McDonald’s Eats Competition’s Lunch (of Breakfast)
In the months since our long national nightmare of not being able to satiate our 3 p.m. cravings for Egg McMuffins (or bacon, egg, and cheese biscuits in the south) came to an end, breakfast sales at the QSR giant have shot up 8 percent. That unsurprising news confirming what everyone expected to happen at the world’s largest fast-food chain comes from a study conducted by sales-tracking firm The NPD Group. What did turn a few heads in that same research was that average check size also increased, and that happened during the company’s busiest daypart – lunch.
Speculation pre-launch and even in the early days of the offering, even among franchisees, held that the move might move those tickets in the opposite direction, since breakfast items are generally lower-cost than the standard menu. It makes sense, right? But, NPD’s tracking indicates there were two factors in countering that potential.
The first is that the all-day breakfast offerings are drawing in customers who might have taken their dining dollars elsewhere, including people who had never eaten under the golden arches. The study found a third of the customers who enjoyed hotcakes or hash browns at lunch were – hard to believe – newcomers to McDonald’s.
The popularity of the offerings, among longtime McDonaldland residents and newcomers alike, is also no surprise given the outcry that led to the menu change. Its introduction was apparently prompted, at least in part, by the calls of tens of thousands of people on social media. That included activism on the part of the cause by independent associations like a Facebook group called, “All day breakfast at Mcdonalds![sic]”
Second, among lunch tickets from 27,000 consistent McDonald’s customers, 61 percent of those who bought breakfast items outside the previous limits also bought more expensive regular menu items. That’s a critical number because lunch, as noted, is the restaurant’s busiest time and it helped eliminate the feared decrease in average ticket size.
Turning Profits Sunny Side Up
The rollout likely played at least some role in the chain notching a 0.9 percent increase in same-store sales in the third quarter of 2015, according to the Chicago Tribune, the hometown paper for the Oak Brook, Ill.,-based company. That represents the first positive growth in that figure in several years until that time.
So, does all this mean breakfast is the game changer McDonald’s needed to turn a tide of declining sales? While the early returns are positive, that remains to be seen, since there’s a good chance some of the increase in sales was driven by people taking in the novelty of all-day breakfast. That suspicion is actually buoyed by some of the good news in the NPD report, since that 1⁄3 customer growth shouldn’t be relied on to become loyal returns. Some of the early boost was also surely created by a huge advertising campaign that included television spots and shareable social media GIFs.
Still, you can bet there are plenty of crossed fingers under the golden arches on the hands of people hoping the move not only buoys sales, but also counters new competition in the morning daypart from other QSRs.