Breakfast wars boost QSR traffic 4% in first week of March

Dive Brief:

For the week ending March 8, quick-service traffic was up 4% versus the year prior with breakfast promotions driving much of these transactions, according to data from The NPD Group emailed to Restaurant Dive. This was the highest gain for the QSR segment in four weeks, the company said.
Conversely, customer transactions at full-service restaurants declined in the period. Midscale/family dining chain transactions declined by 3% and at casual dining restaurant chains by 5%.
"In good and bad times, consumers are always looking for convenience and value and they get that at QSR[s]," David Portalatin, NPD food industry advisor, said in the press release.

Dive Insight:

Amid the rapidly-changing coronavirus environment, this bounce was most likely short-lived, but it does at least provide a glimpse as to how significant of an opportunity breakfast is in the quick-service segment.

Likely in anticipation of Wendy's breakfast launch, the past couple of months have proved just how intense the competition in this daypart has become. In January, McDonald's rolled out new breakfast chicken offerings to compete with Chick-fil-A and perk up slowing breakfast traffic. That same month, Burger King started testing the Impossible Croissan'wich.

On Feb. 28, Panera launched an unlimited coffee and tea subscription for $8.99 per month, a promotion that could capture those captive morning customers who like habituation and speed. Wendy's officially rolled out its latest breakfast iteration March 2, which was supported by a $70 million to $80 million marketing blitz. Notably, McDonald's declared that same day as "National Egg McMuffin Day."

Not to be outdone, Taco Bell debuted a Toasted Breakfast Burrito menu with three new items on March 12, though that launch date comes after The NPD Group's traffic data.

This activity is happening for a reason. In an otherwise stagnant-growth environment, breakfast is the only daypart growing year-over-year. Further, demand is increasing for convenient breakfast options, which bodes particularly well for QSR. Brands may also see a rare opportunity as long-time breakfast market leader McDonald's continues to struggle with traffic in the morning.

This morning trajectory isn't likely to slow anytime soon, especially as more brands start offering delivery earlier and promote the daypart through their mobile apps, adding more layers of convenience. Starbucks, McDonald's, Wendy's, Denny's, IHOP and Panera are some national brands that offer delivery during the breakfast hours. Panera's breakfast delivery, which launched in 2018, is the chain's fastest growing delivery segment, while Denny's On Demand made up 12% of Denny's sales during Q4 2019, according to the company's year-end earnings call.

New Mobile Minute analysis from App Annie also shows that QSRs are leveraging their mobile apps to drive more traffic at breakfast. McDonald's offered customers free Egg McMuffins on its National Egg McMuffin Day if they ordered through the app. On that day, McDonald's hit No. 1 for food and drink apps and No. 22 for overall apps and games in the U.S. by daily iPhone downloads. Panera had 20% more app downloads than the average of 10 weeks prior when it launched its coffee subscription service. This was even higher the week after, with app downloads up 35%.

Expect more menu rollouts and promotions centered on differentiation and convenience. 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.