A Breakfast Bet That Went Bad For Product Managers

Product Managers bet big on breakfast and Covid-19 has changed everything
Product Managers bet big on breakfast and Covid-19 has changed everything
Image Credit: sstrieu

I don’t know about you, but I sure do like betting on a sure thing. You know what I mean, it’s when you place a bet that you know is going to end up being a winner. The product managers at fast food restaurants thought that they had a sure thing to bet on: breakfast. I mean, we all have breakfast every morning and so getting people to drop by a fast food restaurant on their way into work and grab a quick breakfast sure seemed like a no-brainer, right? Well, it turned out that this was a good bet – until the Covid-19 pandemic hit and turned everything upside down.

What Happened To Breakfast?

Once upon a time fast food product managers had a dream. They wanted to boost sales and they thought that they had come up with the perfect solution: expand their product development definition to include breakfast. However, now their best hope for increasing sales, mornings, are now the slowest time of day at their fast-food restaurants. The reason for this change is because many Americans have started to work and attend school from home. Even as overall fast-food sales have recovered in recent weeks from the early months of the coronavirus pandemic, unfortunately breakfast sales have trailed behind.

Fast food product managers at restaurants that depend on breakfast sales, such as Dunkin’ Brands and Dine Brands are in the process of closing hundreds of restaurants. McDonald’s Corp. and Burger King have said that their sales of breakfast items remains weak. Product manager’s at McDonald’s, the home of the Egg McMuffin, have that said breakfast has been a drag on sales during the pandemic. The trouble with breakfast is one of the most significant problems for a fast-food industry that is designed to cater to consumers on the go. With Covid-19 cases once again climbing across much of the U.S., many consumers are likely to keep eating breakfast at home—and they are finding plenty of options for doing this.

Sales of breakfast alternatives – packaged breakfast items including cereal and ground coffee – have risen in recent months after years of slow sales. Some food manufacturer’s product managers have said they are trying to capitalize on the trend. The manufactures of home based breakfast foods now believe that they are in a position to own breakfast. For years, fast-food chain product managers poured money and resources into breakfast. IHOP product managers had planned on introducing a fast-casual brand called Flip’d to serve pancakes to people on the go. And product managers at other chains were focused on menu items that could conveniently fit in cup holders.

How To Bring Breakfast Back

Customers used to stop for breakfast at McDonald’s or Burger King multiple times a week on their morning commute. With the arrival of the pandemic they are now eating toast or yogurt at home. What has happened is that their whole diet has changed. The established fast food product managers are saying that breakfast has been the biggest drag on sales during the pandemic. New offerings from other competitors betting on breakfast are adding to the pressure.

Prior to the arrival of the pandemic, some of those bets on breakfast that the product managers had placed seemed to be working. An example of this is was at Wendy’s who introduced a breakfast menu nationally, emphasizing sandwiches with real eggs, including their Breakfast Baconator. McDonald’s and Burger King at the time were investing in new menu items and marketing focused on breakfast, including Burger King’s new Croissan’wich. All of this would have looked good on a product manager resume. Shortly after these new products were introduced came widespread lockdown orders, and millions of Americans stopped commuting as they shifted to working from home. By mid-April, breakfast purchases were down 54% from a year earlier, worse than the 42% drop for restaurant transactions overall. The good news for product managers is that breakfast transactions have since recovered some, running 10% below last year’s levels. Breakfast trails improvement in fast-food transactions overall.

Product managers understand that some of the commuters that they planned to serve may never come back. New product plans are called for. Some product managers are hoping to sell to families picking up breakfast at the drive-through. Dunkin’ and IHOP said that even as they close some stores, they hope to open others in places where breakfast sales can take off. Other chains are looking beyond breakfast. Some product managers have added back breakfast items – such as the Cheesy Toasted Breakfast Burrito and Cinnabon Delights – at only about half of the 7,000 Taco Bell restaurants in the U.S. The IHOP product managers have introduced an “IHOPPY hour”, the first time it has used discounts to draw customers in the afternoon. The menu includes traditional breakfast items such as eggs and pancakes as well as the usual burgers and fried chicken. Product managers are confident that they can continue to grow the breakfast business into the future as more and more people fall back into their daily routines.

What All Of This Means For You

Every product manager is always looking for ways that they can use their product manager job description to bring more money into the company. The fast food product managers were excited when they discovered that breakfast could provide them with a major new way to attract customers and grow revenues. As they rolled out new breakfast offerings, customers started to show up. However, then the Covid-19 pandemic hit and all of sudden their breakfast customers stopped going into work and started working from home.

Mornings have become the slowest time of the day for fast food product managers. Problems with breakfast are acting as a drag on the rest of the fast food business. Alternative breakfast products to eating at fast food restaurants have seen significant increases in sales. Product managers are dealing with decreases in breakfast sales because of the pandemic and because of new breakfast offerings from competitors. Prior to the pandemic breakfast sales had been very good. They have now started to recover, but they are still below where they were a year ago. Product managers are adding back breakfast items throughout the day as they hope their customers once again start to execute their daily routines.

The good news for fast food product managers is that they know that breakfast can be a good source of revenue for them – it was before the pandemic. However, during the times that we are now living in, they need to rethink their breakfast strategy. Breakfast foods may still sell; however, they may not sell in the morning because nobody is there any more. If fast food product managers take the time to carefully consider what their breakfast options are, they may be able to come up with a way to save breakfast!

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Should fast food product managers start to offer breakfast food throughout the day?

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What We’ll Be Talking About Next Time

When we think about burgers, one of the things that comes into just about everyone’s mind is the golden arches of McDonalds. We think about McDonalds as the place that we can always go to get a burger. However, times are changing and people are starting to become more health conscious. They are also starting to think about global warming and the impact of raising all of those beef cattle can have on the environment. Taken together, these are all reasons that the product managers at McDonalds have decided that now is the time to make a change to their product development definition. Not just a little change, but a big change. They are getting ready to roll out their new “McPlant” meatless burger.