McDonald’s efforts to lift its sales could be headed in a new direction: all-day breakfast.
Oak Brook, Ill.-based McDonald’s Corp. confirmed reports on Monday that it plans to test all-day breakfast next month, which could determine the feasibility of expanding what has become arguably its most popular daypart.
“We know our customers love McDonald’s breakfast and they tell us they’d like to enjoy it beyond the morning hours,” Terri Hickey, a spokeswoman for McDonald’s, wrote in an email statement to Nation’s Restaurant News. “So next month, we will begin testing all-day breakfast at select restaurants in the San Diego area.”
Hickey added that “it’s premature to speculate” on any potential outcomes with the test.
Hickey’s comments confirm a report Monday from Mark Kalinowski, an analyst at Janney Capital Markets, who said the chain was planning to test all-day breakfast in a single market.
A franchisee familiar with the plans told Nation’s Restaurant News that the test would follow a “McBrunch” test in a small Midwestern market, in which some breakfast items are sold until 2 p.m. But the San Diego test would be a full-fledged, all-day breakfast test.
The test is the latest indication that McDonald’s is leaving no stone unturned in its efforts to lift sales following a two-year slump, even if it means testing previously established boundaries for its U.S. business.
The chain’s domestic systemwide sales fell 1.1 percent in 2014, its first domestic systemwide sales decline in at least 30 years. Sales have struggled in 2015, too, including a 4-percent same-store sales decline in February.
But that weakness has come entirely after 10:30 a.m. Breakfast has been the chain’s strongest daypart, with sales holding steady despite the chain’s overall weakness.
More consumers are demanding breakfast items after the morning hours. According to the National Restaurant Association, 72 percent of adults said they wished restaurants offered breakfast items all day. Among younger Millennial consumers, that number rises to 77 percent.
This has increased pressure on McDonald’s to expand its breakfast daypart past its typical 10:30 a.m. end time.
Operationally, all-day breakfast has seemed out of the question. McDonald’s has been working to simplify its menu, and breakfast would only complicate matters, hurting the chain’s trademark speed. McDonald’s makes many of its breakfast items fresh, while other quick-service chains use microwaved eggs, Kalinowski said.
McDonald’s has suggested that the size of its restaurants’ grills make breakfast past 10:30 operationally difficult.
“Here’s the thing: It comes down to the sheer size of kitchen grills,” McDonald’s website says. “They simply don’t have the room for all of our menu options at one time — especially considering we use our grill to prepare many items on our breakfast menu.”
Still, a franchisee said McDonald’s could make a limited number of popular breakfast items available all day, which might improve operational efficiency.
Additionally, there is a sense that all-day breakfast would be easier and cheaper than McDonald’s other sales-expansion plan: Create Your Taste. McDonald’s is testing its burger and chicken sandwich customization platform in restaurants across the country. But adding that capability would cost $100,000 to $150,000. Breakfast, by contrast, could be accomplished from no expense to operators to $3,000 per location.
There would also be considerable buzz should McDonald’s make breakfast available all day — given the popularity of the daypart.
“We believe customers generally want to see McDonald’s offer breakfast items all day,” Kalinowski wrote. “Arguably, the two most craveable items on the McDonald’s menu are its French fries and breakfast items such as the various McMuffin permutations and the utterly delicious McGriddles. Having those breakfast items available to sell all day would also serve as a reminder to customers (and the media … and Wall Street) that McDonald’s does indeed have craveable food to sell.”