A new battle for breakfast begins
Morning meals prove to be more profitable
NEW YORK — Wendy’s/Arby’s Group is trading French toast sticks for breakfast wraps. Starbucks Corp. is introducing its first value meals. Panera Corp. spent two years developing a new coffee blend.
The restaurant chains are taking another run at more profitable morning meals as customers trim spending on lunch and dinner. Across the industry, sales during early hours have grown faster than other segments in the past five years, according to data from NPD Group, a consumer- research company.
Starbucks is “clearly in catch-up mode,” said Jeffrey Bernstein, a restaurant analyst with Barclays Capital in New York. “People weren’t happy with their breakfast. They do not want to lose significant morning traffic.”
Breakfast foods are about 25 percent more profitable than lunch and dinner items, based on the cost of ingredients, said Bob Goldin, an executive vice president with Technomic Inc., a restaurant consulting firm in Chicago.
Last year, traffic during breakfast hours climbed 2 percent, compared with almost no change during other times of the day, said Harry Balzer, vice president at Port Washington, New York-based NPD. Of all the breakfast options in 2008, restaurants — as opposed to eating an on-the- go snack or at home, the office or not at all — accounted for 8.2 percent, up from 6.2 percent in 1996, he said.
“It’s a structural change, not just a fad,” Balzer said. “For years, a hearty bowl of cereal was the most convenient food, but with drive-thrus and restaurant meals increasingly available, that’s not the case anymore.”
Starbucks, the world’s largest chain of coffee shops, is introducing $3.95 combination meals on March 3 to compete with breakfast value menus at other restaurants. The pairings for the Seattle-based company include a coffee and a choice of egg sandwiches or a caffe latte and choice of coffee cake or oatmeal.
Starbucks Chief Executive Officer Howard Schultz told cafe employees Monday that value meals were “the right thing to do” for customers, about six months after he vowed not to offer bundled meals. Last year, the company added oatmeal and reworked its egg offerings because their aroma overpowered the scent of coffee in stores.
Wendy’s is revisiting its breakfast menu in certain cities ahead of a 2011 national roll-out. After a failed attempt in the 1980s that centered on fresh-made omelets, Wendy’s focused its efforts on growing late-night sales instead, said spokesman Bob Bertini.
“We’re not in breakfast in a big way,” Bertini said. “This is a significant opportunity for us. We’re looking to grab more of that market.”
Burger King Holdings said on Feb. 4 it will add mini-breakfast sandwiches to its menu. The BK Breakfast Shots, which feature eggs, cheese and a choice of ham, sausage or bacon, will be available for $1.49 for two or $2.39 for four. The Miamibased company gets about 15 percent of sales from breakfast.
“Breakfast has been a standout” for growth as customers look for ways to make mornings easier, said Malcolm Knapp, a New York-based restaurant consultant. “It’s an area that’s still under-penetrated and still the most skipped meal of the day.”
Panera, which operates 1,300 bakery cafes, introduced a new coffee blend last month and added a yogurt parfait. Stores are brewing pots every hour, twice as fast as before, to maintain freshness.
McDonald’s Corp., the world’s largest restaurant chain, credits orders for Egg McMuffins, coffee and hash browns with lifting sales at stores open at least 13 months, and last year started opening some stores an hour earlier to attract more customers. The Oak Brook, Ill.-based company gets about 25 percent of sales and 40 percent of profit from breakfast sales, Bernstein said.
Evelyn Cortez, 47, a Manhattan video-store clerk, has been eating at the same McDonald’s on the Lower East Side nearly every weekday for the past 10 years.
“I always get the pancakes, the same thing every day,” Cortez said as she swirled her fork in leftover syrup. “I usually think about going somewhere else, but I end up coming back here.”
Log into MyBuffalo to post a comment
MyBuffalo is the new social network from Buffalo.com. Your MyBuffalo account lets you comment on and rate stories at buffalonews.com. You can also head over to mybuffalo.com to share your blog posts, stories, photos, and videos with the community. Join now or learn more.
Reader comments