Breakfast battle brewing
Published: Friday, January 11, 2008 at 6:01 a.m.
Last Modified: Friday, January 11, 2008 at 12:00 a.m.
The menu board at the McDonald's near the University of Florida campus shows platters heaped with McMuffins and other breakfast standards for which the chain is famous.
The same menu board features an image of a hazelnut vanilla iced coffee - a symbol of a national push from McDonald's and other chain restaurants, from Dunkin' Donuts to Wendy's, to step up their breakfast offerings with high-end coffee drinks and other new items.
It's a trend fueled in part by a new market for specialty coffee drinks almost universally attributed to Starbucks, but also by shifts in consumers' lifestyles and preferences and by new moneymaking tactics for restaurants.
"When margins are being pressed for traditional lunch and dinner, restaurants are looking for new ways to increase their sales," said Stan Given, whose Moe's franchise on Archer Road offered breakfast burritos and other items for a three-month test period late last year. "Expanding their breakfast offerings might get loyal customers to come in a second or third time in a given week, and if the offerings are attractive enough, they may get new customers as well. It's a smart strategy, I think."
Grant Thrall, a professor of business geography at UF, said it all started with Starbucks, which created a demand for high-end coffee and proved to other companies that consumers are willing to pay more for flavored lattes and cappuccinos.
Thrall said restaurants realized that introducing new breakfast items, especially fancy coffees, allowed them to increase revenue at a low cost.
"When you can sell a coffee drink for $1.50 to $3.50 per cup and it costs you 10 cents in materials, the profit margins are great," Thrall said. "Existing restaurants can piggyback that on top of space they're already renting, which makes it a marginal cost."
McDonald's has already rolled out its espresso drinks in roughly 800 stores in the Midwest, company spokeswoman Danya Proud said. The goal is for stores nationwide to eventually hire "baristas" to prepare lattes, cappuccinos and other fancy drinks topped with whipped cream and flavored with sugary syrup.
Thrall said McDonald's and other companies offering upscale new breakfast items will have to be careful to avoid alienating their existing customers.
Neil Peacock, who said he stops in the McDonald's near campus for coffee four or five times a day, said he'd try the espresso drinks only if they were the same price as traditional drip coffee. He said if McDonald's gets too pricey or too upscale, he's not afraid to switch to a new location for his coffee, as he did when he abandoned Krispy Kreme when the chain raised its prices for coffee.
"I went there for years, but they priced me out," Peacock said.
McDonald's follows Dunkin' Donuts in adding espresso drinks to its menu. Wendy's and Subway recently started offering breakfast menus.
Thrall said the trend might also be driven in part by a quest for higher-quality convenience foods - snacks that can be purchased to-go throughout the day in lieu of lunch or dinner.
"People in our society are increasingly pressed for time, but there has been a sort of refinement of tastes," Thrall said. "They're not just looking for high-calorie energy food. They're looking for a quality meal or quality coffee on the go. And any food items that are to-go have high profit margins for the retailer."
Scott Ball, who owns Dunkin' Donuts franchises in Jacksonville and Miami, said Dunkin' Donuts is looking to capitalize on that trend by introducing a line of to-go foods like flatbread sandwiches and personal pizzas.
"We're looking to catch that all-day segment, so that people can come into the store at noon or 1 p.m. and get a flatbread sandwich or an individual cheese pizza," Ball said.
Given, whose Archer Road Moe's store recently tested breakfast foods, said in the end, he decided to stick to lunch and dinner at that store.
Given said opening the restaurant several hours earlier than usual created staffing issues.
But he said the experience alerted him to a trend: People are hungry for breakfast. He's planning to open a Flying Biscuit Cafe, which offers an extensive breakfast menu, in Gainesville sometime soon.
"You can look at the success of Cracker Barrel and IHOP and see that there's still room for full-service breakfast places out there, where breakfast is served all day as a sit-down meal," Given said. "For a lot of reasons, breakfast is a very appealing meal of the day."
Amy Reinink can be reached at 352-374-5088 or email@example.com.
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