Some fast food restaurants are doing better than others at drawing profit from morning fare in recent months.
Eateries focusing on speedy service, like Dunkin' Donuts and Tim Hortons, are reaping the benefit of today's booming breakfast demand. Others, like McDonald's Corp. (MCD) and its new all-day breakfast menu, are still struggling to find a reliable sales driver.
On Feb. 8, Dunkin’ Brands Group Inc. (DNKN), parent company of Dunkin’ Donuts and Baskin Robbins, reported fourth quarter U.S. comparable store sales. Dunkin' Donuts drew sales growth of 1.9 percent from the year prior, and Basking Robbins sales increased 0.9 percent. Total revenue increased 5.8 percent in that last quarter, when the company added 296 net new restaurants worldwide.
Like many casual and fast food restaurants, Dunkin’ Brands is working on driving more traffic to its Dunkin’ Donut stores with technology that will allow for remote ordering and mobile payments. It’s also strategizing to sell more of its product outside the stores.
Dunkin’ Brands has “made considerable progress with our efforts to increase consumption of Dunkin’ Donuts coffee” with more packaged goods and a partnership with The Coca-Cola Co. (KO), Dunkin Brands CEO Nigel Travis said in a statement. The deal has the beverage giant bottling, manufacturing and distributing Dunkin’ Donuts brand ice coffee beverages.
Dunkin' Brands' stock is up 8.5 percent since it released fourth quarter financials. Shares have been forging fresh all-time highs in recent sessions. (See also: Dunkin’ Brands Still Plugging All the Right Holes.)
Another morning eatery chain, Tim Hortons, is also boosting its parent company’s bottom line. Canada-based Restaurant Brands International Inc. (QSR), which also owns Burger King, reported 4.9 percent growth in comparable sales in 2016, including 3.6 percent growth in the fourth quarter. The company, with stock up more than 15 percent since the start of the year, attributed the sales growth to “continued strength in coffee, cold beverages and breakfast.”
“[Tim Hortons] is one of the most exciting brands, and we see it growing,” Restaurant Brands chief executive Daniel Schwartz said in an interview with the Financial Post earlier this week. “Breakfast is the fastest-growing day part.” (See also: Burger King and Tim Hortons Form Restaurant Brands International.)
Hortons and Burger King will not add an all-day breakfast menu like McDonald’s did two years ago. While Dunkin' Donuts and Tim Hortons are drawing revenue gains, McDonald’s and its new all-day breakfast menu are seeing sluggish U.S. sales.
McDonald’s is turning to other avenues of sales growth after the yearlong surge in sales driven by an all-day breakfast menu started to dive. McDonald’s began offering breakfast items like Egg McMuffins all day in 2015, triggering a spike in domestic sales. Now, the restaurant’s U.S. sales are waning, with U.S. same store sales down 1.3 percent in the fourth quarter. It was the first decline since the second quarter 2015.
With an eye toward sales growth similar to Dunkin' Donuts and Tim Hortons, McDonald’s is turning to technology for mobile ordering and touch screen ordering options, according to Bloomberg. McDonald’s shares are up 3.9 percent year to date. (See also: McDonald’s: Best Comparable Sales Since 2011.)