Connect with us

Business News

Wendy’s prepares to overtake Burger King in breakfast, two years after its nationwide launch

Published

on

The Breakfast Baconator and Seasoned Potatoes are part of the breakfast menu at Wendy’s restaurants on March 2, 2020 in New York City.

David Dee Delgado | Getty Images

Two years ago, Wendy’s launched its breakfast menu nationwide, finally crossing the finish line for a goal it tried and failed at for nearly four decades. Then came Covid lockdowns.

Before the pandemic, breakfast was the only meal that drew a growing number of customers to fast-food chains. Lunch and dinner traffic was shrinking as consumers chose healthier options or made their meals at home. For Wendy’s, entering breakfast would allow the burger chain to attract new sales without cannibalizing its lunch, snack or dinner traffic.

Wendy’s stuck to its plan even as Covid took hold, serving up egg sandwiches and breakfast burgers as rival restaurant chains opened later or trimmed their early morning offerings. It now holds the third-largest market share of any burger chain in the competitive breakfast category, behind Restaurant Brands International’s Burger King and a dominant McDonald’s.

By the fourth quarter of 2021, breakfast sales accounted for roughly 8% of Wendy’s U.S. sales, still shy of the chain’s goal of 10% of total U.S. sales. Last year, the company grew its breakfast sales by about 25%, and Wendy’s thinks the daypart has more room to grow. In 2022, the burger chain expects its breakfast sales to climb an additional 10% to 20%.

“For us, right now, we’re very solidly and very quickly established as the number three, but we’re only about a share point behind Burger King,” Wendy’s U.S. President Kurt Kane said in an interview. “Our first job is to leave them behind, which we’re very confident that we’re going to be able to do here in the not-too-distant future.”

Burger King’s U.S. business has struggled in recent years, and its weak breakfast performance hasn’t helped. In the fourth quarter, Burger King’s U.S. same-store sales rose just 1.8%, trailing both McDonald’s and Wendy’s metrics for their home markets.

And even though McDonald’s is still the dominant player in the early-morning daypart, Kane said he thinks Wendy’s could eventually become number one.

“We think the Frozen Arches have had plenty of time at the top of the breakfast category, but I think we’ll obviously keep nipping away at that and gobbling up share across the rest of the category,” he said.

In late February, Wendy’s announced it would be taking its breakfast menu to all of its Canadian restaurants this spring.

Shares of the company have risen 7.6% over the last 12 months, bringing its market value to $4.76 billion. The stock has underperformed the S&P 500, but it’s doing better than shares of McDonald’s and Restaurant Brands International.

Becoming a pandemic winner

Wendy’s breakfast was available nationwide for only about two weeks before states and localities ordered restaurants to shutter their dining rooms and switch to serving their food through delivery, takeout and drive-thru lanes.

According to Kane, the company discussed the option to modify its breakfast plans with franchisees once lockdowns went into effect, but their operators committed to keeping the momentum going.

“We were off to a fantastic start, well ahead of any projections that any of us could have hoped for in those first two weeks,” Kane said. “We knew if we could keep it going, we could build new habits and create a lot of fans through the process.”

Wendy’s had a leg up on the competition anyway since it had already designed the first two-and-half hours of its breakfast service to be drive-thru only.

On top of that, Wall Street analysts had anticipated that its fast-food rivals would step up their own breakfast deals and advertising to maintain customers’ loyalty. Instead, many restaurants found themselves hoarding cash, cutting advertising and eliminating promotions as their sales took a nosedive.

Wendy’s took the opportunity to spend more on marketing and spread awareness.

The pandemic didn’t just impact the competition’s marketing plans. Some fast-food restaurants even stopped selling the early-morning meal because of staffing issues and to preserve their profitability. Many Taco Bell locations began opening after breakfast hours and only resumed their prior schedule this September.

Still, Wendy’s hasn’t been immune to some of the pandemic’s pressure points. Like the rest of the broader restaurant industry, its franchisees struggled at times with staffing shortages, although Kane said efforts to recruit more workers ahead of the breakfast launch helped.

Changing routines

The timing of Wendy’s breakfast launch gave consumers the opportunity to start a new morning habit just as the rest of their daily routines were turned upside down.

“Even though it wasn’t the way that we would’ve drawn up the playbook, it may have actually helped us because it gave us the opportunity to really build it in a steady way,” Kane said.

Many consumers stopped commuting to offices or schools, so they changed up their breakfast routines. Cereal and orange juice sales came roaring back after declining for years, but restaurants saw demand for their breakfast drop sharply. Starbucks, for example, saw many of its customers delay their visits, opting for an after-lunch coffee instead of a morning cup.

