When you operate a business, it costs you money to not be open. You still pay rent and utilities even when you’re closed.
Because of that, back in my toy store general manager days, I tried very hard to keep the store open profitably as much as possible. That didn’t just mean opening the doors more, but finding an audience for those dayparts.
On Friday nights, for example, we kept part of the store open for people to play Magic: The Gathering. That meant paying someone to officiate the games and having a front desk person to sell candy and snacks.
We easily sold enough food and drinks to make the time profitable, offsetting the added employee and utility costs.
During Christmas season, we opened two hours earlier most days, and on Easter, I opened by myself, selling a few thousand dollars worth of items, mostly to older customers with nowhere to go.
Still, it would make no sense for us to be open late at night or early in the morning, but I tried hard to maximize our hours while balancing costs.
That same basic calculation helps explain why breakfast can be attractive to a restaurant chain. Wendy’s began offering breakfast nationally in May 2020, giving its restaurants a way to generate sales during hours when many locations had previously been closed.
Those efforts initially showed promise, but the numbers have fallen, and now the company has quietly dropped breakfast at a number of restaurants, cut back hours at others, and a recent franchisee Chapter 11 bankruptcy will see another 120 Wendy’s locations drop, or limit the times it sells the morning meal.
Wendy’s breakfast sales have slowed
Breakfast was supposed to help Wendy’s catch up to McDonald’s.
Instead, the chain has fallen behind Burger King and is once again the third-largest U.S. fast-food burger chain. That’s not directly related to breakfast sales, but those are one of the chain’s problems.
Wendy’s, which has closed hundreds of underperforming stores, has seen its sales slow.
“Global systemwide sales declined 6.5% on a constant currency basis, primarily driven by U.S. same-restaurant sales, which declined 7.0% and the impact of 289 U.S. restaurant closures in the first half of the year,” CFO Steven Cirulis said during the chain’s second-quarter earnings call.
A drop in breakfast sales was part of that.
“The decline in U.S. same-restaurant sales was driven by a 12.5% decrease in traffic, which included the impact of less discounting and reducing or eliminating breakfast operating hours at certain locations, partially offset by a 5.6% increase in average check,” he added.
Breakfast, in Q2, accounted for 5.5% of overall sales. That’s down from 8% in the second quarter of 2020.
CEO Robert Wright admits that the company has not fully figured out the morning daypart.
“Breakfast is important to us, and it’s a complex topic that, frankly, we’re still analyzing very deeply. It can’t be disconnected from the broader strategy and the work that we’re doing there,” he said.
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Wendy’s lets franchisees drop breakfast
Wendy’s has allowed franchises to opt out of breakfast sales.
“The large majority of the system continues to serve breakfast. We did have some opt-out activity. And frankly, it was very helpful for some of the franchisees that took advantage of that opt-out because it was a drag on their business,” he said.
He has not committed to allowing chains to permanently drop breakfast.
“For some franchisees, the opt-out was really helpful and provided a little bit of a relief valve, but it’s still a key area that’s under evaluation for us. And as I said, we need to get our footing on the remainder of the strategy before we start deciding exactly where breakfast fits into that,” he shared.
Meritage Chapter 11 bankruptcy impacts breakfast sales
And now, major Wendy’s restaurant franchisee Meritage Hospitality Group Inc., which operates over 350 locations in 15 states, which includes some non-Wendy’s restaurants, filed for Chapter 11 bankruptcy to reorganize its business and restructure its debt, almost 11 months after defaulting on its franchise agreements for failing to remit payments.
Meritage Hospitality and 14 affiliates filed their petition in the U.S. Bankruptcy Court for the Western District of Michigan on Sept. 17, 2026, listing $10 million to $50 million in assets and debts, TheStreet’s Kirk O’Neil reported.
The franchise operator ran 314 Wendy’s locations, about 5% of the brand’s total U.S. restaurants.
“Meritage closed 60 underperforming stores that helped strengthen its system and exited breakfast or altered that daypart in about 120 underperforming locations,” Retail Dive reported.
Wendy’s has struggled with breakfast
Wendy’s breakfast sales reached 8.5% of the total in the fourth quarter of 2021, when the company changed how it reported breakfast sales.
“We transitioned away from disclosing breakfast sales mix targets as we measure the success of the breakfast business by sales volumes,” a company spokesperson told Nation’s Restaurant News (NRN).
At the time, the company stated its goal as reaching $3,000 to $3,500 in breakfast sales per restaurant per week.
In a March 2024 interview with NRN, BTIG analyst Peter Saleh said he believed the daypart is sufficiently filling a “big hole” in Wendy’s business and the approach this time around better positions the brand in the morning daypart.
“The way they had done it in the past was more market-by-market. They really hadn’t done it nationally all at once, and that gave competitors, predominantly McDonald’s, the chance to come into their markets and coupon like crazy,” Saleh said. “The national strategy they have now is better.”
Saleh did note that changing breakfast habits is hard, and that Wendy’s made a mistake by not making coffee part of its focus.
“You’ve got to get people to switch from what they’re used to, which is really hard to do, especially if you’re not promoting coffee. Customers will come in for coffee and, at the very least, get that coffee, which is high margin, and in the best case, get a coffee and sandwich and drive real incremental sales. I’m surprised they didn’t focus on coffee out of the gate,” he said.
RTM Nexus CEO Dominick Miserandino understands what Wendy’s is doing.
“While it is an economic reality, it’s a sad moment because so many people remember the chicken biscuit sandwiches,” he told TheStreet.
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