Burger King tests mimosas and 'brunch'

BK classes up its menu with offerings like a ciabatta breakfast sandwich, but will it win over McDonald's customers?

By InvestorPlace Apr 21, 2010 7:11AM

Mimosas and brunch at Burger King (BKC)? What’s next in the quest for breakfast sales -- quiche and a croquet game with the King?


Burger King is turning its battle with McDonald's (MCD) for early morning sales into a battle of words. In selected markets, the BK is advertising the availability of a "Burger King brunch." The move away from breakfast is apparently supposed to evoke ideas of higher quality than just a conventional meal of (perish the thought!) eggs and coffee.


The brunch menu is debuting in test markets that include Massachusetts, Florida and parts of Canada. But will it be enough to loosen Mickey D’s iron grip on breakfast sales?


You have to admit that the menu is worth a look. BK’s mimosa is nonalcoholic, with OJ and Sprite instead of orange juice and champagne, but should still provide a fizzy pick-me-up in the morning. Its other new brunch item is a new BK ciabatta breakfast sandwich that consists of scrambled egg, cheese, tomato, ham and bacon with a smoky tomato sauce. This is on top of a previously announced move to roll out Starbucks-owned Seattle's Best Coffee at BK locations.


The final element of the brunch menu in test markets? BK’s signature Whopper available first thing in the morning! Post continues after video:

McDonald’s has seen runaway success with its recent McCafe coffee offerings and strong international sales, but still relies heavily on its mature breakfast menu to boost revenue. Burger King recently partnered with SBUX subsidiary Seattle’s Best to offer up a more flavorful alternative to its BK Joe coffee, but hasn’t seen much bang from the partnership just yet.


But the potential payday from breakfast diners is worth another shot on Burger King's part. According to data from The NPD Group/CREST, breakfast sales at fast-food joints has resisted the erosion seen in lunch and dinner sales due to the recession. For fiscal year 2009, mornings accounted for 22% of fast-food customer traffic, and sales were down 1% from a year earlier. Lunch gets 34% of the day’s customers, but slumped 2% compared with 2008 numbers. Same for the dinner hours, where 25% of customers made their purchases, but total revenue was down the most -- -5% in 2009 compared with 2008.

The remaining 19% of customer traffic (classified as “snack hours”) was flat compared with the previous year, according to NPD/CREST.


This profitable breakfast market is drawing some creative offerings from restaurants. Subway most recently joined the fun, introducing its first breakfast menu. Jack in the Box (JACK) upgraded its morning menu a few weeks back with the introduction of its grilled breakfast sandwich.  CKE Restaurants (CKR) just recently added a double "loaded biscuit ‘n’ gravy"with egg and sausage to the morning menu at its Hardee’s restaurants.


The breakfast marketplace is very crowded right now as restaurants look to cash in on early risers and early spenders. But perhaps the BK brunch menu could help Burger King stock rise and shine in the months ahead.


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