If 2019 was the year of the chicken sandwich wars, 2020 is shaping up to be the year of the breakfast battle.
Major Quick Service Rrestuarant’s (QSR’s) from McDonald's to Dunkin' and Burger King have issued a flurry of breakfast promotions and new items to protect their turf. McDonald’s added chicken breakfast items earlier this year while Burger King is testing its Impossible Croissan'wich and Dunkin' sells snackable bacon strips.
Full-service chains like IHOP, Denny's and Black Bear Diner, which offer all-day-breakfast menus, also hold a strong competitive position, especially as they develop more off-premise channels for added convenience.
So why all the focus on breakfast?
It's the only growing day part in an industry grappling with declining customer traffic.
Last year, American consumers ate nearly 102 billion breakfasts in addition to 50 billion morning snacks, according to NPD Group data emailed to Restaurant Dive. QSRs are capturing a growing slice of this morning spend, and QSR breakfast and morning snack purchases increased at a compound annual growth rate of 5% during the last five years. Foot traffic was also up 1% in 2019 for these two dayparts, whereas the overall restaurant industry on average was flat.
And demand isn't likely to slow down any time soon.
Over half of adults said they are more likely to pick up a breakfast meal, snack or beverage from a fast food joint, coffee shop or restaurant on their way to work than they were two years ago, according to the National Restaurant Association's 2020 State of the Industry Report. Coffee and snack establishments also see 47% of their customer traffic during the morning hours, according to the report.
Full-eService goes full-day breakfast
Those already established in the breakfast space, like IHOP, Black Bear Diner and Denny's, are leaning heavily into their expertise, offering typical morning fare all day.
Breakfast cuisine itself has had positive same-store sales growth, not just as the morning daypart, Victor Fernandez, VP of insights and knowledge at Black Box Intelligence, told Restaurant Dive. And consumers are willing to purchase breakfast items at all times of the day, Godinsky said.
This has translated to an uptick of breakfast for dinner, especially popular with younger consumers, Riehle said.
"If a restaurant patron wants breakfast items for lunch or dinner now that is definitely an operational move, which if one looks back 10 to 20 years ago, certainly was not … mainstream," Riehle said.
Emphasizing all-day breakfast is particularly profitable for these chains. While 85% of Denny's customers order breakfast, its all-day breakfast has grown to make up 64% of its sales mix in Q4 2019 from 62% in Q3 2018, Denny’s CEO John Miller told investors during its February earnings call.
Black Bear Diner's breakfast, which represents about 35% of its sales, has been a part of its menu from day one and offers many homemade items like biscuits, spicy sausage, corned beef hash and fresh squeezed orange juice, Adams said.
"As we think about breakfast, we think of it as a breakfast all-day offering," Adams said. "It's more about ordering a breakfast item whenever you would like that throughout the day."
The company sells a good portion of its breakfast items during lunch and dinner. For dinner, it offers higher quality proteins, such as steak and brisket, alongside eggs, she said.
"From a culinary ideation standpoint, we're not really focused on a window of time, just a breakfast-oriented item any time of the day," Adams said.
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