For decades McDonald's (MCD) dominated the fast-food breakfast game. It wasn't the only player but it was the market leader, partly because of the familiarity of its menu. The Egg McMuffin and the Big Breakfast might not be top-quality, high-end fare, but they were comfort food.
Wendy's (WEN) reentered the breakfast market with unfortunate timing -- pretty much right as the pandemic began. Right when people stopped following a normal work schedule, the fast-food chain introduced its breakfast menu.
Despite that hiccup, the chain has won morning share by doing what McDonald's does but making things a little fresher and, maybe, a little better. Chief Executive Todd Penegor, speaking on his company's fourth-quarter earnings call, credited the chain's double-digit sales growth at least partly to its breakfast menu.
"This was driven in part by growth in our breakfast business, which reached 8.5% of U.S. sales at the peak of our very successful Buck Biscuit promotion," he said.
Wendy's launched breakfast with McDonald's squarely in its targets. The chain called out its rival and basically trolled McDonald's with the ads supporting its breakfast launch.
Now, a new player -- one you may not be thinking about -- wants a piece of the breakfast market and it may have the recipe to do it.
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Can Burger King's Sister Brand Become a Bigger Breakfast Player?
Breakfast has been a notoriously hard meal with which to win over an audience. McDonald's has fended off a lot of challengers while Starbucks (SBUX) has brought a new audience to mornings. Yum Brands' (YUM) Taco Bell has carved out a small morning niche while Wendy's has been growing and Dunkin' remains a player.
Now, while Burger King has a breakfast menu that could probably use a refresh, its sister brand at Restaurant Brands International (QSR), Tim Hortons, wants to become a bigger breakfast player in the U.S.
"During the quarter, we continued our journey of core quality enhancements in both breakfast and coffee," RBI CEO José Eduardo Cil said during the chain's fourth-quarter earnings call.
Basically, Tim Hortons has been following a similar script to what Wendy's has done.
"In breakfast, we built on our fresh cracked eggs platform with the introduction of the Steak and Egg Breakfast Sandwich, which helped drive overall morning daypart sales ahead of 2019 levels for the first time since the start of the pandemic," he said.
Tim Hortons, which has made its mark as a coffee and doughnut chain, has also taken a step that Wendy's has not -- it has stepped up its coffee game.
"We also made progress enhancing our hot beverage offerings, extending our prior work on brewed coffee into a successful platform relaunch of handcrafted espresso beverages, including lattes in November," Cil added.
"We saw the benefits of our richer and bolder recipes, dairy alternatives, and equipment tune-ups with these great tasting espresso-based beverages contributing to positive sales growth and helping drive a sequential improvement in hot beverage sales."
Can Tim Hortons, Wendys, or Any Chain Knock McDonald's Off the Breakfast Throne?
McDonald's has arguably backtracked a little when it comes to breakfast as it dropped the very popular "All-Day Breakfast" because of the pandemic. The morning meal was barely mentioned during its recent earnings call, but that does not mean the chain will be easy to take down.
Customers like the familiar and McDonald's offers that. Wendy's and Tim Hortons may have fresh-cracked eggs, but the Golden Arches sells comfort (along with much-improved coffee).
There may, however, be enough breakfast customers to go around.
The global breakfast restaurant market is expected to reach $49.82 billion by 2028, a compounded annual growth rate of 6.8% over the forecast period, according to a new report by Million Insights quoted by Digital Journal.
"Growing health concerns upholds breakfast as an important meal of the day. This is leading to the huge adoption of breakfast by consumers in various countries like the U.S. and the U.K. In these regions, around 40% of restaurants offer breakfast menus, which led to the potential growth opportunity for the market," according to Digital Journal's report.
That's a global forecast, but these are global companies. Tim Hortons may not be a big name in the U.S. (at least most of it), but it could grow its morning market share while it also grows its U.S. store count.
"In the U.S. we achieved our best year of restaurant growth since 2016 and signed development agreements to expand to new markets, including Houston, which will open its first store this summer," Cil said.
"Our new U.S. openings leverage a smaller footprint, faster build time, and an optimized menu offering focused on beverages, baked goods, and hot breakfast sandwiches, all leading to more compelling unit economics."
