Value pricing to drive restaurant breakfast growth
August 4, 2010
NEW YORK — Despite a downturn in 2010, the breakfast market at restaurants will rebound and approach $38 billion in 2011, according to market researcher Packaged Facts.
“Fast food and Q.S.R. (quick-service restaurant) operators are playing the ‘price equals value’ card for everything it’s worth,” said Don Montuori, publisher of Packaged Facts. “By pushing the envelope with $1 deals, they risk enabling a pool of ‘extreme affordability’ customers. But the upshot for breakfast is that it remains a relatively untapped daypart, so that traffic gained today may translate into additional revenue tomorrow. We believe that decisions by the likes of Denny’s and Bob Evans to place everyday value for quality food at the forefront of their branding initiatives make a great deal of sense. Value pricing meets the reality of today’s and tomorrow’s lower-to-middle and middle-income consumers who frequent family restaurants. For breakfast, they are spinning full-service value menus and value in portion size.”
Packaged Facts said McDonald’s $1 breakfast menu will pressure other restaurants to do the same, and Burger King, Wendy’s and Subway already have followed. Low prices resonate with consumers as 31% of survey respondents said they have been influenced by a maximum $3 price when selecting a restaurant for breakfast compared with 16% who placed a limit at $10. Convenience also influences breakfast decisions as well as breakfast menu features such as getting a favorite menu item, wide variety and healthy menu items. Coffee has also been a driver of breakfast traffic.
Despite the recession, breakfast has fared pretty well and taken market share away from lunch and dinner dayparts.