Starting the Day the Homemade Way
By Bernice Hurst, Contributing Editor, RetailWire
Breakfast may be a lifestyle issue. For those
perennially rushing from pillar to post, there is no time to prepare, let
alone eat, a meal that is widely recognized as helping to get the day off
to a good start. As a result, fast food restaurants have proved obliging,
with quick, convenient and inexpensive choices virtually thrust into the
hands of willing customers.
Claiming that the business is now worth some
$57 billion and accounts "for as much as a quarter of sales at some fast-food
chains," The Washington Post described the growth of breakfast offerings
as both "explosive" and "extremely profitable."
Barclays Capital analyst Jeffrey Bernstein
estimates that McDonald’s breakfast sales account for about a quarter of
its revenue but 35 percent of its profit.
NPD reportedly found that "in the five years
before the recession hit, breakfast sales jumped 64 percent … making
it one of the fastest-growing sectors in the industry." But examples of recent
declines at Burger King, McDonald’s, 7-Eleven and Wendy were cited as evidence
of economic concerns.
Kathy Hasty, senior director of hot foods
at 7-Eleven, said breakfast at her chain traditionally held up well during
recessions, but blames high levels of unemployment for current low sales
levels. "We have never seen it as significant as it is now," she said.
Mr. Bernstein noted the effects of the recession
on restaurants, claiming, "There is a direct correlation between unemployment
and breakfast sales." This may be true for grocers as well.
The decline isn’t all due to unemployment, however.
Much has been written and said about a renewed preference for eating at
home as a means of saving money even for those who still have jobs. Phil
Lempert of Supermarket Guru suggests grocery stores can be proactive by
advertising breakfast ingredients in their regular circulars, running themed
promotions and reinforcing health benefits through educational materials
in-store and on websites.
It may not be much consolation for those
spending their mornings at home involuntarily, but grocers have a new opportunity
for tempting consumers into turning their hands to morning meal preparation.
Discussion questions:
Do you agree the downturn has increased the at-home breakfast opportunity
for grocery stores? What can foodservice operators do to regain lost
breakfast customers?
It would be an interesting study to compare the increase/decrease sales of the frozen breakfast products available at grocers to substantiate this argument over the same time frame. Oh, but could it be that the consumer is turning to a more healthy diet for breakfast?
The downturn has hurt restaurants throughout the day, while it has increased the incidence of eating at home. Grocery stores can take advantage of this by emphasizing their breakfast ingredients and frozen and refrigerated products. This can be accomplished through advertising, circulars, in-store signage, and product positioning.
Advertising is more traditional and straightforward. In-store, grocers could cluster breakfast items together to present consumers with choice, while not having to search the store for items or ingredients.
By offering inexpensive, quick options for eating breakfast at home, grocers can help consumers and their own bottom lines.
The popularity of QSRs and c-stores for breakfast is based on the time constraints consumers have in the morning. Unlike at night when they can eat any time over a period of a couple hours, the commuter has to be to work at a specific time. The growth of already prepared (or at least almost already) “hand foods” made it very easy to grab and go. We became a nation of dashboard diners.
With the current economy, people are looking for ways to cut discretionary expenses and breakfast is an easy target whether you are still commuting or not.
Supermarkets have always sold breakfast food, so I don’t see any new territory here. If restaurants, fast food, or c-stores are having a sales decline in breakfast food, it has nothing to with the economy. The downturn is so 2008 and is history. The reason sales are down is because consumers simply are not impressed by their food. Blaming declining sales on the economy is nothing more than shameless blame shifting to divert attention from a company’s failure to provide a compelling product.
The restaurant I eat breakfast in is packed solid every morning, day after day, because they have figured out what the customer wants. When I can get huge plateful of breakfast food for $2.99, endless cups of coffee, flirty waitress, and a free newspaper, why would I go to a C-store for a microwaved burrito?
I’d say this may be more of a “breakfast at work” opportunity. Many of our staff used to hit the office door with Starbucks, Pannera or, yes, McDonald’s bags in hand in the morning. Now I have noticed a much greater incidence of folks using the small kitchen facility to prep a bowl of cereal or some other breakfast item.
To Susan’s point, I’m also seeing a lot of microwave oatmeal (cholesterol anyone?) and fresh fruit. Grocer’s would do well to make sure they have these items available for the breakfast at work crowd.
Has the phrase “Get a life!” come into anyone else’s mind?
All this rushing around with a constant sense of urgency is pretty well a self-inflicted wound. In other words it’s an artificial construct. My observation from 35 years of helping organizations transform is that more than a third of all the time spent at work adds no value whatsoever. Much of our work revolves around artificial urgency too. Having lost sight of our objectives, let us double our efforts!
Personally, I’ve found that using oatmeal soap and kiwi shampoo in the shower allows me to skip breakfast altogether so I can rush even more efficiently into my work day.
About the observations in the office: I am noticing that younger workers especially seem to be brown-bagging it, even for the breakfast occasion. For the under 30 crowd, budget and health are the drivers.
