Sylvain Charlebois is dean of the faculty of management and professor in food distribution and policy at Dalhousie University.
To mirror our friends in the United States, McDonald's Restaurants of Canada Ltd. is now slowly rolling out its all-day breakfast by testing it at several locations across the country. The blurring of divisions of time between meals is becoming more obvious as millennials are starting to get a hold in the marketplace. The standard three-meals-a-day approach is slowly becoming more of an ideal than a reality. This is likely what the McDonald's decision means to the rest of us.
This phenomenon was highly predictable. Over the past 10 years, most institutions, such as universities and colleges, have gotten away from setting specific hours for meals to accommodate schedules and fast-paced lifestyles. While boomers want to indulge, millennials want choice. Most boomers still prefer to eat breakfast at home; millennials, on the other hand, eat on the go. According to new research findings from Mintel, 65 per cent of boomers eat breakfast at home most days, while 60 per cent of millennials eat breakfast somewhere else. And if breakfast is prepared at home, more than 80 per cent of meals will take fewer than five minutes of preparation. Most of it is ready-to-eat bars or juices. The ever-complicated modern morning rush is disrupting market rules and forcing the food-service industry to reorganize its approach to serving breakfast.
It is hard to blame McDonald's for trying to capitalize on this monumental demographic shift. When McDonald's in the United States committed to the all-day breakfast strategy, the company's share price was at about $96 (U.S.). Now, it is up by almost 25 per cent at about $122 and same-store sales are up 6 per cent from last year. It was a highly successful change. The company added new menu items with healthier ingredients such as the "super-food" kale, something millennials look for. Top-line growth and sound financial results all across the United States have kept franchise owners happy.
In Canada, McDonald's has deployed an aggressive strategy to cater to millennials. Hormone-free chicken in a few years, cage-free eggs by 2025 – its procurement is going through a complete transformation. As a breakfast space, McDonald's Canada has made a name for itself and is giving Starbucks, Tim Hortons and other coffee shops a run for their money. Any Canadian business that generates a significant amount of its revenue between 6 a.m. and 9 a.m. should be anxious. With all-day breakfast, habits can easily change. Offering free coffee for a month helped McDonald's establish itself as a breakfast contender. Since 60 per cent of all breakfasts eaten outside the home include a coffee, McDonald's Canada knew the free-coffee offer was the hook it needed to move the profitable McMuffin. It also likely knew that all the top breakfast restaurant chains in Canada –Tim Hortons, McDonald's and Starbucks – have achieved higher sales when their coffee gained market currency, one way or another. With tea and now cold brew, things are going to get interesting again.
Some may suggest that this decision by McDonald's Canada is opportunistic and strategic. But, given global demographic trends, the company may literally be late to the table – no pun. All-day breakfasts are already a well-established offering in the fast casual, full-service and brunch domains. But you need time to eat a meal at one of these establishments. A brunch with friends on the weekends is enjoyable, but impossible to manage through the week with daily commutes and other obligations. In fact, we have seen some consolidation in this sector of late, which may indicate that growing business in this field is facing headwinds.