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QSRs rollout products with a twist in race for breakfast sales

The notion that the early bird gets the worm has quick-service operators pursuing profits in the breakfast daypart like never before — and with good reason.

Numerous studies have shown a large share of Americans eat nothing more than cold cereal at breakfast, or they bypass the first meal of the day entirely. Given that so many potential patrons go to work and school underwhelmed by breakfast or undernourished by skipping it has operators seeing green — albeit sometimes through bloodshot eyes.

Searching for new ways to maximize their facilities and generate new revenue, some quick- service operators are burning the candle at both ends, attempting late-night service while jumping into breakfast anew or expanding current lineups. According to some industry observers, however, breakfast is likely the better target because it's perceived as the most important meal of the day, while late-night noshing remains an indulgence. The trick, however, is to offer breakfast products that differ from others, observers said.

"There are growth opportunities in late-night … but breakfast is easily the most underpenetrated daypart," said Darren Tristano, executive vice president at Technomic in Chicago. Not only do adults acknowledge the need for a good breakfast, Tristano said their children are begging for variety at the start of the day. "My son said the other day, 'Do I have to eat cereal again? Why can't I have waffles?'

"I don't see the next generation being content with cereal like we were. They want more, and that presents a new opportunity for restaurants."

"More of what?" exactly, is the key question asked by Dennis Lombardi, a consultant with WD Partners in Dublin, Ohio. Mega-fast feeders like McDonald's and Burger King have mastered hot breakfast sandwiches and made them affordable. Smaller operators can try to match them, but even if they're better, customers may never know about them.

"Even if your product's good, if it gives me no compelling reason to switch, to change my established habits, or doesn't create a buzz, it's a 'me too' product," Lombardi said. Research shows, he added, that people's breakfast eating patterns are highly habitual and that it takes a near-watershed change to break established routines. "If it is a copycat product, it better make a step forward, something different and totally unique, some noticeable change."

That's a lot of what Seattle-based Emerald City Smoothie was thinking when it introduced a line of nutrient-enhanced coffees in March. For years the company eschewed serving coffee because its caffeinated profile ran counter to the chain's "better for you foods" mentality. Customer demand eventually led the 65-unit company to rethink its position and compromise by selling a vitamin-enriched line of four types of java.

So far "sales are very good in locations where we have a heavy morning crowd that would potentially pass us by on a cold, drizzly morning," said Julie Vance, Emerald City's vice president of operations. "Now they know we have a hot beverage, something [other than cold smoothies] to offer in the morning."

Emerald City also started selling hot oatmeal and nutrient-enhanced cookies earlier this year, on top of last year's addition of a "layered smoothie" made with granola.

"I think any restaurant that wants to do well will always be looking for additional ways to generate revenue, and that's what we're doing," Vance said. "We plan to keep looking for other things."

Tristano pointed to similar experimentation that appears to be working at Cereality and Cold Stone Creamery. Nearly two years ago, the eight-unit cold cereal chain was acquired by Cold Stone parent, Kahala-Cold Stone, in a cobranding effort designed to drive morning sales when ice creameries were normally closed. Many of Cereality's toppings are shared with Cold Stone's frozen creations, and the self-service breakfast offering doesn't disrupt the flow of core ice cream sales or production.

"That blending of concepts to service multiple dayparts makes a lot of sense with breakfast," Tristano said.

In March, Covington, La.-based Smoothie King opened for breakfast at all 580 of its U.S. stores. According to Katherine Meariman, the chain's executive vice president of administration, franchisees had requested to do so for years. Those eventually cleared to test earlier hours reported results so encouraging, the switch was made to open stores at 7 a.m., about two hours earlier than before.

"We already were competing at lunch and after work for snacks, so we thought we should compete in breakfast as well," Meariman said.

Along with opening for breakfast, Smoothie King added a line of protein-enriched cookies and muffins that sell for $2.49 each. Franchisee Jason Finley said sales are up and growing in the morning, and he suspects people are buying the cookies and muffins for snacks.

"We're seeing a combination of students and adults, people who have to be at work before eight o'clock, coming in for breakfast now," said Finley, whose store is in Mandeville, La. He expects the state's rapidly warming weather will further spur sales at breakfast. "People are slowly learning that we're open early now, so it's getting there. And where it's hot, a smoothie is the perfect breakfast, especially for those who don't eat it to begin with."

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