The Wall Street Journal took a bite out of breakfast at restaurants, one of the fastest growing meal periods in the restaurant industry. Here are some noteworthy points from the article:
- Among top quick-service chains’ breakfast visits, Starbucks is number one with 21.7 percent market share, followed closely by McDonald’s with its 21.3 percent market share. The next set of restaurant operators includes: Subway (16.2 percent), Chick-fil-A (10.2 percent), Dunkin’ (7.1 percent), Burger King (5.8 percent), Taco Bell (4.3 percent) Wendy’s (4.1 percent), Sonic (3.2 percent) and Hardee’s (1.8 percent)
- When it comes to what people eat at restaurants, breakfast sandwiches top the menu with a 23 percent share. Next are eggs, hashbrowns and home fries – all at 11 percent.
- In the past 5 years breakfast visits to fast-food restaurants are up 77 percent while visits for lunch and dinner have declined roughly 1.0 percent. Dollars spent on breakfast are up 31.0 percent.
- Breakfast is becoming more of a battle, though. Over the past quarter, McDonald’s reports an increase in breakfast sales but at a slower pace than either lunch or dinner. Burger King franchisee Carrols reports experiencing “some weakness” in breakfast sales. A Taco Bell franchisee points out breakfast sales fall significantly without promotions and/or advertising supporting this daypart.
- Restaurant Brands International, parent company of Burger King, Tim Hortons and Popeyes has set a goal of having the morning meal account for more than 15 percent of total sales.
Economic News This Week
- Initial-jobless claims totaled 212,000, a decline of 4,000 for the week ending October 19. The 4-week moving average totaled 215,000, a dip of 750 claims.
- Existing home sales declined 2.2 percent in September for a seasonally adjusted annual rate of 5.38 million homes, per data from The National Association of Realtors. The September decline followed two months of sales increases. Despite low mortgage rates, a lack of homes for sale limits buyers’ choices and drives up prices, according to a spokesperson from the National Association of Realtors.
- New single-family home sales fell 0.7 percent in September to a seasonally adjusted annual rate of 701,000, according to the US Census Bureau. But September new home sales were up 15.5 percent above sales in September 2018.
- New orders for manufactured durable goods declined 1.1 percent in September, per the U.S. Census Bureau’s Advance Monthly Report. The decline followed a 0.3 percent increase in August. Shipments of manufactured durable goods fell 0.4 percent in September. Shipments of durable goods were down in the three previous months, as well.
- Retail holiday sales will increase 4.5 percent to 5.0 percent this year, according to Deloitte’s annual holiday economic forecast. Deloitte also noted that there has been a modest increase in “experience” spending. This would include traveling, socializing and dining out.
- The University of Michigan’s October Index of Consumer Sentiment “…held up just fine.” The final reading Index was 95.5, up from September’s final reading of 93.2. The Current Economic Conditions Index rose to 113.2 in October from 108.5 in September. The Index of Consumer Expectations hit 84.2, up slightly from 83.4 in September. The university spokesman stated that positive feelings about income and job growth overcame headline volatility involving trade/tariff issues and the impeachment issues.
Foodservice News This Week
- McDonald’s reported mixed results for the restaurant chain’s most recent quarter. Both quarterly earnings and U.S. sales fell short of Wall Street’s expectations. U.S. same-store sales rose 4.8 percent but were still less than forecasted levels and down from the previous quarter. McD’s CEO said it was necessary to rely on promotions and nearly a 3.0 percent increase in menu prices to increase sales. On the other hand, systemwide same-store sales grew by 5.9 percent, up .5 percent from analysts’ projections. Total corporate sales rose 6.0 percent or up 7.0 percent when factoring in currency fluctuations.
- Taco John’s introduces a new prototype. Located in the chain’s hometown of Cheyenne, Wyo., the restaurant integrates Taco John’s updated, contemporary branding, packaging and other advanced features. The new prototype has brighter colors inside and out with larger dining room windows, tile floors and acoustical ceilings. The design also includes new technology-related items such as a digital exterior menu board and kiosk ordering in the dining room.
- Corporate Stirrings: Memphis-based Spell restaurants successfully bid on the Eat Hear Brands in bankruptcy court with hopes to acquire the Babalu Tapas & Tacos. The sale covers the five Babalu locations in Birmingham, Ala.; Memphis, Tenn.; Knoxville, Tenn., and Jackson, Miss. The Spell group intends to run the Babalu brand as part of its chain of upscale and casual restaurants. The amount paid for the acquisition was not given.
- Growth Chains: Television personality and well-known restaurateur John Taffer will open Taffer’s Tavern in Atlanta next spring and expects the concept to have 50 units in 3 years. Zaxby’s will open at a location in Midlothian, Va., and plans on adding six more restaurants in Chesterfield County. Krystal, which had not added a new franchisee for 15 years, became more aggressive and has now signed 15 new agreements.
- Comparable Store Sales Reports: Chipotle Mexican Grill up 11.0 percent and Del Taco (system up 1.0 percent, company operated up 0.4 percent and franchised up 1.8 percent).
For details and same-store sales of other chains, Click here for the latest Green Sheet.