Article
Breakfast still a growing daypart for QSR
Operators adding more, healthier options.
October 20, 2008 by Christopher Hall — writer, self
Most people grow up hearing that breakfast is the most important meal of the day, but it's still an under-developed segment of the quick-service market, one which may offer operators the biggest opportunity for growth.
Forbes reported in early 2006 that the QSR breakfast market was growing at nearly three times the rate of the overall — and flat — QSR market, with sales hitting $30.6 billion in 2005, a 22 percent increase from just four years earlier.
And two years later, industry insiders say, it's continuing to trend upwards — if perhaps not as steeply as before.
"It's definitely been growing," said Darren Tristano, executive vice president of industry tracker Technomic Information Services.
For example, McDonald's same-store sale figures shows that a large percentage of the chain's growth has come from the breakfast daypart, Tristano says.
"Operators have been attacking the breakfast daypart because it's very under-penetrated compared to lunch and dinner," Tristano said. "It's the least-penetrated daypart, and it's become an opportunity not just to compete for a share of the market, but to increase the market share."
Tapping into trends
One of the big drivers of recent growth has been the introduction of specialty drinks, especially specialty coffee drinks, Tristano said, but the industry is also seeing a shift toward more and healthier breakfast options.
Dunkin' Donuts, he noted, is now offering a flatbread egg white sandwich, not only taking advantage of the recent flatbread trend but also positioning themselves, with egg whites, as a healthier option as well.
Operators do need to be aware of the potential growth in competition from other segments as hotels, supermarkets and sit-down breakfast restaurants like Denny's and IHOP move toward improving their quick or takeaway breakfast options, Tristano said.
Plenty of QSR chains are working to get into, or expand their share of, the breakfast segment.
Carl's Jr. is offering the Monster Breakfast Sandwich; Jack in the Box is filling Breakfast Bowls; Burger King has rolled out Breakfast Wraps; and last year Del Taco introduced the Big Fat Breakfast Taco, which was planned as a limited time offer but became a permanent menu item.
For Jack in the Box, Teka O'Rourke, director of menu marketing and promotions, said the breakfast category continues to grow industry-wide, but that growth has leveled off somewhat.
"Chains have certainly stepped up their offerings at breakfast and the daypart has become more saturated, thus reducing the opportunity for growth," she said. "At Jack in the Box, we continue to see the breakfast daypart grow, but as with the rest of the industry, to a lesser degree than the past few years."
But breakfast continues to be a significant sales booster and the chain's breakfast promotions are a contributor to overall sales growth, she said. The company wants to further grow its breakfast category through new product innovation and menu variety, and will continue its unusual practice of offering breakfast all day long.
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"It's a segment we are committed to focusing our resources on," O'Rourke said. "We feel there is still a good deal of opportunity for growth."
Del Taco vice president of marketing Sharon Fogg said that breakfast is an important daypart for the chain, noting that better promotion efforts are responsible for some of the segment's growth.
"As the major national chains continue to promote breakfast, it helps raise the level of awareness that the quick serve category is a good breakfast option," Fogg said.
Healthy options
While breakfast obviously has been the focus at Dunkin' Donuts for more than 50 years, in August the chain expanded its breakfast offerings to include two varieties of egg white flatbread sandwiches (Turkey Sausage and Veggie) as part of its better-for-you DDSMART menu.
The flatbread sandwiches have been popular with Dunkin's customers throughout the day, said Scott Hudler, the chain's senior director of brand marketing.
"This was Dunkin' Donuts' response to on-the-go busy lifestyles and changing consumer eating habits and expectations," he said. "Customers want flexibility, and having flatbread sandwiches available anytime allows us to change what is possible in a quick meal experience."
These combinations of healthier, more diverse, but still convenient offerings that many chains are embracing is in line with Technomic's projections for the market, Tristano said.
Looking forward, Tristano said, he expects QSRs to offer more healthy and even "ethnically-inspired, more globally-flavored products that are just different than the typical — but still with a heavy focus and emphasis on portability for convenience…being able to eat it in one hand with your other hand on the steering wheel."
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