By Geoff Wilson
Breakfast has become a significant daypart in Canada’s foodservice industry. However, the recent growth of breakfast in Canadian foodservice has manifested itself more so in quick-service restaurants (“QSR”) rather than full-service restaurants (“FSR”).
FSR breakfast traffic and all dollars as a percentage of total foodservice remained relatively flat from 2012 to 2016. However, the percentage share of traffic and dollars spent at breakfast in QSR grew from 2012 to 2016, especially in 2015 and 2016. In 2016, breakfast represented 22.7 per cent of all traffic and 19.0 per cent of all dollars spent. NPD Group, Inc. data also indicates that compound annual Canadian QSR breakfast day part sales and traffic growth rates from 2012 to 2016 were 16.2 per cent and 12.5 per cent respectively.
Google Trends suggests that searches of “Breakfast Near Me” rose from 0 (indicating the least number of searches) in January 2012 to 100 (indicating the greatest number of searches) in July 2016. The growth curve increased dramatically after January 2015. This growth parallels the previously mentioned increase in breakfast sales and traffic.
In many respects, the breakfast day part in Canada’s QSR sector is a micro climate of the overall foodservice industry. Key trends in the broader foodservice industry are being reflected in the breakfast day part of QSRs.
- Flexible dining times. The days of consumers wanting three square meals a day at predictable times are over. Contemporary foodservice customers, especially Millennials, want to eat when they want, where they want and what they want. Is it any surprise that McDonald’s introduced all-day breakfast in the United States in 2016 and both McDonald’s and A&W have recently announced the concept in Canada?
- Customization. Today’s restaurant consumers crave the ability to customize their orders, designing their menu choices to their personal preferences. For its breakfast entrees, Tim Hortons now offers five different carriers (English muffins, bagels, biscuits, bagels and wraps) and six different primary fillings, catering to this trend.
- Premiumization. Consistent with the customization trend, consumers are also looking for ways to purchase more premium products, often as a treat or as a way to convey status. Operators have responded by creating various price level tiers in their menus or focusing their concept on a specific pricing tier. Operators like the greater average check associated with premium offers. This trend is not unlike the stratification of brands in the accommodation sector. McDonald’s added premium espresso-based hot beverages. Starbucks offers premium breakfast sandwiches, consistent with their premium hot beverage positioning.
- Authenticity. More and more, consumers are focusing on the food they consume – where it comes from, how it is processed and how it is prepared. Today’s consumers are better educated about food, its sources and its preparation; seeking what they call “real food.” McDonalds fresh cracked eggs in its breakfast sandwiches provide a strategic advantage. A&W now offers bacon raised without antibiotics. Some QSR that offer hot beverages have documented the source of their coffee beans, seeking to differentiate themselves on ethical growing practices.
- Local food. Consumers seeking out foodservice operators with ethical supply chains are also favouring foodservice operators who procure food locally. While using very local foods is challenging for national chains, some QSR promote the local nature of breakfast items such as eggs.
- Portability. In 1983, Chrysler Corporation introduced minivans complete with the first version of cup holders in vehicles. No one would think about manufacturing a vehicle without cup holders today. The factor that differentiates QSR breakfast from FSR breakfast is portability. Today’s QSR breakfast consumers want to eat in the car, on the bus, as they walk, in class and at their desks. The availability of portable breakfast foods is crucial to our busy lifestyle. QSRs have tapped into this trend extensively.
- Innovative packaging. QSR breakfast packaging has also evolved over time. Key factors driving innovation have included heat retention, reliability (i.e., no leaks), comfort (i.e., easy to hold and eat from), fit (i.e., appropriate size for cup holders), attractiveness, environmental responsibility, consistency with brand image, and marketing capability (i.e., brand conveyance, customer loyalty systems, etc.). McDonald’s innovative two-layer fiberboard coffee cup was introduced in 2009 in Canada and has now been launched in the United States.
Breakfast sandwiches and coffee are a mainstay of QSR breakfast
Breakfast sandwiches first became popular in the United States after the Civil War and were a favourite food of pioneers during America’s westward expansion. Egg McMuffins first become available at McDonald’s in 1972.
Not surprisingly, coffee remains the number one beverage of choice in commercial foodservice in Canada. In 2015, just over 32 per cent of meals and snacks included coffee. Breakfast sandwiches, however, are a relative newcomer to the Top 10 foods in restaurant purchases, making the list in 2010 and then 2012 and thereafter. Interestingly, breakfast sandwich purchases as a percentage of total meals and snacks have grown steadily since 2012 with the greatest growth realized in 2015. This trend follows the growth of QSR breakfast day part traffic and sales. NPD Group, Inc. data indicates that in 2016 breakfast sandwiches represented almost 75 per cent of all Canadian QSR breakfast food purchases (i.e., excluding beverages). Breakfast sandwiches and coffee are clearly the mainstays of QSR breakfast.
Keys to success in QSR breakfast
- Speed. Busy consumers are typically even more pressed for time at breakfast than any other meal of the day. Whether through the drive-through or at the counter in the restaurant, service times must be quick.
- Consistency. Consumers patronize QSR chains partly because the food and experience are predictable. Change is good because it creates a reason to return, but inconsistency is bad as consumers expectations can be dashed by one inconsistent experience.
- Innovation. While traffic for breakfast may be growing, more chains have entered the breakfast space. Innovation differentiates chains from their competitors. Innovation generates trial. Great products and service generate repeat visits.
- Value. The bottom line is consumers only have so much money in their wallets. How they chose to spend it is greatly affected by their last restaurant visit. Because breakfast is the simplest of meals, it is subject to greater scrutiny in terms of value.
What’s in the future of QSR breakfast?
So where do we go from here?
- Weekend brunch in quick service? Perhaps add premium breakfast items such as a breakfast sandwich with hollandaise sauce or lox and bagels on weekends during prime brunch hours and cozy up their dining areas. This premiumization would not preclude all day breakfast the rest of the time.
- New transporters? Rolls? Baguettes? Waffles? Dumplings? What will the next generation of breakfast sandwiches be carried in? The trick is to innovate within the capacity of existing equipment (or with limited additions) and with existing pantries (or with limited additions). Experimentation through limited time offers will validate such new possibilities.
- Ethnic breakfast Items? In its major urban centres, Canada has greater ethnic diversity than most other countries. What about steamed buns stuffed withmeat (China), miso soup (Japan), rice and kimchi (Korea), Idli with Vada (Indian) or Mana’ish with Za’atar (Lebanon). The latter is actually available at Man’ish Global Flatbread Café on Spadina Avenue in Toronto.
- Bold new flavours? QSR chains have had great success with limited time offers at lunch featuring bold and differentiated flavours. Why not in breakfast? Consider a breakfast sandwich with sriracha sauce or a jalapeno cheese slice.
Perhaps some of these ideas are a bit farfetched. But so was the Egg McMuffin in the evolving QSR sector in 1972. The good news is breakfast should remain an important day part in QSR for years to come. Speed, consistency, innovations and value will win the day in the competitive QSR breakfast day part.
About the author:
Geoff Wilson is a Principal with fsSTRATEGY Inc. a niche consulting firm based in Toronto focused on assisting foodservice operators to enhance customer satisfaction, revenues and return on investment. For more information visit www.fsSTRATEGY.com.