Breakfast: Over Easy
Are convenience stores giving up on breakfast?
Competitive Watch: Dunkin’ Donuts
America runs on Dunkin’? It would appear so. With aggressive growth planned for this year, and rising traffic, the former coffee-and-doughnut joint saw shares jump 45% in 2013.
According to Packaged Facts, 39% of the Dunkin’ menu belongs to beverages, and 34% to dessert items including doughnuts and doughnut holes. Coffee beverages obviously hold the highest percentage on the beverage menu, with 31% being premium coffee and 30% iced coffee.
Dunkin’ Donuts is flexible, and in fact it owes much of its success to its LTOs (limited time offerings). It conveys innovation, progressiveness and fun, and it keeps customers coming back to try new things. It’s this sort of innovation that has the chain gaining ground in the better-for-you breakfast realm.
In comparison to other breakfast day-part heavyweights, Dunkin’ holds its own. Most diners at Dunkin’ buy a baked good at breakfast, with 65% walking out with a doughnut or other bakery item at their last visit. At McDonald’s, only 33% walked out with a baked good, but 59% did at Starbucks.
The company has worked hard to balance the indulgent nature of its original concept with a set of healthier staples to draw in a different crowd. According to Packaged Facts, Dunkin’ Donuts’ DDSMART menu items must meet one of the following criteria: 25% fewer calories; 25% less sugar, fat, saturated fat or sodium than comparable fare; or contains ingredients that are nutritionally beneficial.
But it’s coffee that drives the business. Of the 91% of Dunkin’ Donuts’ customers that got a drink during their last visit, 77% bought coffee, and another 10% got a coffee-based drink.
Competitive Watch: Starbucks
It’s good to be Starbucks.
Last quarter, the coffee juggernaut’s revenues grew by 12% to $4.2 billion, and customer visits to the company’s more than 20,000 stores rose by 4%.
The customizable-cup-of-coffee house long ago morphed from a bohemian hangout to an experience-driven quick-service restaurant concept that keeps customers well-fed and well-caffeinated. Targeted growth of its loyalty program, expanding day-parts and product innovation (oatmeal, anyone?) set it apart not only from its roots, but also from its competition.
The historically coffee-centric chain is now beginning to share a focus with tea and juice-beverage segments. With beverages accounting for 65% of the restaurant’s menu, the company is diversifying beyond the coffee bean. The chain recently launched its Refreshers beverage made with fruit juice. It is lightly caffeinated with green coffee extract.
According to Packaged Facts, about 13% of adults 18 and older visited a Starbucks in 2013. The chain has a high number of repeat customers. Of that 13%, 11% are considered moderate-frequency visitors, with one to five visits per month; 8% are higher-frequency users, at six or more visits per month. These numbers reflect an extremely loyal base, many of whom visit during the breakfast hours.
Competitive Watch: McDonald’s
McDonald’s deserves a break today.
Much has already been said about the chain’s struggle to remain king of the breakfast hill. Its shares gained 10% last year, while Starbucks’ gained 46%.
Last year, there were 20 menu items under the McCafé umbrella. It offers premium coffee drinks, smoothies, chillers, frozen lemonade and shakes. It has extended its breakfast line to an “After Midnight” menu that allows diners to purchase both breakfast and lunch items and mix and match with hash browns or fries.
The chain is working to create more interesting breakfast sandwiches beyond the perennial favorite McMuffin. About one in three diners purchase baked goods during breakfast, 26% opt for an egg-based menu entrée, and 20% choose a starch-based meal, according to Packaged Facts.
Struggles aside, the chain saw 56% of adult consumers over the age of 18 walk through its doors in 2013. The restaurant has an obviously strong hold on consumers across all demographics. However, it’s experiencing a decline in its regular diners, which is due in large part to the association McDonald’s has with poor health. To combat this sentiment, the restaurant continues to work at providing menu items of the more healthy variety. These new better-for-you breakfast items could help reel those health-conscious diners back into the chain’s convenient fold.