The Golden Arches has found its “golden nugget.”
Since implementing all-day breakfast last October, McDonald’s saw its U.S. same-store sales grow 5.7% in the quarter ending Dec. 31, reversing a multiyear downward spiral that saw the world’s largest quick-service restaurant (QSR) losing share to healthier alternatives such as Panera Bread.
Further buoying McDonald’s is its customer base, with one-third of patrons who ordered a breakfast item outside of the traditional morning hours saying they had not been inside a McDonald’s at all before the rollout, according to The NPD Group.
And McDonald’s success is undoubtedly taking a toll on competitors: Jack in the Box reported a smaller-than-expected profit during the quarter ending Jan. 17. “We believe a competitor’s messaging around its launch of all-day breakfast had some impact on our results, particularly in the 10:30 a.m.-to-noon period,” Jack in the Box chairman and CEO Lenny Comma said in a release.
Convenience stores aren’t immune either. “They are going to have to step up their game,” says Darren Tristano, president of Chicago-based Technomic, a division of Winsight LLC (owner of CSP magazine).
Why Not C-Stores?
McDonald’s wasn’t the first QSR to implement all-day breakfast. (White Castle rolled out the offering in September 2015.) But as QSRs emphasize their breakfast offerings, c-stores will need to focus on fresh if they want to compete.
The difference is “brands like McDonald’s are still fresh made to order, whereas the c-store still, in some cases, [offers] cellophane-wrapped, microwavable product,” says Tristano.
For its Egg McMuffin, McDonald’s touts using fresh-cracked eggs as well as real butter for the buns. “Those are things that a c-store isn’t going to compete with them on unless they’re actually preparing food on site,” says Tristano.
Recognizing this, Irving, Texas-based 7-Eleven has expanded its breakfast menu with the launch of two new Melt sandwiches (bacon, egg and cheese, and maple sausage, bacon and cheese, both served on a ciabatta roll) that are made fresh in local kitchens and delivered daily to participating 7-Eleven stores.
“All-day breakfast is heating up at quick-service restaurants,” said Nancy Smith, 7-Eleven’s senior vice president of fresh food and proprietary beverage merchandising, in a release. “While some food outlets are just now realizing the importance of offering all-day breakfast, 7-Eleven has long offered its fresh foods—and every product—morning, noon and night.”
Tristano doesn’t disagree. “Because of the nature of how [c-stores] serve breakfast, it really has been all-day breakfast for a long time,” he says. “They need to take credit for it, and they need to market it.”
He suggests creating more dedicated foodservice-focused locations, adding signage at the pump or at eye level in entryways, and offering bundled meals that include both beverage and breakfast items.
“You have to have good coffee if you’re going to try and win at breakfast,” says Tristano.
But it’s no slam dunk, as coffee giant Dunkin’ Donuts has discovered. The chain, which has long offered breakfast items past morning, saw same-store sales fall 0.8% last quarter—the first such drop since the brand went public in 2011.
To better position itself in the battle for stomach share, Dunkin’ Donuts is overhauling counter menus and drive-thru windows at 8,400 U.S. shops to emphasize coffee and all-day breakfast foods.
Morning Rush
Why is breakfast suddenly emerging as an all-day driver?
Technomic found 54% of consumers enjoy eating breakfast food at nontraditional times, up from 48% in 2013. That number increased across all age groups, specifically among millennials—a growing demographic for c-stores.
Sixty-one percent of 18- to 24-year-olds reported enjoying breakfast at nontraditional times in 2015 vs. 52% in 2013, according to Technomic data.
“With regard to c-stores, there tends to be a higher incidence for millennials, especially males, to purchase food … and breakfast is a big part of it,” Tristano says. “Millennials are looking for it when they want it, which could be breakfast early, late [at] night or anywhere in between.”
Because younger consumers are more likely to order breakfast for between-meal occasions, Technomic suggests marketing breakfast items, which tend to be lighter, as snacks.
Baby boomers are not to be forgotten either, says Tristano, because they too have “an affinity toward breakfast and … are starting to see it as an option throughout the day.”
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