Consumer Trends | September 2012 | By Barney Wolf

Drive Time

Baked breakfast items proliferate as consumers seek grab-and-go options.

Breakfast is on a roll.

Even though most Americans prepare or eat their morning meals at home, an increasing number of them are opting for breakfast on the way to work, particularly at quick-service restaurant locations.

Nearly half of consumers visited a limited-service restaurant for their early meal last year, up from a third in 2009. So it’s no surprise that at least half a dozen quick serves launched breakfast dayparts in the past three years, while many others added new menu items.

Customers are looking for breakfast options that are portable and save time and money, according to a study last year by market research firm Technomic Inc. That fits with what quick-service and fast-casual restaurants typically offer.

“Adding that daypart has been an opportunity for operators to boost their unit sales without adding much more than opening earlier with coffee and some good food offerings,” says Darren Tristano, executive vice president for Chicago-based Technomic.

Still, McDonald’s, Starbucks, Dunkin’ Donuts, and others have long held primary positions in the quick-serve breakfast pecking order, and experts say it is particularly difficult to get consumers to change their morning eating habits.

“Most people are routinized with breakfast,” says Jack Russo, a restaurant analyst with Edward Jones & Co., an investment firm based in St. Louis. “They have only a short time to get to work, so they tend to stay in the same routine.”

In order to draw customers, “you really have to offer something very, very different,” he adds. “The odds are stacked against you. It’s easy to look at the success McDonald’s and some others are having, but it is an uphill battle.”

There is room, however, for additional restaurants to participate in breakfast, because the daypart is not yet saturated, Tristano says.

The economic downturn that started in 2007 also contributed to boosting breakfast options at quick serves, which were positioned to snare sales to consumers who decided to trade down from more expensive breakfasts at full-service locations. Some big chains entered the fray; Subway added breakfast in 2010, and Wendy’s is taking another stab at the daypart. Taco Bell began offering its First Meal breakfast in about 800 restaurants in 10 Western states.

In all, the number of quick-service restaurant morning items rose 17.3 percent over a two-year period ending in the third quarter of 2011, according to a study by market research firm Mintel. Fast-casual breakfast items leaped 28.4 percent during that same period.

Mintel estimated that breakfast restaurant sales totaled nearly $25.5 billion last year, up 2.1 percent from 2010, with a similar increase expected this year. More than half of breakfast restaurant users are choosing to dine at limited-service units.

The favorite morning menu item, other than coffee, has become the breakfast sandwich. Whether using biscuits, bread, buns, muffins, tortillas, or any of a number of other carriers, the sandwich leads the morning menu of entrees.

Burgers have been available as a breakfast item for years at some 24-hour places, like White Castle. The Columbus, Ohio–based restaurant chain served egg sandwiches during World War II because of meat rationing.

The first breakfast sandwich as we know it was probably Jack in the Box’s Breakfast Jack in 1969. It featured a fried egg, ham, and American cheese on a bun and is still on the menu at the San Diego–based chain’s units.

As of early this year, according to Mintel, 41 percent of early- and mid-morning restaurant customers ordered a breakfast sandwich on their last visit. And Technomic ranks the biscuit as the top bread item for these sandwiches.

Biscuits are part and parcel of Southern cuisine, and, not surprisingly, the breakfast biscuit sandwich trend began in the South. The most popular, with chicken, is a quick version of a traditional Southern Sunday supper.

The quick-service breakfast biscuit traces its roots to 1972, when a pair of Hardee’s franchisees—in Charlotte, North Carolina, and Norfolk, Virginia—began baking made-from-scratch buttermilk biscuits to sell to morning commuters. The item did so well that it eventually made its way to other franchisees and has been served at the chain’s Southeast restaurants since. It is now served systemwide.

Other Southern quick-service concepts based on biscuits followed soon afterward, including some with country ham in the biscuits. In 1977, the Charlotte Hardee’s franchisee, Jack Fulk, began his own chicken joint, which developed into Bojangles’ Famous Chicken ‘n Biscuits. At the beginning, however, there were no biscuits. They came along shortly afterward, once Fulk perfected his recipe.

“Sales went up 60 percent” when biscuits were added, says Eric Newman, executive vice president. “Cars were wrapped around the block.”

Biscuits became the core of the chain’s breakfast menu, which included the butter biscuit, a biscuit with gravy, and biscuits stuffed with either sausage or steak. Cajun-spiced fried chicken was added a short time later and eventually became the most popular biscuit.

These days, Bojangles’ also offers country ham, eggs, bacon, and cheese in a variety of combinations inside two halves of the biscuits, which are made fresh from scratch every 20 minutes. Each restaurant has its own biscuit makers.

“Not everyone can do biscuits,” Newman says. “They’re in our DNA, from the ingredients to the labor flow to even the site selection. The breakfast daypart is really built around the biscuit. It’s not an add-on.”

The breakfast daypart makes up about 40 percent of sales at a typical Bojangles’. Biscuits and other breakfast items are also available the rest of the day, and they add another 10 percent of sales during those dayparts.

The same year Bojangles’ launched, McDonald’s rolled out the now-iconic Egg McMuffin. The portable breakfast sandwich, created by franchise owner-operator Herb Peterson, is made with eggs, Canadian-style bacon, and American cheese on an English muffin.