For others, it may simply be a matter of cutting out yet one more expense. Many of those who are unemployed (or underemployed) have been that way for much longer than they anticipated. A “jobless recovery” doesn’t feel like recovery at all to those affected.
Side note: The argument that consumers are in too big of a hurry to fix breakfast at home has never rung true to me. A good cereal with fruit on top takes maybe 3 minutes to fix and 7 minutes to eat, for a total of ten minutes. I would say the average wait at a fast food drive-thru in the morning is probably 5 minutes. So, if we don’t account for any drive time, the consumer saves 5 minutes, pays more, and gets less healthy food.
So, I think for the consumer a fast food breakfast is all about perceived convenience, and taste, while looking the other way at the heath angle. And those don’t matter as much when one is out of work or having to make big personal budget cuts.
Grocers and brands might be able to demonstrate to consumers that they can get healthier, and save money by eating a better breakfast at home–starting with the produce aisle.
It will be interesting to see how Mrs. Obama’s attack on child obesity effects FF breakfast. If the trend towards healthy eating for children grows then there could be an opportunity for supermarkets to increase their sales. But they will need to get with the program. A healthy breakfast for children section makes a lot of sense, doesn’t it?
Many of the comments here seem to be “seat of the pants” responses or personal observations. Recent research shows that all dayparts are off at QSRs and FCRs, while casual dining is in even worse shape. Some of that is likely due to unemployment: if you ain’t got a job, you ain’t gonna go have breakfast out. But the statistics also show that use of the stove at-home has remained flat, even as more consumers are eating more in the home. Why is that?
Clearly they are using their microwaves more, and are looking for meal solutions that will satisfy their desires for convenience and good taste (healthy alternatives remain something consumers claim they want, but don’t necessarily purchase due to higher prices, lesser flavor, habit, etc.).
So what should grocers do? Advertising their mixes, ingredients, etc. is a waste of resources. Consumers know the local store has eggs, pancake mix, etc. They don’t WANT to cook more. The two areas of growth at breakfast will be handheld sandwiches and innovative delivery platforms.
The stores can go the private label route and push their own innovations, but few of them have the resources to develop really innovative products. It’s why PL remains a “me, too, but cheaper” alternative to national brands. Greed, though, is undermining that advantage, with PL prices increasing much faster than brands.
The number of restaurant chains leveraging their brands to retail would seem to indicate the trend will be to see licensed or co-packed versions of restaurant breakfast items as the leading trend in the near future.
I think we are seeing a growing trend (hopefully not a fad) towards healthier living and I know that we are all time conscious (more so than ever). We use and LOVE Dream Dinners (cannot imagine life without it), so breakfast is a natural extension–Beautiful Breakfasts.
I work in Manhattan and the economy has definitely caused a change. Many of us (myself included) are now bringing both breakfast and lunch to work. The skyrocketing rents in good times and the shaky job market in bad, have made purchasing breakfast and/or lunch in Manhattan a luxury for many. Don’t even get me started on the impending transit cuts and rate hikes.
Purchasing both a healthy breakfast and lunch in Manhattan is usually somewhere between $14 – $20 a day, depending on your location and that adds up over the long run. If you’re not concerned about your health, you can eat on the cheap in most parts of Manhattan. Therefore,we are now doing what we should have been doing all along–watching every penny we spend.
Part of the QSR breakfast downturn has to be persistently high levels of unemployment. The official unemployment number may hover in the 9% range, but everyone knows the mechanism for counting the unemployed is deeply flawed. If you don’t have a job, you won’t be heading to a drive-thru in the morning….
Unemployment data are only the tip of the iceberg when it comes to QSR breakfast trends. The stats overlook the huge numbers of working people who have had hours cut, overtime eliminated, and wages flattened or even reduced. These folks are earning less and are likely to look for places to trim the fat (pun intended)–the take-away breakfast sandwich and lattes are good places to start.
Supermarkets can pick up some of this business, I should think. When a box of cereal costs less than one Grand Slam and a pound of coffee less than two Venti caramel macchiatos, there’s a gap to exploit. Was it Walmart that recently ran an ad suggesting how a family could save hundreds of dollars per year by fixing breakfasts at home with Walmart-bought ingredients?
This situation is a share-of-wallet opportunity that cries out for solution selling at the supermarkets. Sorry QSR brethren: for the near-term at least, your breakfast growth is likely to be flat at best.
The big opportunity that I see is the “how”…yes, supermarkets have sold breakfast foods forever–but typically do not merchandise them well. Just the way both dinner and lunch dayparts have commanded their own areas and merchandising tactics, the time has come for some smart breakfast marketing; versus just coupons and other cents-off promotions.
The problems today present an opportunity for tomorrow. It has all been said above but if you look at the types of changes, the most significant change is the structure of things. This economic climate is creating a structural change in the way consumers look at things and spend their money. Now is the time for the grocery industry to build on this unique opportunity and win back old customers and create new ones by showing them
1. How easy it is to make breakfast at home.
2. How much faster it is to make breakfast at home.
3. How much money you can save by making breakfast at home.
4. How much better for your health it can be to make breakfast at home.