On the Margin

Chick-fil-A: It’s what’s for breakfast

This post is part of the On the Margin blog.

Chick-fil-A this summer decided to start promoting its breakfast. And why not? It’s the restaurant industry’s hottest daypart, after all, with big competitors like McDonald’s Corp., Taco Bell and Subway all pushing that business hard.

So in late July the chain started a new ad campaign, “Chicken for Breakfast — It’s not as crazy as you think.” And then in September the company gave away breakfast nationwide.

The campaign worked.

According to the research firm Sense360, Chick-fil-A’s breakfast promotions over the summer helped the chain take market share. Between June and October, the chain’s share of the breakfast market jumped 16 percent. 

Consumers went more frequently, from 1.59 times per month to 1.71 times per month.

In theory, this has to be bad news for McDonald’s. Chick-fil-A is often compared with the Golden Arches in that they target families, offer all dayparts and have a traditional focus on small operators. 

Yet since Chick-fil-A started its marketing strategy, McDonald’s share actually grew. So who lost?

Subway, for one, saw its market share drop 7.6 percent over that time. Burger King’s share dropped 4 percent. Taco Bell 3.4 percent. And Starbucks 2.5 percent. And according to Sense360, Chick-fil-A’s share in the quick-service breakfast market is now neck and neck with Burger King’s. 

“Burger King should be very worried,” Sense360 wrote, “so should the rest of the industry.”

To be sure, none of this should be much of a surprise. Chick-fil-A has been growing rapidly in recent years, both with new locations and with strong sales at existing units. Average unit volumes have jumped an astounding 20.1 percent in the past two years to $3.5 million, according to NRN Top 100 data.

That $3.5 million makes it the highest volume, limited-service concept among large chains. And it’s not open Sundays.

The chain’s new strength in the morning should only improve on that number.

Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.

Contact Jonathan Maze at [email protected]
Follow him on Twitter at @jonathanmaze

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