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Hey McDonald's, Where's That All-Day Breakfast?

Hey McDonald's, Where's That All-Day Breakfast?

Standup comedians joke about it.

The 1993 film, Falling Down turned it into part of the reason Michael Douglas went berserk. “It,” of course, is the McDonald’s (NYSE: MCD) “Breakfast Rule.” The McDonald’s “Breakfast Rule” says that no matter how hungry you are for an Egg McMuffin, you can’t have one after 10:30 a.m. local time weekdays or 11 a.m. on weekends.

All that changed in April when McDonald’s President and Chief Executive Officer Don Thompson said on CNBC that the company was considering serving breakfast all day. “Hallelujah,” screamed millions of “Pancakes-at-noon” addicts the world over! “Praise Ronald McDonald,” exclaimed throngs of “Bacon-egg-and-cheese-bagels for dinner” fans! Except it didn’t happen. At least not yet.

So, what’s the holdup? It could be logistics, according to restaurant-franchisee consultant and former McDonald’s restaurant owner, Richard Adams. In a Bloomberg Businessweek report. Adams said “It’s been tried and failed repeatedly. It just makes the operation too complicated.”

Don Boodel, who owns two McDonald’s restaurants in the Denver area, cited a lack of grill capacity as a major obstacle to all-day breakfast. Boodel says burgers and meat in general need to be cooked at a higher temperature than eggs. For the breakfast shift, the crew makes bacon and sausage ahead of time – something that Boodel says might not be possible during the busy lunch shift.

Adams added that scrambled eggs are another problem since they are labor-intensive. He doesn’t see a practical way to dedicate crew to stirring eggs at the same time they are needed for serving in-restaurant and drive-thru customers.

There’s also an issue with profit margins. Breakfast costs less and generates lower profits than lunch or dinner items. On the other hand, McDonald’s owns 48 percent of the fast food breakfast market according to a 2012 study by Scarborough and reported by Bloomberg Businessweek.

Barry Klein, a former McDonald’s franchisee who is now a marketing consultant in Chicago believes the solution might lie in a limited all-day breakfast menu, consisting primarily of the breakfast sandwich line. Eliminating pancakes and scrambled eggs, Klein says, eliminates a large part of the problem. Another suggested option would be to serve breakfast a short while longer – say until noon.

At any rate, Forbes said, the whole notion of all-day breakfast doesn’t just serve a marketing purpose for McDonald’s. Given the popularity of Egg McMuffins and all their morning griddle cousins, the move could help boost the company’s bottom line – especially following lower than expected first quarter earnings and a decline in same-store sales.

McDonald’s shares were up slightly at $100.24, after opening at $99.97 in early trading Monday.

As of this writing, Jim Probasco had no position in McDonald’s.

Latest Ratings for MCD

Jan 2021Goldman SachsInitiates Coverage OnBuy
Jan 2021OppenheimerUpgradesPerformOutperform
Jan 2021Stephens & Co.MaintainsEqual-Weight

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