But while breakfast remains lucrative on a per-purchase basis, and has hovered around 25 percent of total sales, McDonald’s continues to cede transactions during the morning daypart. It’s not so much the items themselves that aren’t moving, but when they’re selling. Some of that might be tied to its all-day move and the dilution that followed. More likely, though, it’s simply a result of competitive intrusion into a daypart it once dominated. Breakfast was McDonald’s slowest growing segment in Q2, CEO Steve Easterbrook said during the company's July review, although the chain is “back to solid sales growth.” Guest counts continue to decline as “there’s been plenty of other entrants who are competing in the breakfast market,” he added, “and we don’t have it all our own way, the way perhaps we used to back in the day.”
To put Easterbrook’s point in perspective, when Wendy’s first tried breakfast in the 1980s, one out of four Americans who ate breakfast outside the home said they chose McDonald’s, according to the Los Angeles Times. At the time, fast food accounted for more than 40 percent of consumer out-of-home breakfast sales.
In 2018, The NPD Group reported that breakfast business was responsible for 21 percent of all restaurant traffic in 2018, up from 19 percent in 2013. It was actually the only growing daypart. Yet this includes sit-down chains and the rise of early morning micro-chains like First Watch, Snooze, Another Broken Egg, and others that thrive as social gathering sports with alcohol sales thrown in.
Also, counter-service brands have flooded the space. Taco Bell added breakfast in 2014. Burger King recently said it plans to ramp up efforts. And one thing Yum!’s concept had going for it from the outset was concept differentiation. McDonald’s and Burger King have had to innovate products and infuse value, like BK’s $5 coffee subscription, to inspire trial and transactions. Taco Bell’s breakfast is just very much Taco Bell. Within two years, breakfast presented about 10 percent of its business. Since? Taco Bell has reported positive same-store sales in 17 of the last 18 quarters, including 12 consecutively. Panera has also kicked up proprietary direction lately, complete with coffee stations that grind beans in-house and new wraps.
Dunkin’ and Starbucks have innovated, too, with the first launching breakfast bowls this year. Dunkin’s U.S. same-store sales increased 2.4 percent in Q1, with much of the result attributed to a demand for breakfast sandwich value deals, the company said.
Wendy’s last serious effort to introduce breakfast came in 2010 when it launched across several test markets with the goal of hitting 1,000 restaurants by the end of 2011. Adoption stalled somewhere in the 600–700-unit range, Saleh said. The effort formally ended in early 2013 with about 375–400 units remaining.