The breakfast meal occasion has become a fierce battleground between quick-service restaurant operators and packaged food processors. Convenience, specifically portability, has redefined the category, but nutrition is a detail manufacturers cannot forget about.
The importance of the breakfast occasion within Q.S.R. cannot be understated. Jim Skinner, chief executive officer of the McDonald’s Corp., Oak Brook, Ill., noted in a Jan. 24 conference call with financial analysts that in the United States, "where we’ve delivered 15 consecutive quarters of positive comparable sales, we will continue to expand our food and beverage offerings, particularly at breakfast and with our chicken menu choices."
Mr. Skinner added future breakfast initiatives may include the expansion of the breakfast items included in McDonald’s dollar menu, and the introduction of specialty coffees, burritos and premium burgers, among other new products.
Other Q.S.R. operators expanding their offerings during the morning day part include Miami-based Burger King, which will introduce its Breakfast Value Menu this month; and Jack in the Box, San Diego, which introduced the addition of a buttermilk biscuit to its morning "arsenal."
"With new players entering the breakfast market and longtime competitors building up their breakfast menus, it’s important we continue to offer high quality products that appeal to a variety of consumers," said Teke O’Rourke, director of menu marketing and promotions for Jack in the Box.
Defining an average breakfast consumer is difficult, but it is not hard to pinpoint the pressures that are driving their purchasing decision.
"More than half of our breakfast meals consist of just one or two items," said Dori Hickey, senior manager of product management for The NPD Group, Port Washington, N.Y., following the release this past December of NPD’s Morning Needs States Study. "When we look at this by week part we don’t see a marked difference between weekdays and weekends. And over time, the number of items included in breakfast meals has fallen from 2.46 in 1985 to 2.17 today."
According to The NPD Group’s data, consumers viewed only 38% of their breakfast meals as a "full or complete meal," while 45% of the time it was viewed as a "small or mini-meal," 5% of the time they described breakfast as more of a "snack," and 11% of the time it was a beverage-only situation.
The researchers concluded that smaller and more portable mini-meals are conducive to today’s hectic lifestyles and convenience continues to be a driving factor behind people’s meal and snack choices.
C.P.G. processors waking up
A focus on health may be one way the manufacturers of packaged breakfast foods can compete with food service, according to the Mintel International Group’s "Breakfast Foods" report published in October. They noted competition is stiff, with Starbucks offering a hot breakfast in many locations and Wendy’s set to roll out a breakfast menu nationally in 2008.
But according to Mintel consumers are challenged to find many low-fat and low-calorie options in quick-service restaurants. The research group said healthy breakfast products that stave off hunger pangs for all of the morning hours will be well received by those working to lose or control weight and busy people who would prefer not to have to take the time to accommodate a morning snack.
Lynn Dornblaser, the director of custom publishing solutions for Mintel and a new product expert, said there are some healthy options at Q.S.R. outlets.
"I don’t think you can say that all fast-food breakfasts are inherently unhealthy," she said. "It depends on your definition of ‘healthy’ and it depends on the choices a consumer makes. Fast-food chains such as McDonald’s offer fruit, fruit parfaits and orange juice, and some of the breakfast meal choices at restaurants such as McDonald’s are not necessarily unhealthy. Again, it depends on the choices you make.
"Something else to keep in mind is consumers have been learning about the importance of having a decent breakfast every morning, and that breakfast should include carbohydrates and protein. While some restaurant or retail choices may not be as healthy as others, they do appeal to consumers who are seeking that blend of carbs and protein."
Jim Ruehlmann, vice-president of breakfast and snacking for Sara Lee’s Food and Beverage Group, Chicago, sees three criteria driving the breakfast category — taste, nutrition and convenience. The challenge for all food marketers, he said, is getting all three criteria to work together.
"That is the challenge we as marketers need to embrace," he said. "There is a broad belief that cereal and milk will provide adults or children with the energy they need to last through the morning. Carbohydrates can’t get you there alone. Protein is what Jimmy Dean has popularized; we provide a strong sense of protein to get consumers through that period of time. That is how we answer the nutrition question."
