Final Trades: Iqvia Holdings, Wendy's & Qualcomm
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The "Halftime Report" traders give their top stocks to watch for the second half
In a crowded field of competition, Wendy’s strategy to win over breakfast customers includes spending big on advertising and poking fun at rivals.
Within the fast-food industry, breakfast is the only meal that is seeing more customers return to restaurants compared to a year ago. For chains like McDonald’s and Dunkin’, the early morning meal plays an important role in their overall business. Breakfast accounted for 16% of fast-food chains’ traffic in the 12 months ended Nov. 2019, according to data from the NPD Group.
“As restaurants, and especially when you talk about a breakfast war, you tend to be competing for consumers that are already breakfast consumers. The challenge is to expand that pie,” Technomic senior principal David Henkes said.
Wendy’s is betting that breakfast will eventually account for 10% of its U.S. sales. To drive those sales, Wendy’s will use national advertising campaigns to promote the meal for the first time, starting Monday to coincide with the nationwide launch. Its past attempts at breakfast never expanded beyond regional tests, which meant it could only use local advertising to draw in customers.
Wendy’s CFO Gunther Plosch told analysts on Wednesday that the chain plans to spend between $70 million to $80 million in 2020 on advertising for breakfast, increasing its total media spend by about 30%. The company will contribute between $40 million to $50 million. The chain is not planning on pulling any advertising dollars for lunch or dinner.
Other fast-food chains that serve breakfast are expected to step up their own marketing to compete with Wendy’s.
“There’s clearly a renewed vigor in defending each restaurant chain’s turf,” Henkes said.
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