McDonald's testing breakfast dollar menu
DES MOINES, Iowa --Cheap breakfasts are becoming fast-food's latest battle zone.
McDonald's Corp., which has turned its morning meals into a grab-and-go bonanza, increasingly finds itself under fire from would-be competitors. To protect that lucrative turf, the home of the Egg McMuffin is testing a breakfast version of its successful "Dollar" lunch and dinner menu in selected U.S. cities.
The move comes as archrival Burger King Corp. races to do something similar, and Wendy's International Inc. gives every indication it will join the breakfast fray in coming months.
A McDonald's spokesman, Bill Whitman, insists that the Dollar Breakfast Menu isn't aimed at repelling rivals but simply is "all about providing our customers with even greater value at breakfast, just like we do through the remainder of the day."
Still, it may be more than coincidental that several of McDonald's test sites are the same markets where Wendy's is fine-tuning its likely entry into the breakfast business, among them Kansas City, Raleigh-Durham, N.C., Columbus, Ohio, and Austin, Tex.
In some of those markets, Oak Brook, Ill.-based McDonald's is calling attention to its cheaper morning meals with commercials.
The chain's Dollar Breakfast Menu test includes such items as a sausage muffin with cheese but no egg, a chicken biscuit sandwich, a sausage biscuit item, a burrito and two hash browns.
Whitman said a slightly higher "dollar and more" breakfast menu also is being tested. Its fare may include a sausage McGriddle sandwich, an egg-and-cheese biscuit and a snack-sized fruit-and-walnut salad.
Burger King's planned a breakfast "value menu" is believed to feature about 10 items for $1 each. Its rollout is expected sometime next spring.
Last month Burger King Chief Executive John Chidsey said the nation's No. 2 hamburger chain sees significant growth potential in promoting a value meal at breakfast, alluding to an "opportunity to be the first national footprint around that initiative."
But with breakfast believed McDonald's fastest-growing -- and most profitable -- meal time, the world's fast-food leader is loath to give any ground.
A.G. Edwards & Sons restaurant analyst Jack Russo recently estimated McDonald's breakfast sales at about $7 billion, with a 23 percent share of the U.S. market. He put Burger King's sales at about $1.4 billion, giving it a 4 percent share. Dunkin' Donuts, a unit of closely held Dunkin' Brands Inc., was estimated to ring up $3 billion in breakfast sales annually, for a 9.8 percent share.
Russo, who recently visited Wendy's in Kansas City to test its breakfast offerings -- and who said he found them "high quality, delicious and of good value" -- told clients that the addition of $1 billion in systemwide breakfast sales could add 30 cents to 40 cents to Wendy's per-share earnings over a 12- to 18-month period.
In outlining its breakfast intentions, Wendy's has said it won't be a "me, too" menu. Indeed, distinctive items in its widening test include buttermilk and Southwest panbread sandwiches, omelet bites and a cinnamon twist pastry.
McDonald's, which introduced the Dollar Menu at lunch and dinner about six years ago to stimulate then-sagging sales, has since used it as one bookend to a strategy that, with premium sandwiches and salads at the other, offers an array of food that almost everyone can afford.
Shares of McDonald's rose 51 cents, or 1.2 percent, to close Tuesday at $43.99 on the New York Stock Exchange. They set a new seven-year high earlier in the day, hitting $44.
