McDonald's Bets on Breakfast -- Again
December 27 2018 - 07:29AM
Dow Jones News
By Julie Jargon
McDonald's Corp. wants customers to eat more breakfast during
When the fast-food giant three years ago responded to widespread
demand for breakfast beyond 10:30 a.m. by offering McMuffins, hot
cakes and sausage burritos all day, consumers cheered -- and so did
investors. McDonald's business got an immediate jolt, and all-day
breakfast buoyed sales for nearly a year.
But the availability of breakfast anytime led to unintended
consequences. More customers are forgoing morning visits and
getting their McMuffin fix in the afternoon and evening, according
to some franchisees. McDonald's has blamed slowing U.S. sales in
recent quarters on softness in its morning breakfast business.
McDonald's recently added new Triple Breakfast Stacks, for a
limited time, in an effort to generate excitement on a menu that
has seen little change. The breakfast sandwiches with extra meat
are offered beyond traditional breakfast hours only upon
The company is pushing the idea of a "holistic" breakfast, with
ads encouraging customers to pair its breakfast items and McCafe
coffee drinks, and it is testing baked goods including coffee cakes
and muffin tops. McDonald's has also started offering more
competitive breakfast deals, including breakfast sandwiches for
Getting breakfast right is critical for a chain that derives a
quarter of its sales in the morning. Rivals including Chick-fil-A
and Burger King have upped their breakfast game with new products
They are all fighting for a shrinking market. Restaurant traffic
growth at breakfast has slowed in the past three years as the
entire eating-out market has softened, said David Portalatin, a
vice president at market-research firm NPD Group Inc.
Still, breakfast sales are more profitable than lunch and
dinner, because the cost of ingredients such as eggs are cheap
compared with the beef and chicken in sandwiches served later in
the day, and fewer workers are generally needed to prepare
"What that means for us is that we need to sharpen the focus on
breakfast around products, convenience and value," said Linda
VanGosen, president of menu innovation at McDonald's.
Whether the moves will be enough to compel more people to stop
in for breakfast is unclear. The chain is running up against shifts
in consumer behavior that could run counter to the idea of the
morning meal altogether.
Levi Adams, a 21-year-old naval officer in San Diego, loves
McDonald's breakfast burritos and McGriddles but doesn't have time
to stop for breakfast on his way to work.
"When I was a teenager, I would get breakfast at McDonald's, eat
lunch at school and then have dinner at home with my family," Mr.
Adams said. "Now I wake up early every day, have coffee and an
apple at home and get McDonald's breakfast on my way home in the
evening. My eating habits have changed to fit my schedule."
Numerous McDonald's customers want burgers in the morning,
according to thousands of people who have tweeted about it. A
spokeswoman for the burger giant said demand isn't strong enough to
warrant running the burger grill in the morning.
Offering a full menu all day adds complexity to restaurant
kitchens, and the additions of all-day breakfast and fresh rather
than frozen burgers in the afternoon have already slowed McDonald's
service speed. Seeing a long line at a drive-through window can be
a deterrent for consumers rushing to get to work in the
McDonald's Chief Executive Steve Easterbrook in October said it
is difficult to give consumers what they want when they want it --
and at the speed they expect.
"We are always going to want to introduce initiatives that are
attractive to customers, which are reflecting where customers want
us to go and their changing tastes," he said, "but at the same
time, how can we maintain that discipline of making sure we take as
much out as we ever put into a restaurant?"
Competitors have been making changes to meet the desire for
breakfast any time. Wendy's Co. has started offering a Bacon Maple
Chicken sandwich on a croissant bun for people who want a breakfast
item at lunch or dinner.
Taco Bell doesn't serve breakfast all day, but its lunch items
are offered at most restaurants beginning at 9 a.m. Melissa Friebe,
Taco Bell's senior vice president of brand marketing and consumer
insights, said: "Sometimes people order both a beef taco and a
breakfast burrito in the morning."
Write to Julie Jargon at email@example.com
(END) Dow Jones Newswires
December 27, 2018 07:14 ET (12:14 GMT)
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