Is the Shift to All-Day Breakfast a Good Business Move for Mcdonald’s?

pictureKelsey Dallas
http://newsok.com/is-the-shift-to-all-day-breakfast-a-good-business-move-for-mcdonalds/article/5452066/?page=2

Many McDonald’s fans are celebrating the increased availability of breakfast foods, but the change could cost the fast-food chain.

McDonald’s now offers all-day breakfast at its U.S. locations, thrilling Egg McMuffin lovers across the country. However, business analysts are giving the menu adjustment mixed reviews, noting that the popular change could actually hurt the restaurant’s bottom line.

“The lower check average doesn’t drive the margin as much as higher-priced items like premium burgers,” said Darren Tristano, an executive vice president at Technomic, a food industry research and consulting firm, to CBS MoneyWatch.

In other words, increasing the availability of breakfast foods will likely bring more people into the restaurant, but they’ll be spending less than they would on the company’s traditional lunch or breakfast options, Time reported.

“McDonald’s is somewhat in danger of cannibalizing sales with all-day breakfast,” the article noted.

However, this appears to be a risk the world’s largest fast-food chain is willing to take, as pressure mounts for the company to increase wages and healthy eating campaigns hurt the restaurant’s popularity. In the first three months of 2015, sales at U.S. McDonald’s fell 2.6 percent compared with the same period in 2014, Fortune reported in April.

McDonald’s CEO Steve Easterbrook is optimistic about the potential effects of the breakfast expansion, even as he highlights the need for more creative solutions, according to CBS MoneyWatch.

“During McDonald’s latest quarterly earnings call, Easterbrook tried to keep Wall Street’s expectations for all-day breakfast modest, noting that the initiative isn’t a ‘silver bullet’ to solve every problem,” the article noted. “But it will help satisfy that midday (or midnight) craving for an Egg McMuffin.”

On Tuesday, when all-day breakfast became available at all 14,300 U.S. McDonald’s locations, social media sites were buzzing with reactions to the #AllDayBreakfast menu adjustments, and not all eaters were satisfied.

As CNBC noted in its coverage of the breakfast rollout, “just half of McDonald’s 24 total breakfast items are available as part of the full-day menu.” Fans of the McGriddle or Egg White Delight McMuffin will still be constrained by the old 10:30 a.m. deadline.

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