Ms. Dornblaser added, "I think it is all about choice. Consumers have more choice than they have ever had before. Portability and on-the-go convenience are essential, but so is good taste. Some of the sales slippage of snack bars and meal replacement bars I think illustrates that point."
Despite Mr. Ruehlmann’s comments, cereal, both hot and cold, dominates the breakfast foods market with a 29% share of sales through food, drug and mass merchandising outlets, according to Mintel data.
"When it comes to cold cereal there hasn’t been a lot of significant (innovation) activity," Ms. Dornblaser said. "We have seen new product introductions, but there has been very little introduced that is significantly different than anything on the market. Cold cereals are all about heart health, whole grains — specific health benefits for adults and fun for kids.
"Like orange juice, cold cereal is an excellent place for fortification and health benefits, but there is very little that can be done in terms of new forms. Flavors have been well explored and companies have had trouble finding new ways to make the products more convenient."
Beyond their base products, Ms. Dornblaser said the leading cereal manufacturers appear to be trying to take their products beyond breakfast. Kellogg, for example, has extended its Special K brand by adding protein and meal replacement bars as well as bottled water to the line. All three products do not necessarily have to be eaten at breakfast. In addition, Kellogg has marketed its products as part of a weight loss plan where consumers may eat two bowls of Special K per day as part of a regular diet and weight loss plan. It is anticipated the second bowl of cereal will be consumed beyond the morning breakfast time.
Hot and getting hotter
Mr. Ruehlmann credits the expansion of the Q.S.R. breakfast with pushing the hot breakfast concept.
"The traditional breakfast experience, a real hot breakfast, the desire to get solid nutrition, is exploding," he said. "From a broad perspective, have you paid attention to what’s going on? Some Q.S.R.s are doing breakfast 24/7; they are all over the concept. The expansion of the International House of Pancakes is another indicator that people want a good hot breakfast. That is what people crave and that is what people want to get."
Jimmy Dean, Sara Lee’s leading breakfast brand, has introduced two hot breakfast products during the past two years: Skillets and Bowls. The products are designed to accommodate two different segments of the breakfast occasion, Mr. Ruehlmann said.
"One of the segments is the sit down breakfast," he said. "Our Skillets are designed to facilitate the traditional breakfast experience. We take out the prep time by chopping the potatoes, onions, peppers, and precooking the onions and sausage. All mom has to do is put the mixture in a skillet, add 4 eggs and she has a family breakfast that will feed four. We are making a convenient, hot breakfast accessible in the home for the family.
"With Bowls, we take the Skillet experience and make it portable. All people have to do is put it in a microwave and in 2 minutes they have a traditional breakfast experience. Instead of getting in their car and going to Mc-Donald’s or Burger King, and believe me, we love them bringing people into the hot breakfast category, they can have a similar meal at home or at the office. It is for people who don’t want to spend time in the drive thru at quick-service restaurants."
Another challenge facing the food industry is the blurring of the different meal occasions. As companies like Kellogg’s are trying to introduce cereal to other meal occasions during the day, companies like McDonald’s are testing burgers and burritos at breakfast.
"The blurring we are seeing in breakfast foods currently relates to bacon, eggs and sausage moving out of the breakfast time," Ms. Dornblaser said. "You don’t see dinner stuff, like a Caesar salad and steak being eaten for breakfast, but you do see bacon on burgers and sausages in sandwiches. The International House of Pancakes and Denny’s serving breakfast all day has also opened the opportunity for breakfast to be consumed all day."
Ms. Dornblaser does note convenience food formats traditionally served during other meal times are translating back to the breakfast occasion.
"The new Jimmy Dean Breakfast Bowls are the perfect example," she said. "They take the concept of convenient, single-serve microwavable lunch meals started by companies like Uncle Ben’s and introduce them to the breakfast occasion. They allow consumers to grab breakfast out of the freezer and take to work. At work, all they do is pop it into the microwave, grab a cup of coffee and they can have a convenient warm breakfast."