No safe place to eat
Wendy's is putting a two-year hiatus on breakfast at up to 475 stores.
Well, it appears as though nothing is safe. Even though recent studies have shown that fast-food places are virtually recession-proof, according to CNN Money at http://money.cnn.com/2009/01/13/news/companies/wendys_arbys.reut/index.htm?postversion=2009011310, up to 475 Wendy’s restaurants are preparing to stop serving breakfast.
In 2007, when Arby’s bought Wendy’s, Wendy’s added breakfast to the menu in hundreds of locations. The recent decision represents yet another casualty of the recession. The odd thing is, as with payday loans, demand for fast food is increasing, not decreasing.
Adding hunger to injury
Official financial reports for the company won’t be released until March, but in November the company posted losses. This is an exception among fast-food places, most of which have seen improving or steady sales as Americans seek ways to save money.
Wendy’s plans for this to be a temporary situation. The company’s CEO says Wendy’s breakfast will be relaunched in 2011. He said the recent decision is part of an effort to cut costs by $60 million. He said the company is also aiming for overall growth of $100 million.
Helping out the competition
McDonald’s is currently the nation’s leading fast-food chain, financially. It credits breakfast with increasing sales in the United States. No doubt even more customers, faced with decreasing choices, will be spilling through McDonald’s doors in the morning.
Curiously, during November, the month that Wendy’s/Arby’s reportedly posted losses, several fast food companies saw gains. McDonald’s, Burger King, Subway, Pizza Hut and Taco Bell all reported growth.
Eating our way through the recession
Wendy’s move to reduce breakfast service strikes me as a strange one. Fast-food chains in general are doing better because of the recession. Another industry that is reportedly doing well is the “comfort food” industry. Inexpensive grocery items like Spam and macaroni and cheese are selling very well.
Other studies show that people tend to gain weight during a recession because they turn to less expensive, and also less healthy, foods. All the cultural indicators out there seem to say that now is the perfect time to beef up a cheap breakfast menu, not pare it back.
Future losses
I highly doubt people are just going to skip breakfast until 2011. They will simply go somewhere else. And we all know what that means in America, a land filled with creatures of habit. Customers will develop brand loyalty for other restaurants. Who knows if they will ever come back?
Sure, some people might be ready for a change when Wendy’s relaunches breakfast in two years. But who knows what the economy will look like then? Americans may go back to their old ways of hitting up the corner diner and shelling out $10 for breakfast by then.
For the time being, I expect to see sales increase at fast-food places that do offer breakfast. With Americans taking out payday loans to pay for basics, I predict they’ll continue to eat up offers of $1 breakfast sandwiches until the economy straightens out.
I agree. It does seem odd that a fast-food restaurant, especially one so popular, is not actually thriving in business. Fast-food restaurants and second-hand stores, such as Goodwill and Salvation Army, are actually seeing a significant increase in profits more than ever before amid the current recession. It’s funny how it also mentioned the fact that people generally gain more weight during times like these. However, you can still create healthy, delectable meals around cheap staples such as beans, rice, and pasta and still have some extra cash left over.