McDonald’s for decades (MCD) – Get the McDonald’s Corporation Report Dominates the fast food breakfast game. It’s not the only player, but it’s the market leader, in part because of its familiar menu. Egg McMuffin and Big Breakfast may not be top high-end food, but they are comfort food.
Wendy’s (WEN) – Get Wendy’s Company Report Re-entering the breakfast market with unfortunate timing — almost right when the pandemic started. Just as people stopped working as normal, the fast-food chain launched its breakfast menu.
Despite its troubles, the chain has won its share of the morning by doing what McDonald’s does, but keeping things fresh and maybe a little better. Speaking on his company’s fourth-quarter earnings call, CEO Todd Penegor credited the chain’s double-digit sales growth at least in part to its breakfast menu.
“This is partly due to the growth of our breakfast business, which reached 8.5% of U.S. sales at the peak of our very successful Buck Cookie promotion,” he said.
Wendy’s launched breakfast with McDonald’s, and that’s exactly what it’s aiming for. The chain called out its competitors, essentially wooing McDonald’s with ads supporting its breakfast launch.
Now, a new player — someone you might not have thought of — wants a piece of the breakfast market, and it might have a way to do it.
Could Burger King’s sister brand become a bigger breakfast player?
Breakfast is notoriously difficult to win over an audience.McDonald’s fends off a lot of challengers, while Starbucks (SBUX) – Get the Starbucks Corporation Report Brought a new audience to the morning.Yum Brand (Yum) – Get Yum! Brands, Inc. report Taco Bell has carved out a small morning market, while Wendy’s has been growing, and Dunkin’ is still a player.
Now, while Burger King’s breakfast menu may need a pick-me-up, its sister brand at Restaurant Brands International (QSR) – Get the Restaurant Brands International Inc reportTim Hortons, wants to become America’s bigger breakfast player
“During the quarter, we continued to improve our core quality of breakfast and coffee,” RBI CEO José Eduardo Cil said on the chain’s fourth-quarter earnings call.
Basically, Tim Hortons has been following a similar script to what Wendy did.
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“On the breakfast side, we built on the Fresh Broken Eggs platform with a steak and egg breakfast sandwich, which helped drive overall morning segment sales above 2019 levels for the first time since the pandemic began,” he said.
Tim Hortons, best known for its coffee and doughnut chain, also took a step Wendy’s didn’t — it stepped up the coffee game.
Cil added: “We are also making progress in strengthening our hot beverage offering, extending our previous work in brewed coffee to a successful platform with the relaunch of handcrafted espresso beverages, including lattes in November coffee.”
“We’re seeing the benefits of our richer, bolder formulations, dairy alternatives and equipment tweaks for these great-tasting espresso beverages contributing to positive sales growth and helping drive sequential improvements in hot beverage sales.”
Can Tim Hortons, Wendys or any chain knock McDonald’s off the breakfast throne?
McDonald’s is arguably taking a step back when it comes to breakfast, as it ditched the very popular “all-day breakfast” due to the pandemic. Breakfast was barely mentioned in the most recent earnings call, but that doesn’t mean the chain could easily be canceled.
Customers love the familiar McDonald’s service. Wendy’s and Tim Hortons may have fresh eggs, but Golden Arches sells comfort (and greatly improved coffee).
However, there may be enough breakfast customers walking around.
According to a new report from Million Insights cited by Digital Journal, the global breakfast restaurant market is expected to reach $49.82 billion by 2028, growing at a CAGR of 6.8% during the forecast period.
“Breakfast is increasingly seen as an important meal of the day for health concerns. This has led to high adoption of breakfast by consumers in several countries, including the US and UK. In these regions, around 40% of restaurants offer breakfast menus , which leads to potential growth opportunities in the market,” according to the Digital Journal report.
This is a global forecast, but these are global companies. Tim Hortons may not be a big name in the U.S. (at least in most cases), but it could increase its morning market share while also increasing its U.S. store count.
“In the U.S., we had our best year for restaurant growth since 2016 and signed development agreements to expand into new markets, including Houston, which will open its first store this summer,” Cil said.
“Our new opening in the U.S. takes advantage of a smaller footprint, faster build times, and an optimized menu focused on beverages, baked goods and hot breakfast sandwiches, all of which result in more attractive unit economics .”