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Last week McDonald’s stepped up its game by announcing that all franchises will offer breakfast all day starting Oct. 6.
This is a part of McDonald’s (NYSE: MCD) larger scheme to reinvigorate the business and boost revenue. But, is a 24-hour McMuffin enough to turn things around for the company?
McDonald’s Struggles to Increase Traffic
Popularity of the fast food giant has been sharply declining in recent years. The company also faces competition with new menu items, forcing it to also revise its menu to stay competitive. According to The Wall Street Journal, the company is facing its worst six-month outlook in 12 years.
Faltering restaurant traffic is the company’s biggest problem. McDonald’s said declining traffic was to blame for its drop in worldwide sales.
Another big challenge facing McDonalds is its competitors’ superior brand reputation. Fresher, healthier choices are demanded by the consumers’ changing preferences, and that is what some competitors are delivering.
McDonald’s now says it aims to upgrade its own ingredients. For example, it is using butter rather than margarine for all biscuit and muffin items.
However, one segment in which McDonald’s has consistently beat competition is its breakfast menu. So, when customers asked for all-day breakfast, McDonald’s listened.
Big Demand for All-Day Breakfast
The decision to serve breakfast all day was the result of customer demand. More than 120,000 customers have tweeted about McDonald’s all-day breakfast over the past year, the company says.
Of course, all-day breakfast has been requested by customers for years. However, there are high costs associated with modifying restaurant kitchens for breakfast cooking. Due to health code standards, McDonalds is unable to prepare eggs and hamburgers on the same surface. Each of the 14,300 locations implementing all-day breakfast will be required to purchase a new grill exclusively for egg prep.
The company estimates the change to all-day breakfast will pull in 200 more customers per week at each franchise.
Just One Catch
The all-day breakfast menu is actually a more limited menu of breakfast items focusing on biscuit and McMuffin items.
Additionally, to offset the additional all-day menu items, McDonald’s says that its drive-thru operations will only offer only the top menu items. But upon release of that news, social media exploded with consumers’ criticisms of the plan.
Will it Work?
The all-day breakfast strategy may have some weaknesses:
- Scarcity: Economic principle dictates that scarcity creates demand. Will all-day availability of the McMuffin mean morning-time demand will falter? Will the customer base quickly burn out on McDonald’s breakfast items when they’re offered throughout the day?
- Competition Follows The Leader: While McDonald’s is among the first of its competitors to introduce all-day breakfast, it is also the guinea pig. If the concept turns out to be a hit, competitors will likely follow suit. The all-day breakfast offerings may lose novelty as more restaurant competitors begin to offer it.
Some industry watchers believe this could be the beginning of a turnaround for the struggling fast-food giant. While all-day breakfast is a start, McDonald’s has a brand reputation to change if it wants to see restaurant traffic increases it sorely needs.
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