As more employees return to the office — and their daily commute — fast-food chains are ramping up promotions and loyalty programs in a bid to make quick breakfast a part of workers’ morning routines.
“Breakfast is the most profitable part of the day,” said Lauren Silberman, food and beverage analyst at Credit Suisse, a financial services firm. McMuffins, Baconators and an array of coffee and donut concoctions helped fuel $35 billion in fast food breakfast sales in 2020, according to research from Credit Suisse. Researchers also found that breakfast drives more customer retention than any other part of the day.
Although breakfast activity still hasn’t returned to pre-pandemic levels, “it has rebounded faster than other meals,” Silberman said. “It’s actually surprising how strong the breakfast performance has been.”
Even as millions of workers continued to work remotely and children only partially returned to in-person school, customer traffic at fast food restaurants increased 11% in 2021, according to the National. Restaurant Association, an industry trade group.
Peyton Williams, a banker from Palestine, Texas, can take some credit for that. For the past two years, Williams, 31, has eaten breakfast at one of the same three fast food restaurants near her office in Tyler. When he’s pressed for time, he grabs a McGriddle at McDonald’s. If the drive-thru is too busy, it’s bacon, eggs and cheese on a cookie at Dairy Queen or a burrito at Sonic.
“I can live without ever eating another fast food lunch, but man, some of the breakfast items are fantastic,” William said. Fast food breakfasts “obviously are made to be done faster, but I mean, an egg is an egg. If they scrambled an egg to put on your meal, they scrambled an egg to put on your meal.
To help things along, many major fast food chains have invested in technology that can reduce drive-thru wait times. They also ramped up rewards programs and special offers for customers who download their apps, which have become key promotional tools. McDonald’s, for example, offers coffee, hot or iced, any size, for 99 cents. But it has to be ordered through the app. Branded apps not only increase efficiency by allowing customers to order ahead; they also produce a steady stream of data that makes it easy for restaurants to provide them with a steady stream of targeted promotions.
Smaller players, such as Taco Bell and convenience stores including 7-Eleven and Wawa, are also looking to carve out a larger share of the breakfast market by offering low-cost breakfast sandwiches, deals two for one and coffee discounts.
“It’s as competitive as it’s ever been in breakfast,” said RJ Hottovy, head of analytics research at retail location analytics firm Placer.ai.
McDonald’s, which is credited with putting breakfast on the map more than 50 years ago when it introduced the Egg McMuffin, still holds the morning, with around 27% of customer traffic, according to the consultancy in Technomic restoration.
But competition is gaining ground. After multiple failures, Wendy’s reintroduced its morning menu in March 2020, featuring cookie sandwiches, fresh eggs and the Breakfast Baconator: sausage, bacon, a fried egg and two layers of cheese, all drizzled with cheese sauce on a bun.
The timing was far from ideal. The pandemic was starting to rage and the restaurant industry was collapsing. Like much of the industry, Wendy’s has shifted to online ordering, delivery and pickup. He also launched an ad campaign focused on trolling McDonald’s.
The company took out a giant billboard in New York’s Times Square to make fun of McDonald’s on the 49th anniversary of the Egg McMuffin, with a giant tweet saying, “McDonald’s just announced a partnership with the NHL to provide them with hockey pucks.” and he produced a series of advertisements, including one featuring a former McDonald’s chef giving a “chef’s kiss” after taking a bite of Wendy’s Baconator. By the end of 2021, the chain’s breakfast sales had increased 25% from the previous year. In the fourth quarter alone, they accounted for 8% of store sales.
Wendy’s CEO Todd Allan Penegor told investors on a recent earnings call that the company is looking to grow its morning business by 10-20% this year, primarily by targeting people returning to their old routines.
Burger King, which derives 15% of its annual revenue from breakfast, and many smaller operators are also looking to boost their morning business. Burger King launched a line of Cheesy Breakfast Melts this week. After serving breakfast during the worst part of the pandemic, Taco Bell brought back its breakfast menu last year, along with several variations of the Toasted Breakfast Burrito.
“Fast food companies are well positioned to attract consumers looking to return to their pre-pandemic routines,” said Maeve Webster, president of menu and strategy consulting firm Menu Matters.
During tough economic times, fast-food chains typically benefit from consumers “bargaining” for more expensive restaurants, Webster said. They may skip the hash browns or opt for a regular coffee instead of an espresso drink, but they’re “so desperate after two years of Covid to get back to more ‘normal’ behavior that they’re going to cling to it the most long as possible until their financial situation starts to dictate otherwise,” she said.
But with the inflation rate higher than it has been in decades and customer traffic beginning to decline, fast food operators are looking for ways to manage costs and ramp up promotions without continuing to raise prices, which have climbed about 7.2% over the past year, according to the National Restaurant Association.
With food prices squeezing shoppers’ grocery budgets, “it’s more about the value proposition than the increasingly outdated idea that value is cheap prices,” Webster said. “Because at the end of the day, cheap prices mean cheap food, and with increasing competition [quick service restaurants] need to think hard about how they create owned and defensible competitive points of differentiation. »
Peyton Williams, the Texas banker, says he probably won’t change his fast food routine unless McDonald’s brings breakfast back all day and he can have it for lunch. He says that on occasion he’ll order from Chick-fil-A using his wife’s app, and then she’ll use the points to cover her quick meals on busy mornings. But when it comes to fast food, he says, his focus is on breakfast, any time of the day.