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Profit-rich breakfast projections inspire chains' menu expansions


Quick-service, fast-casual and full-service restaurants that serve breakfast are challenging each other for market share as more time-crunched consumers eat their morning meals away from home and on the go.

Several major chains are looking for a bigger piece of the breakfast pie by either expanding their breakfast offerings or, like Wendy's, introducing morning menus. Wendy's, which has been testing breakfast in preparation for a planned 2007 rollout, has forecast that the new daypart would boost sales by an average of $160,000 annually at its locations within three years of the launch.

Such outlooks for morning sales have enticed dozens of rival brands to set more expansive breakfast tables. In a recent survey, 28 quick-service chains disclosed that they had added 67 new breakfast items within the past year and a half, according to Maria Caranfa, director of Mintel Menu Insights in Chicago. It sees additions of breakfast dishes and "premium" beverages as a major trend.

Quick-service breakfast traffic has increased 7 percent in the past year, according to a study cited by the nearly 2,000-unit Jack in the Box quick-service chain recently, when it added two $1.99 biscuit breakfast sandwiches to its all-day menu, which has featured breakfast for 52 years.

The lucrative breakfast business also might become an all-day affair at the world's largest restaurant chain if a new development initiative comes to fruition. McDonald's Corp. chief executive Jim Skinner told stock analysts at an investment conference last month that the chain is developing a new "flexible operating platform" that would enable the service of breakfast throughout the day, instead of ending it mid-morning to free up kitchen gear for the chain's lunch and dinner items.

Breakfast is McDonald's best-performing daypart, Matthew Paull, the company's chief financial officer, told the analysts.

Although McDonald's equipment change could be years away from deployment, that chain's all-day-breakfast revelation might have served as a wake-up call to competitors.

But Brad Haley, executive vice president of marketing for the Hardee's and Carl's Jr. chains of CKE Restaurants, based in Carpinteria, Calif., said he wasn't concerned about the segment-leading breakfast purveyor's potential for that menu expansion.

"I hope [McDonald's restaurants] do it, because it will slow them down." Haley said. "We're not worried about increased competition at Hardee's," he added, explaining his view that customers establish a habit of having breakfast at a specific restaurant and tend to remain regulars.

Hardee's currently generates a whopping 45 percent of its sales at breakfast, Haley indicated, adding that he has not given any thought to expanding the morning daypart to all-day status, though that could be done. But even though flat-top grills are used for breakfast items and charbroilers are used for burgers and chicken sandwiches, "the complexity of using the two systems all day would interfere with speed of service," he explained.

Currently, both Hardee's and Carl's Jr. offer their full menus in the mornings and sell large numbers of burgers then, including Carl's Jr.'s Breakfast Burger, topped with a fried egg, cheese, bacon and hash browns.

Carl's Jr., which had not advertised breakfast for a decade until three years ago, expects the current 15 percent of sales done in the morning to increase, which Haley said would benefit the chain because food costs for that daypart are lower than at lunch and dinner.

Breakfast items offered by San Diego-based Jack in the Box, though available all day since the chain's inception, still have a lot of growth potential, spokesman Cason Lane said. Substituting a branded orange juice for an unbranded variety has increased juice sales, he noted. Breakfast ciabatta sandwiches and French toast sticks both are now on Jack in the Box's permanent menu.

"More people are eating breakfast either on the go or at their destination," said Tammy Bailey, Jack in the Box's divisional vice president of menu, marketing and promotions. "There is much more variety in QSR breakfast than there used to be." And turning out both breakfast and burgers simultaneously has not proved difficult for Jack in the Box. "It's just the way you work the grill so you avoid cross-contamination," Bailey said.

Some Burger Kings sell burgers in the morning, but BK has no plans to offer breakfast all day. "We don't see the demand," chief concept officer Denny Post said.

With such items as the Country Breakfast Burrito, Taco Bell is testing breakfast, including an expansion this month to at least 12 outlets in the chain's Orange County, Calif., headquarters market, a local manager indicated.

Meanwhile, fast-casual and bakery-cafe chains are paying closer attention to upgrading breakfast sandwich breads. Ric Scicchitano, corporate chef for Brinker International's 93-unit Corner Bakery Cafe chain, said, "Breakfast is a serious daypart," and cross-promotions throughout the day continue to bring in more customers for breakfast.

Coffeehouse leader Starbucks also is expanding its breakfast sandwiches to additional markets, the newest one being New York City. Available all day, the lineup includes egg-based sandwiches on English muffins and one on a toasted potato bagel that includes Virginia-style ham and fontina cheese. The items are meeting unspecified sales expectations, a spokeswoman said. Starbucks' breakfast items now are sold in six markets - Seattle; Washington, D.C.; Portland, Ore.; San Francisco; Chicago; and New York.

California Pizza Kitchen, with its recent decision to offer breakfast at its fast-casual variant chain, California Pizza Kitchen ASAP, debuted in that daypart with breakfast pizzas, paninis and omelets in select markets.

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