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New data shows a sharp decline in breakfast traffic driven in part by slower promotional activity.

Why breakfast traffic plunged in November

New data from Revenue Management Solutions finds that breakfast traffic in the QSR segment dropped by 7.4% year-over-year, despite a consistent uptick in morning commuters.

Sometimes you get a piece of data that is just so anomalous, it’s worth digging into deeper. Such was the case this week with Revenue Management Solutions’ November 2022 traffic report, showing that traffic plunged by 7.4% year-over-year in the quick-service breakfast daypart. By comparison, November’s dinner traffic was down less than 1% year-over-year, while lunch was down 3.9% versus 2021.

That breakfast decline is despite a consistent uptick in morning commuters returning to work and school. According to Precisely PlaceIQ, the number of commuters on the road increased by 30% from January to July, for instance.

It’s worth noting that traffic has been and continues to be compromised across the board due to increased menu prices, which remain over 8% higher than last year. But that pricing is industry wide and doesn’t parse breakfast’s material relative drop. So, what gives? According to RMS data consultants, the drop is due to a slower promotional environment this year.

“Breakfast traffic decreased by -7.4% year-over-year – (also) a significant drop compared to last month, when decreases were -1.8%. It should be noted that the significant drop observed is mainly due to specific breakfast value promotions run by various QSR brands in November 2021,” an RMS spokesperson said.

Consider that in November 2021, McDonald’s was just coming off of its “Thank You Meal” promotion offering teachers across the country a free breakfast, which may have created a lingering tailwind. The chain also celebrated the 50th anniversary of the Egg McMuffin in November 2021 by offering the product for its original price – 63 cents. The promotion proved to be so popular, McDonald’s app experienced shortages on that day. Wendy’s focused several of its 2021 promotions on breakfast as the chain's relatively new morning menu tried to gain awareness and share. Burger King ran a 2 for $4 Mix & Match promotion in November 2021, while Jack in the Box ran a 2 for $5 Double Bacon Breakfast Sandwich TV spot the same month.

This year included Veterans Day breakfast promotions from several chains, a $3 breakfast combo deal from Wendy’s, new breakfast biscuit sandwiches from Hardee’s and few other app-crashing promotions.

Of course, the big puzzle for operators to solve has always been how to find the right balance between getting consumers in the door while also making money, and the latter has become particularly challenging as costs are high for everything from food to labor to energy. But, as it turns out, effective promotions – those that don’t completely erode margins – are effective at driving traffic. Therein lies the kicker. Costs are so high across the board, it’s hard not to erode margins with even the slightest discount.

This seems to be particularly true at breakfast time. During a “Foodservice supply chain expectations for 2023” webinar last week, David Maloni, principal of Datum FS, said the breakfast category has experienced “significantly more inflation” compared to other segments – over 30% versus just over 5% on beef, for example. The daypart’s inflation is driven in particular by higher costs on eggs and coffee, “two of the most expensive markets we’ve had this year,” Maloni said.

In other words, there are fewer breakfast promotions this year because there is even less room to squeeze margins this year, and traffic has taken a hit accordingly. On the positive side, inflation seems to be peaking, while pricing activity has stabilized. The monthly average price, according to RMS, saw a slight decrease from 15.8% in October to 15% in November 2022.

Contact Alicia Kelso at [email protected]

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