Fast-food industry waking up to breakfast's potential

Breakfast is the only meal that is growing in an otherwise flat fast-food industry

Forty-three years ago, Santa Barbara McDonald's Corp. franchisee Herbert Peterson shaped an egg, using Teflon rings, to fit perfectly on top of an English muffin, creating the first fast-food breakfast sandwich and transforming America's eating habits.

The Egg McMuffin still reigns as the breakfast champion, but every fast-food chain has tried to topple the ham-and-egg sandwich. Now, even eateries that most would not equate with breakfast food are entering the fray. Taco Bell, long known for lunch and dinner offerings, has launched a major marketing campaign touting its breakfast waffle tacos.

That's because breakfast, once a small portion of revenue, generated $34.5 billion in sales last year and now accounts for 21% of the 45 billion customer visits to fast-food restaurants. It is the only meal that is growing in an otherwise flat fast-food industry.

"More than anything, fast-food breakfast satisfies the need for convenience," said Bonnie Riggs, restaurant analyst for NPD. "It's been growing year after year, so there is demand."

One of the most important aspects: A breakfast meal should be able to be held in one hand, particularly important for eating while driving, said Kevin Burke, founder and managing partner of Trinity Capital, which counts Yum Brands, owner of Taco Bell, as one of its clients.

That can lead to re-imagined breakfast classics, such as the waffle taco and biscuit taco that have shown up on Taco Bell's breakfast menu, Burke said. These new creations are an attempt to lure hungry millennials, who have significantly cut back on eating out since the recession.

The number of restaurant visits by the average millennial has dropped by 50 over the six-year period since the recession, Riggs said. Millennials, ages 18 to 34, make up almost 25% of the population.

"You lose that much volume from that group, the industry is not going to grow," she said. "They are looking for healthier options, and there's a lot that we can do to attract them, but first, they have to feel comfortable in terms of employment."

There may be more focus on millennials, but it's the baby boomers who are driving growth in the breakfast sector, Riggs said.

"It's the boomers and beyond who have decided to keep on working," she said. "They grew up on fast food, so they have the need for convenience just like everybody else."

Although McDonald's has long dominated the scene, it doesn't have a firm grasp on any particular demographic. The company's tests of all-day breakfast at San Diego restaurants this month may be an attempt to recapture the lead, Burke said.

"It's a pushback on some of the others who have come into breakfast and put the heat on them," he said.

samantha.masunaga@latimes.com

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