High-margin coffee drives revenues for restaurateurs across all dayparts. Sponsored by Gevalia.
Breakfast is the only restaurant daypart with sustained visit growth over the last several years, according to The NPD Group, a Port Washington, N.Y.-based research firm. It’s a style of eating so popular that it is on the menu all day in a growing number of eateries.
Not surprisingly, coffee, as a high-margin add-on sale or a destination driver itself, is poised to play an important role whenever breakfast is served.
The launch of all-day breakfast byCorp. in October has cast an additional spotlight on breakfast in the foodservice industry. In fact, the move has given the beleaguered burger giant a much-needed boost, new research shows.
Data from NPD’s Checkout Tracking service, based on restaurant receipts submitted by consumers, shows that all-day breakfast has attracted new or lapsed customers and raised lunch visits. A third of the buyers of breakfast foods outside of traditional morning hours had not purchased from McDonald's prior to the all-day breakfast launch.
Throughout the day, breakfast food orders at the chain rose from 39 percent before the launch to 47 percent afterwards. Also noteworthy is that 61 percent of the receipts for breakfast food purchased during lunch included non-breakfast items, which contributed to a higher average check.
NPD has not publicized the specific non-breakfast items that patrons have bought with their Egg McMuffins at lunch. But there is reason to believe that specialty beverages, such as McDonald’s McCafe coffee line, are in the mix.
“It could very well be, when they purchased breakfast food beyond traditional breakfast hours, they included not only add-on food items but also beverages,” says Bonnie Riggs, NPD restaurant industry analyst. “I would be hard pressed to say that was not the case.”
There is a logic to promoting specialty coffee with all-day breakfast. “A breakfast sandwich tends to have a lower price point than a regular sandwich,” Riggs says. “To increase that check average, why not promote it with a specialty beverage?”
The results McDonald’s has gotten may spur competitors to follow suit with all-day breakfast, observes Aaron Allen, an Orlando, Fla.-based restaurant consultant. “They may say, ‘If they are doing well with it, struggling as much as they are, imagine what we could do with it, with a better product and a better approach,’” Allen says.
Although hot coffee consumption declines significantly after morning hours, people drink it all day long, “suggesting coffee opportunities at lunch, snack and dinner times,” reports Datassential, a Chicago-based market research firm. Iced coffee peaks during lunch and afternoon snack times.
International House of Pancakes, or, has served all-day breakfast and coffee since it opened in 1958. The Glendale, Calif.-based family dining chain now has more than 1,660 locations. The brand’s Never Empty Coffee Pot, house roast beans and Swiss Mocha and French Vanilla coffees are signatures.
To IHOP, java is much more than a wake-up beverage. “We think of coffee not only as an accompaniment for the meal but as a driver all by itself throughout the day,” says Kirk Thompson, IHOP vice president of marketing.
The company oversees the handling of its house roast coffee from bean to cup and designs on-trend products, such as cold-brewed iced coffee and the upcoming new Salted Caramel coffee. “We know that people are drinking great coffee at younger ages, and we want to be a part of that,” says Marie Grimm, IHOP vice president of menu development and innovation.
A full-service coffee bar inside an IHOP restaurant in Hollywood serves espresso, latte, cappuccino and iced and blended coffee drinks to patrons.
“We want to know what our guests are enjoying and asking for,” Thompson says. “We want to continue to stay as relevant as possible and meet their expectations.”
Coffee and all-day breakfast find a unique expression in the 19 co-branded Caribou Coffee and Einstein Bros. Bagels stores. “It is the best of breakfast — the bagels and fresh eggs that Einstein does, paired with our coffee drinks,” says David Marshall, senior manager of R&D and culinary arts at Caribou Coffee, based in Minneapolis.
Marshall notes that stand-alone Caribou stores, which number more than 400 domestically, have upgraded their menus with-driven breakfast sandwiches, such as capicola pesto flatbread with egg and croissant with hardwood-smoked bacon, egg, cheese and onion marmalade. They are offered all day.
“This will drive people to come in and experience breakfast and a great cup of coffee,” says Marshall, who joins the Caribou “bean team” for daily coffee cuppings.