earnings call. He pointed out that limited-time offers have helped drive sales, a tactic the chain regularly uses on its standard menu.

"Turning to the U.S. We are incredibly proud of the success of our French Toast Sticks launch. This sweet, craveable morning treat has quickly become our number-one-selling breakfast item. The launch helped us maintain our morning meal dollar share in the QSR burger category and drove a meaningful acceleration in U.S. breakfast sales over the course of the quarter with average weekly sales approaching $3,000 as we exited Q3," he said,

Wendy's has Big Goals for Breakfast

Penegor has targeted averaging $3,000 per week, per store as a major goal for the chain. In addition to the French Toast Sticks, he cited a recent $3 croissant promotion as one of the reasons the chain is on track to meet the $3,000 per week sales goal by the end of the year.

The CEO made it clear that the company remains committed to building its breakfast business.

"We remain committed to our $16 million global investment in breakfast advertising this year just as we remain committed to fighting for our fair share of the QSR breakfast business," he said.

That's not exactly throwing down the gauntlet to McDonald's and Burger King, but it's doing so in a subtle way as any growth will likely come at the expense of its competitors. Penegor also sees areas for future morning sales growth.

"As we move forward, and we've talked about this on prior calls, more innovation could be an important play in the category and in the breakfast daypart for our brand. And we talked about the opportunity to innovate into the morning beverage area," he said. "We think that's an opportunity for some growth into the future."