Fast food chains are banking on breakfast, here’s why

Everyone is trying to cash in on breakfast.

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At least that’s the case with the fast food world and the ever-growing number of establishments that are either expanding or inventing their own morning menus.

McDoanld's is allowing franchisees to choose which breakfast items they would like to keep on the all-day menu. (iStock)

McDonald’s and Dunkin’ Donuts have maintained their hold on the market – though the golden arch chain has allowed franchisees to scale back on all-day breakfast menu items while the donut staple that's aiming to separate itself from the sweet treat has kept up with trending faux meat with a Beyond Sausage Breakfast Sandwich test that’s set to launch nationally.

Photo: Dunkin'

Burger King, who started a breakfast menu six years after its competitor Mickey D’s in 1978, has continued to push the $5 monthly coffee subscription it launched in March. Burger chain White Castle cooked up morning sandwiches of its own in 2011.

Taco Bell jumped into the breakfast fray in 2014, just before breakfast visits peaked two years after, according to data collected by market research firm NPD Group, Inc. More specifically, in the past five years, breakfast visits at fast food restaurants have grown 7.7 percent with a spending increase of 31 percent.

Likewise breakfast visits went up 1 percent in the past year while lunch and dinner dropped by nearly the same rate, according to NPD Group’s numbers.

The research firm also alleged that morning meal traffic has increased due to customers seeking low cost and portable breakfast options that are convenient to their lifestyle.

“I think if I had more time, I would love to eat more meals at home. But, I’m kind of like anyone else, I’m on the go and don’t necessarily have enough time to make something and just want to grab something quickly,” Adam Chandler, author of Drive-Thru Dreams: A Journey Through the Heart of America’s Fast-Food Kingdom told FOX Business.

He added: “It’s easy for me to grab a bacon egg and cheese from a cart, and in other places if you’re driving, fast food makes all the sense in the world.”

Not having to worry about dishes or stocked fridges are added bonuses Chandler cited aside from affordability.

From an industry standpoint, the ingredients for a breakfast menu are low cost, but the implementation is expensive.

“There is an increase in labor, management and operations, so for a chain to add this daypart, they have to be committed as it involves capital investment,” John Howeth, senior vice president of market development at American Egg Board explained to FOX Business. “One thought comes to mind, foodservice operators already have the building and the land, so why not add a new segment if it fits your corporate goals and customers’ expectations.”

Wendy's announced its 2020 plans for a national breakfast expansion. (Wendy's)

Wendy’s on the other hand is joining the fast food fight in 2020 after failing to capture the breakfast market with its three previous attempts – and this time with a $20 million investment.

“We’re absolutely confident this is going to work,” Wendy’s CEO Todd Penegor told investors during the Oct. 11 Investor Day presentation.

Unlike its first few tries at the breakfast game, Wendy’s has dedicated two years of development that included input from executives, members of the board and franchisees.

“We didn’t have scale behind it,” Kurt Kane, the burger chain’s CCO and U.S. president said at the time. “We’ll put full media power behind the breakfast,” he added regarding Wendy’s dedication to building nationwide breakfast sales.

According to KeyBanc Capital Markets analyst Eric Gonzalez, however, it might be too late to make a meaningful dent in the fast food breakfast market. The early announcement may also give competitors a chance to create a counter attack.

“We expect an onslaught of discounting from other chains that have greater scale, established customer bases and a lot to lose,” Gonzalez told the Wall Street Journal.

And it appears that Wendy’s main rivals, McDonald’s and Burger King really are prepping for the redheaded logo donning chain’s 6,000 store-wide launch.

Last quarter, McDonald’s said breakfast sales rose, but were weaker than lunch and dinner. Despite this, recent promotions for apple wood smoked bacon, Donut Sticks and an updated McCafé menu aim to keep McDonald’s competitive.

McCafé is a coffee-house-style food and drink chain, owned by McDonald's. (iStock)

Burger King’s parent company Restaurant Brands International Inc. told investors earlier this year that will try to make breakfast 15 percent of its total sales.

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Outside of the burger-focused franchises that are trying to dominate breakfast, countless other fast food joints are using Americans love for protein and sandwiches to lure consumers in.

NPD Group surveys revealed that U.S. dietary trends are leading breakfast eaters away from cereal and toward quick-service egg and meat sandwiches.

Milk stream pouring into a bowl with ?ornflakes close-up. Milk splash on a cup with flakes macro on a blue background.

“Cereal has been propped up as healthy for a really long time, and I think between studies on sugar and food trends against gluten have kind of put a big dent in that kind of sensibility,” Chandler said regarding the shift from at-home breakfast to fast food.

“There’s kind of the protein aspect. A lot of people are vegetarian and are moving away from meat, so eggs are really a quick-fix,” Chandler pointed out.

Fresh Organic Eggs in a Carton (iStock/4nadia)

He cited the Egg McMuffin was a big deal for vegetarians when it was added to McDonald’s all-day breakfast menu. Additionally, he found in his research that McDonald’s serves nearly 5 percent of all eggs produced in the U.S. to feed breakfast enthusiasts.

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KFC's limited-edition "Chicken & Donuts" sandwich. (Courtesy: Kentucky Fried Chicken)

Aside from a high demand of eggs, protein from meat fits the diets of Americans well, according to Chandler.

“The sandwich is sort of the quintessential breakfast meal because we are such an on the go, pressed for time people. We sort of have it in our national credo to always push to get things done, to make the most of your time and succeed at all costs, and think that speaks to why we want food to be portable,” he explained.

Moreover, fast food chains are keen to the cultural significance of the sandwich and have opted for over-the-top or sugary menu items to get the people’s attention. Last month, KFC began testing Chicken & Donuts after the Popeye’s chicken sandwich craze. Texas chain Whataburger has mastered the art of sweet and savory breakfast with its Honey Butter Chicken Biscuit – a menu item Wendy’s is happily adding to its breakfast rollout.