Breakfast has come to save the day at McDonald's (NYSE:MCD). The struggling fast-food giant will be offering up McMuffin sandwiches, hotcakes, hash browns, and more of its morning staples all day long starting Oct. 6.
It's a move that McDonald's claims has been its most common request. It also couldn't have come at a better time. McDonald's has now posted seven consecutive quarters of negative comps at its stateside restaurants.
Serving breakfast all day could be what finally turns things around for McDonald's. Let's go over a few of the reasons such a simple move could be a game-changer for the world's largest burger-flipper.
1. Consistency and predictability rule the move
It was easy to sell franchisees on the move, and that's something that's never a given, after suffering through several quarters of slowing traffic. Franchisees are on board because the move doesn't involve introducing new ingredients to a menu that needs simplifying, a move that will finally free the chain to scale back on some of the more unpopular lunch and dinner choices. There is no new prep process to learn.
As long as the move doesn't slow down average wait times -- something that had become a problem as Mickey D's expanded its menu -- it should be an easy transition in terms of operations.
2. One word: McCafe
The push to milk more money out of customers led to the national McCafe rollout of premium coffee beverages in 2008. That was expanded a couple of years later with the addition of fruit smoothies.
McDonald's sells plenty of McCafe beverages during the lunch and dinner dayparts, but the beverage of choice continues to be carbonated soft drinks with burgers and chicken sandwiches. It's the other way around in the morning. Introducing breakfast entrees as a dining choice later in the day should drum up higher-priced McCafe beverages, increasing average check sizes.
3. It's an incremental move
No one hungry for a Big Mac is going to avoid McDonald's at night because it's also serving up sausage burritos. However, someone hungry for sausage burritos in the afternoon now has a reason to hit up the Golden Arches. That's the beauty of the move. It's a slam-dunk way to increase traffic.
The move might also increase the amount that customers spend. Breakfast items tend to be cheaper the chain's signature burger meals, but it's a different story if someone with a voracious appetite decides to add a side of hotcakes to a Quarter Pounder meal. Suddenly someone going in for just a McDouble walks away with a McDouble and an Egg McMuffin.
If a Filet-O-Fish with fries doesn't hit the spot, how about going with hash browns instead? There are already a couple of the "better burger" chains that can wedge a hash brown inside a burger, and now McDonald's -- or at the very least McDonald's customers -- can play that game, too. It's just a matter of time before McDonald's offers a breakfast burger with eggs and hash browns.
Lunch and dinner customers will not only grow in number, but the average check should also increase. Offering breakfast all day could be just the ticket to wake up this slumping juggernaut.