Wendy’s‚ Starbucks take aim at morning traffic

Wendy's/Arby's Group Inc. and Starbucks Corp. are looking at more-profitable morning meals as customers trim spending on lunch and dinner.

Across the industry, sales during early hours have grown faster than other segments in the past five years, according to data from NPD Group, a consumer-research company.

Breakfast foods are about 25% more profitable than lunch and dinner items, based on the cost of ingredients, said Bob Goldin, an executive vice president with Technomic Inc., a restaurant consulting firm in Chicago.

Last year, traffic during breakfast hours climbed 2%, compared with almost no change during other times of the day, said Harry Balzer, vice president at Port Washington, N.Y.-based NPD. Of all the breakfast options in 2008, restaurants—as opposed to eating an on-the-go snack or at home, the office or not at all—accounted for 8.2%, up from 6.2% in 1996, he said.

"It's a structural change, not just a fad," Balzer said. "For years, a hearty bowl of cereal was the most convenient food, but with drive-throughs and restaurant meals increasingly available, that's not the case anymore."

Starbucks, the world's largest chain of coffee shops, introduced $3.95 combination meals in early March 3 to compete with breakfast value menus at other restaurants. The pairings for the Seattle-based company include a coffee and a choice of egg sandwiches or a caffe latte and choice of coffee cake or oatmeal.

Wendy's is revisiting its breakfast menu in certain cities ahead of a 2011 national roll-out. After a failed attempt in the 1980s that centered on fresh-made omelets, Wendy's focused its efforts on growing late-night sales instead, said spokesman Bob Bertini. "We're not in breakfast in a big way," Bertini said. "This is a significant opportunity for us. We're looking to grab more of that market."

Burger King Holdings Inc. said Feb. 4 it will add mini-breakfast sandwiches to its menu. The BK Breakfast Shots, which feature eggs, cheese and a choice of ham, sausage or bacon, will be available for $1.49 for two or $2.39 for four. The Miami-based company gets about 15% of sales from breakfast.

"Breakfast has been a standout" for growth as customers look for ways to make mornings easier, said Malcolm Knapp, a New York-based restaurant consultant. "It's an area that's still under-penetrated and still the most-skipped meal of the day."

McDonald's Corp., the world's largest restaurant chain, credits orders for Egg McMuffins, coffee and hash browns with lifting sales at stores open at least 13 months, and last year started opening some stores an hour earlier to attract more customers. The Oak Brook, Ill-based company gets about 25% of sales and 40% of profit from breakfast sales, Bernstein said.