Fast-food wars spill over into mornings
Thursday, May 01, 2014
The fast-food wars have spilled over into our mornings with breakfast battles.
McDonald's has dominated this segment for years. McDonald's reported $10 billion in restaurant sales for just the breakfast segment in 2012, which was almost a third of the $31.7 billion breakfast sales of all national fast-food restaurants the same year, as per Technomic.
Now McDonald's is looking at some serious competition. With Taco Bell, Chick-fil-A and others, Americans now have more fast-food choices in breakfast than they ever had before. Taco Bell's new campaign with the two dozen guys named Ronald McDonald who declared their love for Taco Bell's new breakfast choices has taken the industry and consumers by storm.
McDonald's can no longer bask in the glory of its dominance and has to play defense to simply hold onto its market share. Taco Bell, Dunkin' Donuts, Chick-fil-A and other smaller brands have realized what a huge segment this is and are now all out to grab their share of the lucrative pie.
With a complete re-haul of its menu and adding delicacies like the increasingly-popular Waffle Taco, Taco Bell is creating major worries for McDonald's. But McDonald's CFO Peter Benson said recently that every year the company has had major competitors try and chip away at this monopoly and this year is no different, so they are not worried.
Despite increasing awareness for healthier foods and tighter budgets, breakfast sales figures from U.S. fast food chains have shown steady growth. Between 2007 and 2012 they rose by an average of 4.8 percent per year compared to other dining sales, which have seen slow progress.
The National Restaurant Association says that the breakfast market has big potential for revenue, which shows why all fast-food chains are strongly focusing on it for survival. Taco Bell's campaign has continued with the Ronald McDonald theme, only this time taking a more direct aim at McDonald's being out of touch. Taco Bell claims the Egg McMuffin is "so-eighties," when one could easily have something more interesting like Taco Bell's new Waffle Taco for breakfast.
Taking potshots at competitors is certainly nothing new, but according to Yahoo Finance Senior Columnist Michael Santoli, Taco Bell's campaign could have the dual effect of making them popular and yet establish McDonald's as the leading breakfast brand at the same time.
McDonald’s countered this campaign with some innovative responses as well. Their mascot, the red-and-yellow Ronald McDonald clown, is now seen all over their social media networks petting the Taco Bell Chihuahua fondly and rather condescendingly saying, "imitation is the sincerest form of flattery."
But apart from the sarcasm and the laughs, McDonald's also gave free small cups of its McCafe coffee to customers during breakfast hours for two weeks as a part of its own marketing blitz. When you look at the figures from 2012, the $7.6 billion in all-day restaurant sales at Taco Bell are smaller than the $10 billion McDonald's generated on breakfast alone.
It seems Taco Bell will have to come up with more ammunition if it wants to score major points in this all-out war.
And while these two fast-food joints are fighting, Chick-fil-A is focusing on a completely different segment — healthier fast foods. Sounds like an oxymoron, but it could very well be one the biggest differentiators this year. A new, healthier menu showcases Chick-fil-A's signature, healthier grilled-chicken line, which is focused on millennials and the younger, urban audience.
Dunkin' Donuts, on the other hand, is focusing on robust expansion so that all of America can "run on Dunkin's." With a new donut menu enticing customers, Dunkin' Donuts has upped its breakfast sandwich selections to draw in more crowds.
Where this will all lead is yet to be seen. But in a nation that is increasingly focused on health and savings, it will be an interesting outcome for sure.
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