Before the pandemic, Wendy’s anticipated that its busiest times would be from 7 a.m. to 9 a.m. as consumers went to work. Instead, the company saw its longest breakfast lines in the last half hour of service.

Of course, that pattern is shifting again as more consumers return to offices and schools.

“Even though the pattern is different, breakfast mobility is pretty much back to where it was prepandemic,” he said.

From September to November, online and in-person traffic to restaurants during breakfast hours rose 11%, compared with a 10% decline in the year-ago period, according to The NPD Group.

As early-bird customers return, Wendy’s has used aggressive promotions to drive traffic to its restaurants and build awareness for its breakfast offerings. From November to mid-December, it sold its egg and cheese biscuit sandwiches — with a choice of sausage or bacon — for just $1. Kane said to expect similar deals in the coming months.

The chain also recently launched its first addition to the breakfast menu since its debut: the Hot Honey Chicken Biscuit. It’s a play on the Honey Chicken Biscuit, which is tied with the Breakfast Baconator as Wendy’s top-selling breakfast items.

Between the two crowd favorites, though, Kane has a clear favorite: He claims to have eaten 720 Breakfast Baconators since the official launch — just about one a day.

“Some days you get two, some days you don’t get any, but you have to balance it out,” Kane said.

Business News

Trump media company subpoenaed in federal criminal probe of SPAC deal

Published

on

Former U.S. President Donald Trump gives the keynote address at the Faith & Freedom Coalition during their annual “Road To Majority Policy Conference” at the Gaylord Opryland Resort & Convention Center June 17, 2022 in Nashville, Tennessee.

Seth Herald | Getty Images

Donald Trump’s media company was subpoenaed by a federal grand jury in connection with a criminal probe, according to the company with which the former president’s firm plans to merge.

Digital World Acquisition Corp. said in a filing Friday that Trump Media and Technology Group received a subpoena from the grand jury in Manhattan on Thursday. The Trump company also received a subpoena from the Securities and Exchange Commission regarding a civil probe on Monday, DWAC said.

DWAC also said some current and former TMTG employees have also recently received grand jury subpoenas.

The filing came days after DWAC said the government investigations could delay or even prevent its merger with Trump’s newly formed company, which includes Truth Social, a social media app intended to be an alternative to Twitter.

Neither TMTG nor a spokeswoman for Trump immediately responded to CNBC’s requests for comment.

The Justice Department and the SEC, which regulates the stock market, are investigating the deal between DWAC and Trump Media. By merging with DWAC, which is a kind of shell company called a special purpose acquisition company, or SPAC, Trump’s firm would gain access to potentially billions of dollars on public equities markets.

Trump established Truth Social months after Twitter banned him for his tweets on Jan. 6, 2021, when hundreds of his supporters stormed the U.S. Capitol in a bid to overturn Joe Biden’s victory in the presidential election. Trump Media’s CEO is former Rep. Devin Nunes, one of the former president’s most ardent loyalists in the Republican Party. Trump is also considering whether to run for president in the 2024 election.

Trump has continued to spread the lie that the election was stolen from him. His alleged involvement in the Jan. 6 insurrection is being probed by a House select committee that has accused the former president of being at the center of a multipronged conspiracy to block the peaceful transfer of power to Biden.

Early criticism of the Trump-DWAC deal came from Sen. Elizabeth Warren, D-Mass. In calling for an investigation, she wrote to SEC Chair Gary Gensler in November, telling him that DWAC “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information in [SEC] filing and other public statements.”

DWAC shares are far off their highs, closing Friday at $24.20. The stock had surged above $90 in October, after the deal with Trump’s group was announced.

DWAC on Monday revealed in a securities filing that it learned June 16 that each member of its board of directors received subpoenas from the same federal grand jury.

The grand jury sought documents similar to those the SEC already requested as part of its civil probe, DWAC said. The company itself was served with a subpoena a week ago with similar requests, along with other requests relating to communications, individuals and information involving Rocket One Capital.

DWAC also revealed Monday that a board member, Bruce J. Garelick, had told management that he would quit the board during the previous week. Garelick said his resignation “was not the result of any disagreement with Digital World’s operations, policies or practices,” according to the company filing.

— CNBC’s Kevin Breuninger and Thomas Franck contributed to this story.

This is breaking news. Please check back for updates.

Continue Reading

Business News

Walmart is working on a response to the Supreme Court’s abortion decision, CEO says in memo

Published

on

Walmart CEO Doug McMillon speaks at the CNBC Evolve conference November 19th in Los Angeles.

Jesse Grant | CNBC

Walmart CEO Doug McMillon told employees on Friday that the company is weighing how to respond to a Supreme Court decision that ended the federal right to an abortion.

