According to new data, quick-service traffic in the morning was down nearly 7% during the month
The breakfast daypart seemed poised to make a full recovery from the pandemic last year, driven by more workers returning to the office.
The number of workers required to be in the office at least a few days a week or month has continued to increase since then — about 75% are now hybrid versus 63% last year, according to Pew Research Center — but breakfast hasn’t exactly kept pace.
According to data from Revenue Management Solutions, breakfast traffic in the quick-service segment was down 6.9% in January compared to January 2024. Inclement weather impacting much of the country is an obvious factor here, but the overall segment was down just 0.2% by comparison, so weather seems to be only part of the story.
Perhaps a bigger narrative is that consumers, particularly lower-income consumers who skew heavily toward QSRs, have abruptly tightened up after trends improved in November and December, and they’ve done so to the detriment of the morning business. RMS senior vice president of consulting services Richard Delvallée said “budget management” is a contributing factor for the morning traffic dip.
“Breakfast is the easiest meal for consumers to skip, especially on busy weekdays when they opt for quick, at-home options,” he said. “As a result, breakfast transactions are shifting toward weekends, when customers typically purchase higher quantities per transaction and spend more per check. In other words, save the $12 coffee for Sunday a.m. with friends, not rushing to carpool on a random Tuesday.”
Indeed, though breakfast traffic is down in the high single digits, the average check for QSR is up 3.6% and net sales are up 3.4%.
Notably, budgets may not be the only driver. RMS data show that some brands have scaled back in the mornings, either cutting service all together or shortening hours. In August, Taco Bell announced it was giving franchisees the option of whether to offer breakfast. The opt-out opportunity was created based on franchisee feedback, the company said, allowing them to focus more on other dayparts and platforms, including lunch and the Cantina Chicken menu. Taco Bell did not disclose how many of its roughly 7,500 U.S. restaurants have since opted out.
“While we do not have a specific number to share, many Taco Bell restaurants are still continuing to serve breakfast, including all company-owned restaurants,” the company said in a statement emailed to Nation’s Restaurant News.
A final explanation is that the growing number of value offerings tend to target lunch and dinner.
“This year, fewer promotions were offered at breakfast and RMS even saw menu price increases during the daypart, driving up the average check and driving price-sensitive customers away,” Delvallée said.
In addition to these factors, restaurants now also have to contend with significantly higher egg prices, which jumped over 15% in January compared to December, according to federal data released earlier this week. This spike is too recent to impact RMS’ January data, but Delvallée said the cost of eggs as a percentage of total spending isn’t significant.
“If breakfast constitutes 10% of their sales mix, perhaps only 20% of the breakfast food and paper costs are driven by eggs. This means that only 2% of their total costs are now higher, so most of this could be absorbed through a modest price increase,” he said.
Current trends aside, plenty of brands remain bullish about the morning business. For instance, Wendy’s reported full-year 2024 breakfast sales grew by more than 6% and “remains a top priority and will provide a tailwind to our growth,” chief executive officer Kirk Tanner said during the company’s earnings call earlier this week. Wendy’s plans to dedicate a higher share of total advertising dollars to breakfast and sharpen its focus on innovation during the daypart.
Dutch Bros is also exploring more opportunities in the morning and is doing so by testing several food products. During its earnings call this week, CEO Christine Barone said, “We believe we have an opportunity to expand market share in the morning daypart. We understand that many people seek the added convenience of a food pairing with their morning beverage choice. Food makes up less than 2% of our total sales and we are likely missing morning beverage transactions from would-be customers who are not satisfied with our current food offerings. With the expansion of our food program, we are targeting these incremental beverage occasions and aim to compete more aggressively for these high-value routinized occasions with a limited food offering that fulfills our customers' needs.”
Meanwhile, McDonald’s executives noted that breakfast was a strong daypart for the U.S. business through an otherwise lackluster 2024, and the company has big plans to continue that momentum this year.
“It's an area where we're taking share,” chief financial officer Ian Borden said during the company’s earnings call this week. “This will be the 50th anniversary of breakfast in the U.S. this year and I think there'll be some interesting and exciting things that the U.S. business does around breakfast.”
Contact Alicia Kelso at [email protected]
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