QSR Breakfast Sandwich Opportunities

QSR Breakfast Sandwich Analysis

 Opportunities within the fastest growing day-part Segment

As a practice we review trends within day-parts to assist our clients to better understand potential opportunities within the food service industry.  As it happens there is continued and new activity in one of our favorite day-parts, breakfast!  There is new movement by QSR’s in the first meal period but we prefer to offer an overview to promote focus on the potential.

The breakfast day-part has accounted for over 60% of the growth in the US foodservice industry since 2005 with over 80% of the 12 Billion morning meals purchased at QSR’s.  Breakfast sales at QSR’s have grown by at least 2% annually while lunch sales remain flat and dinner sales down 2%.  Breakfast sandwiches and specialty coffee are the two fastest growing categories since 2005.  Sales have been driven by convenience, quick preparation times, reasonable price points and accessibility due to drive-thru windows. 

Industry analysts have offered forecasts of breakfast sales anywhere from $25 to $37 Billion (depending on whose cool-aid they’re drinking).  But with industry leaders such as McDonalds, Starbucks and Dunkin Donuts holding the Lions share of the day-part sales and breakfast being a “habit-driven” meal the challenge remains to attract some of the over 41% of consumers who start their day with a QSR meal.

Still breakfast is appealing enough to operators who desire to capture more sales due to its’ relative low cost margins on ingredients, the opportunity to drive sales through value-pricing and the fact that it is a relatively untapped ‘long-term’ day-part as compared to lunch and dinner meal periods.  It is attractive enough that Subway kicked-off their breakfast program in 2010, Wendy’s is returning to the day-part after previous lackluster results and Taco Bell (long time leader in the lunch to late-night / early morning depending upon your internal clock) is currently testing the breakfast landscape.

A review of QSR breakfast menus reflects the consumer desire for “grab-n-go” and especially handheld items (with hopefully the other hand on the wheel).  Following is a quick break-out of menu items, flavor profiles and platforms offered during the breakfast day-part for QSR’s:

• Sandwiches or other handheld item lead at around 80% of items
• Breakfast Bowls / baked items follow at 10%
• Platters bring up the rear at about 9% +
• American Comfort Food leads predominantly with eggs, bacon, cheese and potatoes
• Hispanic flavors feature similar proteins dressed with Salsa-Roja, Verde and fire-roasted chilies
• Alternative flavors include smoked items such as tomato or cheese sauces
• The English Muffin is the most prevalent platform followed closely by biscuits, with wraps (burritos), bagels and specialty breads in descending order
• Grilled / Griddle-cooked items predominate at over 55% of items followed by baked and deep-fried preparation methods
• No mystery here the favored cheese offered is sliced American with almost 70% of menu mentions followed by sliced White Cheddar at 17% and Cheddar, Pepper Jack, Colby/Jack and Monterey Jack or Swiss in descending order

Analysts suggest that as the breakfast meal period is not yet saturated opportunity remains; however, as our breakfast habits appear difficult to change it is offered that a significantly different offering will need to be made to pull consumers through a competing drive-thru.