The era of the breakfast sandwich had begun.

Another Southern chain, Atlanta-based Chick-fil-A, helped bring biscuits to the national quick-service consumer, most notably with its fried chicken biscuits. Then, in early 2008, McDonald’s rolled out its Southern Style Chicken Biscuit to an even bigger audience.

 

Just as biscuits expanded beyond the South, tortillas expanded beyond their cultural heritage to become a quick-service breakfast staple, especially at Mexican eateries. Taco John’s has served breakfast for more than a decade, and all of the chain’s traditional stores offered the daypart as of January. The morning menu consists of a variety of handheld burritos, led by the Breakfast Meat and Potato and the Scrambler burritos.

In August, Taco John’s launched a new line of breakfast items featuring chile verde, a popular Southwestern sauce. Two are portable: the Chile Verde Breakfast Stuffed Grilled Taco and the Chile Verde Breakfast Burrito.

Bagels, along with long-time breakfast staple doughnuts, make up the most popular breakfast starch menu items among Technomic’s top 500 restaurants. Before they were used in sandwiches, they were served by themselves or sliced with cream cheese and other toppings.

More than a third of consumers say they eat doughnuts for their away-from-home breakfast during the week, and 30 percent grab a breakfast pastry, such as a cinnamon roll, coffee cake, muffin, Danish, or scone, Technomic reports.

Scones have grown in popularity in the quick-service restaurant universe. They have been part of the breakfast line-up at Starbucks for some time and are also veteran menu items at fast-casual bakery cafes, such as Panera Bread, Atlanta Bread, and Le Pain Quotidien.

A scone is a small quick bread that is believed to have originated in Scotland but became popular in Britain. The cake typically is served with tea.

At Starbucks, however, it’s a morning treat. A customer favorite is the Blueberry Scone, a regular menu item along with the Petite Vanilla Bean Scone, which is flavored with vanilla extract and ground vanilla beans.

Starbucks also offers a variety of seasonal and regional scones, made with high-quality ingredients. These scones include cinnamon chip, cranberry orange, maple oat pecan, and pumpkin varieties, says spokeswoman Megan Adams.

At Le Pain Quotidien, the scones rotate seasonally. Some of these are buttermilk, cranberry orange, Parmesan and chive, and quince and spelt.

Pastries and other baked goods continue to be popular grab-and-go alternatives in an environment where consumers are increasingly seeking portable breakfast alternatives.

“The whole portability trend makes baked goods a perfect option for breakfast,” says Andrew Wezeman, category manager for sweet goods at Aryzta, a global food business that owns the Otis Spunkmeyer brand.

Otis Spunkmeyer offers pre-packaged and on-site baked options—including pastries and breakfast sandwiches—for restaurants, hotels, hospitals, universities, convenience stores, and other locations. Many items carry the Spunkmeyer or La Francaise Bakery names.

Wezeman says baked goods like miniature muffins are doing extremely well. “The smaller or individually wrapped ones make it easier to take the meal on the road,” he says.

Bundling a pastry or breakfast sandwich with coffee or other beverage “is a great way to make more money and provide more value to customers,” he adds.

One problem for health-conscious Americans is that many breakfast offerings carry high calorie, fat, sodium, or sugar levels. To counter that, a number of restaurants have developed better-for-you alternatives.

Dunkin’ Donuts developed a DDSMART menu, with low-calorie egg-white flatbread sandwiches, wraps, and baked goods. The turkey sausage sandwich, for instance, includes a turkey sausage patty, egg whites, spinach, and melted reduced-fat Cheddar on multigrain flatbread, all for less than 300 calories and nine grams of fat.

A variety of other quick serves, including bakery cafes and bagel-based restaurants, are also offering better-for-you sandwiches featuring either egg whites or bagel thins, such as those being sold at Bruegger’s Bagels and Manhattan Bagel.

Wendy’s new breakfast menu includes a range of breakfast sandwiches—made with artisan bread, muffins, biscuits, and burritos—but it also has a warm oatmeal bar, made with oats, blueberries, and cranberries. It allows oatmeal, which is now being served for breakfast at dozens of quick serves, to become more portable.

Although grab-and-go items may be the wave of the future, that doesn’t mean all of the traditional American plated favorites must go by the wayside.

McDonald’s succeeded with its McGriddle breakfast sandwich, which includes bacon, egg, and American cheese between two small maple-flavored pancakes. This summer, Jack in the Box released its Breakfast Waffle Sandwich. This limited-time offer features an egg, sausage patty, and American cheese between two maple syrup–flavored waffles.

San Francisco’s The Melt, a four-unit grilled cheese chain that started offering breakfast in June, created another unique throwback menu item.

“The hero of our breakfast,” says Paul Coletta, chief marketing officer, “is the Egg in a Hole” sandwich, a take on a favorite often called Eggs in a Frame or Eggs in a Basket.

The item starts with artisan sourdough bread with a hole cut in one of the two pieces. Then comes a fresh egg, Tillamook sharp Cheddar cheese, and free bacon on request. The price is $4.25, and it’s served within three minutes after it’s ordered.

“It’s designed to be fast, fresh, and portable,” Coletta notes. “We wanted to evoke morning memories, and we think we’ve done that.”