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March 2, 2007

Breakfast Wars or Building daypart/increasing sales

Analysis of: Fast-food rivals suit up for breakfast war | www.usatoday.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Jeffrey Segal, VP Culinary Research & Concept Development, Ops.Jeffrey Segal
VP Culinary Research & Concept Development, Ops., Riese Restaurants
Implications: Building sales with existing labor

Staying in touch/compete with rivals

Retaining consumers while offering new menu items

Analysis: Let's get to the real point...this is a war that benefits all involved...unlike the 99 cent/value menu wars (although that may be in the near future with a more crowded and competitive market)

1) Starbucks:
        The roll-outs in 7 major markets have been a success and why not! They increased sales, have kept their loyal customer base from straying to someone else for their breakfast sandwich/breakfast needs and introduced a  an oven that allows them to 
    a) get product hot and fresh to the customer in a very timely manner (while preserving quality)
    b) allows them to bring in pre-prepared product from central commissary (which requires no in store assembly)
    c) the oven is not a one-trick pony...it is being used for the roll-out of their hot sandwich program, which extends day-part sales again

2) Burger King
        While they have not enjoyed as much success as McD's with breakfast they have learned lessons from them & increased sales.
    If you can increase day-part you make use of existing labor (some new labor is added) to increase sales it is a win-win. Also with the introduction of a quality coffee program you have an all day item with excellent margins & stay in step with your biggest competitor.

3) Wendy's
        A little bit of a mystery in the making...while they failed the first time around...their R & D pipeline is very full...they should have learned from their time with Tim Horton's (who are a subject for a different analysis). Building daypart is essential to competing and stay in step as I said...the management team seems to have taken cue's from competitors and we will see...early roll-outs have been mixed but with more positives than negatives

4) Subway
        This is the one I have doubts about...while I am all for developing day-part...I don't see someone who has and will have even more choices choosing a completely different destination that does not have a beverage program (coffee)

5) McDonald's
        What can i say, they do it right! (to paraphrase) Great breakfast roll-out, ear to the ground as far as meeting customers needs and one of the best Coffee program roll-outs ever...kudos...let's see what comes...I think that with their upcoming beverage roll-out they will continue their success

Other Analyses of the Same Source Article:
Don't Forget Hardee's!
March 1, 2007, Author: Glenn Postell, Partner & Operator, Bear Group, Inc.

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