Dive Brief:
- McDonald's is launching its latest breakfast menu item, Donut Sticks, nationwide on Feb. 20, according to a company release. The pastries will only be served during breakfast hours, and will be available for a limited time.
- Donut Sticks are the fourth breakfast innovation — after Triple Breakfast Stack sandwiches, Muffin Toppers and coffee cakes — the chain has rolled out since reporting it was losing breakfast share last year. "We continue to lose traffic at a greater level than we want at breakfast," McDonald's CEO Steve Easterbrook admitted on the company's Q4 earnings call.
- Nation's Restaurant News noted that the LTO is very similar to Dunkin's Donut Fries, which drove strong sales for the coffee chain last year.
Dive Insight:
McDonald's is determined to rebuild breakfast. And while some initiatives have been successful — Triple Breakfast Stacks alone boosted sales growth during Q4, and the fast food giant successfully extended breakfast items to the $1-$3 Dollar Menu — it's had some misses. The chain's new hand-crafted McCafe drinks, for example, slowed down drive-thru service because they take so long to make.
But Donut Sticks could have a brighter future, as Dunkin's version of the product saw such positive results during its 2018 testing that it could eventually be made a permanent menu addition.
It's difficult to pinpoint the source of the breakfast trouble McDonald's has experienced between launching its all-day breakfast menu in 2015, which saw booming sales (profits increased 35% to $1 billion) and now. Though its customers have enjoyed the ability to buy Sausage McMuffins any time of day, the company can't seem to sustain its once-busy, early-morning crowd. McDonald's is an established leader in breakfast, which is the chain's most lucrative daypart and makes up close to 24% of its sales.
Growing competitors could be to blame. Starbucks, Dunkin', Chick-fil-A and Taco Bell — which launched its breakfast menu in 2014 — have all honed their morning food offerings over the years. According to Technomic, QSR brands are driving the most away-from-home breakfast purchases, capturing 3.9 breakfast visits per month compared to 2.5 visits to coffee chains. This proliferation may be shouldering McDonald's out of the front of the pack. The chain's morning market share has slipped from 17.4% in 2012 to 14.7% in 2017, according to Euromonitor.
It's possible that McDonald's all-day breakfast menu has undercut consumer motivation to get to its stores early. Though its seems unlikely that the chain will reverse that decision, other chains have taken a strong stance against selling breakfast items outside the morning daypart. Casual dining chain Village Inn, for example, went so far as launching an anti-brunch campaign.
Whatever's ahead for McDonald’s, LTO products and perpetual in-store testing doesn't seem to be helping in terms of bringing back their breakfast fans — so far, at least. But Easterbrook has proven he can successfully overhaul the brand, and breakfast may simply be a tougher egg to crack. Since implementing McDonald's 2017 Turnaround Plan, the company's stock has increased 60%.