“We are working thoughtfully and diligently to figure out the best path forward, guided by our desire to support our associates, all of our associates,” he said in a memo sent to employees on Friday. “We will share details on our actions as soon as possible, recognizing that time is of the essence.”

He did not say what changes the company is considering, such as if it may cover travel expenses for workers who must travel to another state where abortion is available.

The memo was previously reported by The Wall Street Journal.

Arkansas, home to Walmart’s headquarters, is one of several states with severe limits or bans on abortions that went into affect after the high court’s ruling.

Walmart is also the country’s largest private employer. It has about 1.6 million employees across the country, including many who live and work in states across the Sunbelt with abortion restrictions such as Texas, Oklahoma and Florida.

Since the Supreme Court reversed Roe v. Wade, companies across the country have had a mix of reactions. Some, including JPMorgan Chase, Dick’s Sporting Goods and Target, have announced new plans to cover employee travel to other states for abortions. Others, such as Kroger and Apple, said they already cover travel for medical treatments and reproductive health care. And still others have remained quiet.

Amazon, the second-largest private employer in the country, said in May that it would pay up to $4,000 in travel expenses each year for non-life-threatening medical treatments, including abortions.

Walmart already covers employee travel for some medical procedures, such as certain heart surgeries, cancer treatments and organ transplants.

Walmart health benefits cover only some abortions. According to the company’s employee handbook, charges for “procedures, services, drugs and supplies related to abortions or termination of pregnancy are not covered, except when the health of the mother would be in danger if the fetus were carried to term, the fetus could not survive the birthing process, or death would be imminent after birth.”

Plan B, an over-the-counter form of contraception, is covered only if the person gets a prescription. The pill, often called the “morning after pill,” works by preventing ovulation or preventing a fertilized egg from attaching to the womb. It can be taken after unprotected sex or when contraception fails.

Other forms of contraception are also covered with a prescription, including birth control pills, injections and intrauterine devices, or IUDs. Some anti-abortion activists also oppose IUDs because they can stop a fertilized egg from implanting in the uterus.

In Friday’s memo, McMillon said Walmart has gathered input from employees as it decides what to do. He also alluded to the size and diversity of both the company and its customer base.

“We know our associates and customers hold a variety of views on the issue, and this is a sensitive topic about which many of us feel strongly,” he said. “We want you to know that we see you, all of you. No matter what your position on this topic is, we want you to feel respected, valued and supported.”

Continue Reading

Business News

FCC authorizes SpaceX to provide mobile Starlink internet service to boats, planes and trucks

Published

on

The Starlink logo is seen in the background of a silhouetted woman holding a mobile phone.

Sopa Images | Lightrocket | Getty Images

The Federal Communications Commission authorized SpaceX to provide Starlink satellite internet to vehicles in motion, a key step for Elon Musk’s company to further expand the service.

“Authorizing a new class of [customer] terminals for SpaceX’s satellite system will expand the range of broadband capabilities to meet the growing user demands that now require connectivity while on the move, whether driving an RV across the country, moving a freighter from Europe to a U.S. port, or while on a domestic or international flight,” FCC international bureau chief Tom Sullivan wrote in the authorization posted Thursday.

SpaceX did not immediately respond to CNBC’s request for comment on the FCC decision.

Starlink is SpaceX’s network of satellites in low Earth orbit, designed to deliver high-speed internet anywhere on the globe. SpaceX has launched about 2,700 satellites to support the global network, with the base price of the service costing users $110 a month. As of May, SpaceX told the FCC that Starlink had more than 400,000 subscribers.

SpaceX has signed early deals with commercial air carriers in preparation for this decision: It has pacts with Hawaiian Airlines and semi-private charter provider JSX to provide Wi-Fi on planes. Up until now SpaceX has been approved to conduct a limited amount of inflight testing, seeing the aviation Wi-Fi market as “ripe for an overhaul.”

The FCC’s authorization also includes connecting to ships and vehicles like semi-trucks and RVs, with SpaceX having last year requested to expand from servicing stationary customers. SpaceX had already deployed a version of its service called “Starlink for RVs,” with an additional “portability” fee. But portability is not the same as mobility, which the FCC’s decision now allows.

The FCC imposed conditions on in-motion Starlink service. SpaceX is required to “accept any interference received from both current and future services authorized,” and further investment in Starlink will “assume the risk that operations may be subject to additional conditions or requirements” from the FCC.

The ruling did not resolve a broader SpaceX regulatory dispute with Dish Network and RS Access, an entity backed by billionaire Michael Dell, over the use of 12-gigahertz band – a range of frequency used for broadband communications. The FCC continues to analyze whether the band can support both ground-based and space-based services, with SpaceX pushing for the regulator to make a ruling.

Continue Reading

Trending