But over time, things change. Brands evolve. Opportunities emerge. And McDonald's has made a few radical changes lately to cope, some of which weren't even noticeable to many customers. 

The whole thing with from the chain's decision two years ago now to start serving breakfast all day. Because apparently, some regular breakfast customers simply started coming in later.  

That meant not only less traffic in the morning--but also that some afternoon customers started buying cheaper breakfast items. 

Combine both of those results, and overall store sales started to fall, according to The Wall Street Journal, which examined McDonald's in detail this week, and came up with these insights. So, McDonald's has started to make some other big changes--some widely heralded, some not. They include things like:

  • trying to boost excitement for its breakfast menu by rolling out Triple Breakfast Stacks, basically a massive breakfast sandwich that comes with sausage, bacon, egg and cheese. 
  • deciding not to advertise that you can actually get Triple Breakfast Stacks all day long -- they're "offered beyond traditional breakfast hours only upon request," according to the Journal.
  • advertising the idea of "a 'holistic' breakfast," in which customers buy both sandwiches and McCafe coffee drinks
  • adding tests like coffee cakes and muffin tops
  • introducing what you might think of as a true dollar menu: several breakfast sandwiches for $1.

Of course, McDonald's isn't alone in trying to take over breakfast, which accounted for a quarter of its revenue before the changes. Burger King and Chick-fil-A have focused on it lately, too. 

Why the focus? Several reasons:

Once you've built a burger restaurant, you already have most of the fixed costs to sell breakfast as well. So if you don't do breakfast, it's like leaving money on the table.

Add to that the fact that the profit margins on breakfast items are simply better than they are on lunch and dinner (except perhaps for alcohol, which McDonald's doesn't actually sell in the U.S.). Eggs and cheese are simply less expensive than chicken and beef.

A third reason: You don't need as many employees in most cases to prepare and serve breakfast items as you do for lunch and dinner. (This is part of why McDonald's now can serve breakfast after 10:30 a.m., but doesn't go the other way -- meaning it won't let you order a Big Mac at 8 a.m.)

Finally, there's just the fact that eating out is getting less popular, even as our population continues to grow.

One possible way around? Adding burgers and other lunch and dinner items in the morning. But as noted that requires more staff and cuts into profit margins.

And, it's also considered likely--harder to tell for sure--that switching to an all-day menu makes kitchens more complicated and less efficient, which leads to longer lines at counters and drive-thrus. That could in turn leads some would-be customers to skip the restaurant altogether.

It's a tough challenge to get right -- which means McDonald's will probably wind up trying quite a few other big changes before it settles on an outcome.

"We are always going to want to introduce initiatives that are attractive to customers, which are reflecting where customers want us to go and their changing tastes," McDonald's Chief Executive Steve Easterbrook said in October, as quoted by the Journal. "But at the same time, how can we maintain that discipline of making sure we take as much out as we ever put into a restaurant?"
 

Published on: Dec 28, 2018
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