Wendy's is ploughing $25 million into breakfast ads to tempt returning office workers with deals like a $1.99 honey butter chicken biscuit

• Wendy's plans to spend $25 million advertising its breakfast in 2021, CEO Todd Penegor said.
• The chain wants more people to add its biscuits, croissants, and cold brew to their morning routine.
• Wendy's rolled out its new breakfast menu only weeks before most states entered lockdown last March.

Wendy's is massively ramping up its breakfast advertising spend as it tries to grab a bigger share of the lucrative breakfast market.

The fast-food chain plans to spend $25 million advertising its breakfast food in 2021, up from an original $15 million, CEO Todd Penegor announced at its earnings call last week.

Wendy's has doubled down on its breakfast marketing since it rolled out its new breakfast menu in March 2020.

Read more: Ghost kitchens operators are expanding their business models beyond the rent-a-space model

Penegor said that breakfast sales in the three months to July 3 were up 10% on the previous quarter, which he credited partly to its $1.99 Honey Butter Chicken Biscuit and 2 for $4 promotion.

"These promotions have been critical to our success as we continue to see very strong customer repeat and high customer satisfaction after people try our breakfast," he said, adding that he expected breakfast sales to continue growing in the second half of 2021.

Penegor said that Wendy's breakfast marketing strategy would center around encouraging new customers to try its breakfast items, which range from biscuits and a breakfast burrito to cold brew and Frostyccinos.

The chain is also pushing for more people to add its restaurants to their morning routine as the economy reopens.

"We really want to be there as morning routines start to get reestablished as we get into the fall," Penegor said.

"Whatever that routine is, we need to be part of it," he added.

Wendy's launched its new breakfast menu in March 2020. The restaurant industry watched Wendy's closely after its previous attempt to launch a breakfast menu flopped and was pulled from restaurants in 2013.

But Wendy's new menu came out right just weeks before most states across the US entered lockdown.

Restaurant chains like Panera Bread and Tim Hortons saw their number of breakfast orders dive as Americans worked and studied from home, and some pared down their breakfast offerings as a result. McDonald's, for example, removed its All Day Breakfast menu while some Taco Bell locations stopped serving breakfast entirely.

But Wendy's said its breakfast sales remained strong during the pandemic. Penegor said last week that breakfast currently makes up 7.2% of Wendy's total sales, a slight dip from 8% last May. The company is still confident that 10% of total sales will come from breakfast by the end of 2022, Penegor said.

Wendy's breakfast menu relies on people coming through the door early. Unlike some other chains, Wendy's has said that it has no plans to create an all-day breakfast menu, and Penegor said that customers were less likely to order on its app in the morning than in the afternoon or evening.

After Wendy's unveiled its new menu last year, the chain actually saw a marked increase in the number of morning visitors despite the pandemic, Ethan Chernofsky, vice president of marketing at location-data company Placer.ai, told Insider.

Between April and June 2020, just after the new menu was launched, around 5.5% Wendy's customers visited the chain between 6 a.m. and 11 a.m., Placer.ai data shows. This is a huge jump compared to the same time the previous year, when just 3.7% of its visitors came in the morning, and has remained at the elevated level in 2021 so far.

As well as knuckling down on breakfast advertising, Wendy's also unveiled plans to open 700 ghost kitchens with Reef by 2025.