Food Fight at the Breakfast Bar

While convenience stores continue to battle QSRs for coffee sales, a new clash has ensued for the morning daypart as a whole.

By: Erin Rigik, Associate Editor.

Despite busier lifestyles, breakfast remains the most important meal of the day to most customers.

The Food Channel’s recent breakfast survey found that 95% of respondents viewed their morning meal as very or somewhat important with about two-thirds reporting eating breakfast every day. Two-thirds of respondents also said they eat breakfast at home, while nearly 25% eat breakfast at work. The items most consumed at breakfast, the survey found, are eggs (50%), and cereal (25%).

When it comes to food sales, convenience stores face the strongest competition from fast-food restaurants, especially during the breakfast daypart.

Nearly half of consumers (49%) said fast-food restaurants were their alternative for breakfast, 47% for lunch, and 32% for dinner, according to Technomic’s Convenience Store Foodservice Consumer Trend Report.

But convenience stores have been busy positioning themselves to usurp the breakfast daypart with everything from pancake machines to breakfast sandwiches and pizzas.

High’s of Baltimore, for example, recently introduced fresh sandwiches to its morning menu. The chain offers a supporting array of breakfast options, including croissants, biscuits, English muffins and pancakes, each with a choice of sausage, bacon, ham or steak, as well as a fresh bakery program, which includes doughnuts, cinnamon pastries and cookies.

“Sausage, egg and cheese croissants and fresh-baked doughnuts are our most popular morning items and complement our premium line of Buffalo and Spring coffees,” said Pat Kelly, director of purchasing for High’s Dairy Stores, which operates 55 locations throughout Maryland.

The chain uses promotions to tempt customers into tasting its offerings, and then hopefully coming back for more. “We continually promote our breakfast offerings, such as a free coffee with a fuel fill up or with a hot dog, or a special price for a coffee and a doughnut,” Kelly said. “We launched our new fresh breakfast sandwich program with a series of BOGOs (buy one get ones) to give our customers a taste of these great sandwiches.”

Driving New Business
Rutter’s, Quick Chek and Wawa are also promoting their breakfast sandwich menus with morning specials focused on bundling,  such as getting a sandwich for 99 cents with the purchase of a cup of coffee.

“The last 4-5 years we’ve been seeing an upscaling of coffee programs at c-stores. Not only did convenience stores improve their coffee, but they came up with their own brand of coffee,” said Tim Powell, director of research and consulting at Technomics Inc. “QSR coffee programs weren’t growing as fast, and c-stores were taking some of that share.”

QSRs responded, Powell added, pointing to McDonald’s McCafé line and Burger King replacing its own brand of coffee with Seattle’s Best, as well as advertising campaigns from all of the major players. With the coffee war still at play, the battle is now intensifying on the breakfast items front.

“For McDonald’s, about 30% of its business comes from breakfast, particularly with the success of the Egg McMuffin, so they don’t like to see these c-stores coming out with a breakfast sandwich,” Powell said.

And c-stores are taking breakfast even further. York, Pa.-based Rutter’s Farm Stores, for example, has come out with breakfast bowls, which customers can order to their personal specifications by choosing among a myriad of ingredients via a touchscreen kiosk. Quick Chek, Sheetz, Wawa and Nice N Easy are among the many top-quartile chains pushing made-to-order morning menus.

“It’s no longer just breakfast muffins or sandwiches. Now they’re offering something that’s not necessarily portable—something that helps c-stores be viewed as more of a restaurant,” Powell said. “It might be hard to eat a breakfast bowl with one hand but, if you can offer seating, consumers will think, ‘I can either sit and eat here or stop at Burger King and eat.’”

While grab-and-go portable foods aren’t going away anytime soon, Powell said the next trend in foodservice is going to involve becoming more of a destination for a sit down morning meals.

This breakfast evolution at the c-store level is also a sign that c-stores are looking not only to QSRs, but also to a range of other businesses as viable competition.

Ready for the Challenge
While customers have shown they want fresh food served fast, convenience stores have the added challenge of training customers to associate fresh foods with c-stores.

“You have to get through the perception that the food has been sitting there a while and it’s a gas station and not considered a place to get a variety of food,” Powell said.

But even stores without a huge variety can still drive sales by perfecting the basics. A Technomic survey polled 420 consumers 18 and older who purchase breakfast from c-stores once a month or more, who reported buying doughnuts (60%), muffins (41%), bagels (40%) and made-to-order sandwiches (38%) for breakfast at least once every 90 days.

The backbone of every breakfast program is a strong coffee offering, including a way for customers to customize their coffee with fresh milk, syrup and a condiment station.

First and foremost customers are seeking a good, fresh cup of coffee, and they want to buy it from a location that shows it cares about its coffee. Thorntons Inc., in Louisville, Ky., is one c-store chain going the extra mile to make its coffee bar a destination. Coffee hosts and hostesses are planned for stores during the morning coffee rush from 5-10 a.m. to greet and serve the morning coffee customers.

A c-store’s coffee offering also needs to be good consistently from one store to the next, Powell said. But, he noted, there are steps to launching a food program. The first is putting together a hot beverage program that can compete with the national brands. “A prepared foods program without a solid coffee program to anchor it, in my opinion would not be successful,” he added.

High’s Dairy Stores credits its coffee program as a big part of why customers target its stores as a destination for breakfast.
“We attribute our strong (breakfast) daypart to the Buffalo & Spring coffees we offer,” said Kelly of High’s. “We are committed to offering clean surroundings with a premium coffee program, fresh foods, competitive pricing, fast service and easy access to the fuel pumps to get our customers back on the road quickly. That’s just a part of what it takes to be successful in the food business.”

Breakfast Trends in 2011

The Food Channel reported its Top 10 Breakfast Trends for 2011, based on research conducted in partnership with CultureWaves, the International Food Futurists and Mintel International. Top 10 trends retailers can expect include:

1. Oatmeal. McDonald’s now serves fruit and maple oatmeal all day long. Starbucks Caribou Coffee and Jamba Juice are also serving up oatmeal bowls.
2. Chocolate. At the Winter Fancy Foods Show in San Francisco, chocolate was promoted as a breakfast product, from chocolate Belgian waffles to chocolate granola.
3. New players battle. The breakfast daypart has become the key battleground among QSRs. Look for new players like Subway; Hardee’s, with its new budget breakfast platter; Domino’s; and Wendy’s, which is currently testing a fresh breakfast menu, to vie for its share of the market.
4. Haute coffee. Customers are buying whole beans and grinding them at home for a fresher, richer flavor.
5. Ethnic flavors. A National Restaurant Association survey of chefs predicted that ethnic-inspired breakfast meals will be a hot trend for the coming year.
6. Dynamic beverage choices. The breakfast drink menu is expanding with a wide variety of flavors and options, like carbonated fruit juices, antioxidant blends and fortified juice options.
7. Hot pizza. Technomic puts pizza at the top of its list of the “hottest menu items for breakfast.”
8. Breakfast all day. A scrambled egg biscuit at 4 p.m.? It’s available at several national QSR chains.
9. Second breakfast. Customers are eating two small breakfasts like coffee and a muffin followed by some yogurt and fruit later on in the morning. This offers bundling opportunities for c-stores.
10. Eggs. A new report on a nutritional re-evaluation of eggs conducted by the USDA shows eggs are healthier than previously believed.

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