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As convenience stores upgrade coffee programs and add high-margin breakfast items, the first meal of the day has become the hottest area of competition for the foodservice industry.
Foodservice operators added more than 460 new breakfast items to their menus in 2009, more than in 2007 or 2008, according to market intelligence firm Mintel.
"C-stores and quick-service restaurants (QSR) are increasingly competing for the breakfast consumer," noted Maria Caranfa, senior analyst for Mintel Menu Insights. "Variety is key to the breakfast daypart and c-stores need to keep that in mind when developing new items. In the past, there were coffee wars. Now retailers are competing for the healthiest or most unique items."
One new battleground: oatmeal. Starbucks' dry oatmeal with optional brown sugar, dried fruits or nuts, served in a cardboard container, may be prepared with boiling water in-store or by customers at the office. Other QSRs, such as Jamba Juice, are selling ready-made oatmeal, and McDonald's is testing a version with apples, raisins and dried cranberries.
"C-stores could take Starbucks' approach with instant oatmeal branded with the c-store name, with different toppings to choose from, such as trail mix or chocolate chips," Caranfa noted.
Other foodservice sellers are taking different approaches to healthier fare. Dunkin' Donuts offers egg whites with turkey sausage or vegetables on flatbread, with less than 300 calories. In April, Subway launched a breakfast menu that includes Seattle's Best Coffee and a Western Egg White Muffin Melt on a light wheat English muffin with 4 grams of fat. Subway's offer includes four Fresh Fit Egg White Muffin Melts, each with less than 180 calories, 4.5 grams of fat and 5 grams of fiber.
"Subway is well known for its healthy lunch and dinner menu choices, but healthy morning meals seem to be lacking in the breakfast category in the U.S.," Mike Jameson, developing agent for Subway, noted. Breakfast is a $40.7 billion business among U.S. QSRs, he said, noting it represents more than 20 percent of potential business.
But even as c-stores, QSRs and others invest in morning fare, outside-the-home breakfast and brunch sales fell 3.4 percent from 2007 to 2009, according to Mintel. The segment is expected to grow modestly through 2011 before picking up speed, increasing 13 percent from 2009 to 2014.
As customers recover from the recession, value menus are still important, Caranfa said, noting nearly one-third of respondents would like to see more discounted items.
Last month, family-dining operator Denny's threw down the gauntlet with its $2 $4 $6 $8 Value Menu, including breakfast foods. "The new offering redefines the concept of traditional value menus, moving consumers beyond the idea that fast food is their only affordable option," said Nelson Marchioli, Denny's president and CEO.
In early April, Dunkin' Donuts took up the challenge in the Indianapolis, Fort Wayne and South Bend markets, unveiling six breakfast items for 99 cents.
"Our customers are looking for new choices to keep them going without compromising on price, convenience or taste," said field marketing manager, Vicky DeSalvo.
Beyond price points, retailers may perk up sales by stretching breakfast hours, said Mintel foodservice director of research, Eric Giandelone. A significant number of diners told Mintel they'd like to see all-day breakfast (36 percent wanted to see it during the weekday, 38 percent during the weekend).
But c-store operators, with their grab-and-go offer, may be at a disadvantage in this arena. "If the breakfast item can be made to order, extending the daypart may work," Caranfa said. "But consumers associate wellness with freshness, which is the second-most-popular attribute they look for [in food to go]. If c-stores are operating with food sitting out or merchandised in a case, they won't sell much after breakfast hours."