Why Can't McDonalds Serve Breakfast All Day?

Your local diner does it, why can't Mickey Ds?

The trade-off between marketing demand and operational efficiency is one that many businesses face daily. An important demographic segment wants something but the cost and effort of providing it don't quite add up, even when the loss of customers is factored in.

And we can think of that in terms of new mobile phone features or shoes or, probably, certain types of ten thousand ton locomotives. But we rarely think about it in terms of breakfast.

Fortunately, for those who really care - and it turns out there are a lot of you - McDonalds has given this some deep thought. We wish the answers were profound or philosophical or even health-related. But, to get ahead of ourselves, they're not. They are operational and financial, which is where most businesses live.

Turns out McDonald's dominates - as in, owns - the fast food breakfast category. But the problem is that providing all those yummy egg, cheese and meat products on a bun is not as profitable as your garden variety (or should we say feed-lot variety?) hamburger and fries. And, as if that weren't disincentive enough, it actually takes some skill and attention to turn those breakfast items out. So the problem is that lots of people want breakfast at 11:22 am or at 3:15pm or, most likely, between 10pm and 4am after they've had a few adult beverages and are seeking the return of intestinal equilibrium. Unfortunately that would reduce profits both by encouraging the purchase of items with lower margins and because the additional costs of providing the service cut further into the company's retained value.

So learn to appreciate what you've got as you eat in your car or as you walk or sit on the bus every morning, as well as the thought, care and analysis that went into making this opportunity available to you. JL

Susan Barfield and Leslie Patton report in Bloomberg:

Breakfast accounts for only one-quarter of McDonald’s U.S. sales, but it dominates the market. A 2012 study by Scarborough found that among the adults who said they’d eaten a fast-food breakfast in the prior month, 48 percent had visited a McD’s
In the 1993 film Falling Down, Michael Douglas enters a fast-food restaurant and orders breakfast. The worker behind the counter informs Douglas he’s a few minutes too late, and suddenly Douglas becomes totally unhinged. Twenty years later breakfast still ends too early for many people—10:30 on weekdays and 11 on weekends—at most McDonald’s (MCD) restaurants. So when Don Thompson, the company’s president and chief executive officer, said on CNBC in late April that he was considering serving breakfast all day, a lot of Americans thought it was about time.
Not so fast. Back in 2006, then-CEO Jim Skinner announced that the chain was considering operational improvements that would make it possible to offer breakfast 24 hours a day. “It’s a concept for now—no specifics yet,” Heidi Barker Sa Shekhem, vice president for global communications, writes in an e-mail in response to a request for an update. (A few breakfast items are offered all day in select countries.)
But all-day breakfast? “It’s been tried and failed repeatedly. It just makes the operation too complicated,” says Richard Adams, a restaurant-franchisee consultant in San Diego and former McDonald’s restaurant owner. He says the chain has conducted test runs in a few stores over the years. (There are about 14,100 McDonald’s stores in the U.S.)
One of the biggest obstacles to a McDonald’s breakfast 24/7 is logistical. There may not be enough “grill capacity” to cook both eggs and burgers, says Don Boodel, who owns two McDonald’s restaurants in the Denver area. And burgers, like other meat, need to be cooked at a higher temperature than eggs. At breakfast, the crew cooks the bacon and sausage ahead of time. That solution might not be possible during a busy lunch shift. Then there’s the scrambled egg. “It’s something you’ve got to dedicate yourself to, stirring the eggs,” Adams says. “You’ve got to keep them moving; you can’t just let them sit there.” During peak times, McDonald’s already struggles to quickly serve drive-in customers, says Darren Tristano, executive vice president at research firm Technomic. About 65 percent of McDonald’s U.S. business comes from customers in their cars.
Another problem with all-day breakfast is that the morning fare costs less than lunch or dinner meals, so some customers might trade down. Still, “there’s nothing better on the menu than breakfast,” says Barry Klein, a former franchisee who is now a marketing consultant in Chicago. “The value is sensational. And there’s a slightly healthier halo to what they serve then.” (The Sausage, Egg & Cheese McGriddle excepted: It has 550 calories and 31 grams of fat.)
Klein and other interested observers suggest that restaurants could offer only the breakfast sandwiches all day; they’re easier to make and sell better than pancakes and scrambled eggs anyway. Or they could experiment with serving breakfast until noon, suggests Tristano of Technomic. Until then, he says, there’s always the (once) secret Mc10:35. Customers arriving minutes late for breakfast can often prevail on McDonald’s crew to put leftover eggs from the Egg McMuffins on their burgers.