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Instant Analysis: McDonald's Is Expanding Its All-Day Breakfast Menu

By Jeremy Bowman – Mar 11, 2016 at 5:25PM

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Fans of McGriddles, rejoice!

Image source: McDonald's.

What happened? 
Following the success of its all-day breakfast launch in October, McDonald's (MCD -0.75%) is testing out the possibility of making its complete breakfast menu available at all hours. Currently, the all-day breakfast menu varies from location to location, but generally includes a staple menu of either McMuffins or biscuits sandwiches, hotcakes, oatmeal, and a couple of other items. Absent from the current all-day menu are popular items like McGriddles and even hash browns, which were not available at most locations. 

McDonald's is testing the full menu at locations in Tulsa and in North Carolina's Triangle region under the title, "All Day Breakfast: Bigger Menu." If it's successful, the full menu is expected to be added nationwide.

Does it matter?
The launch of all-day breakfast helped drive McDonald's U.S. comps up 5.7% in the fourth quarter after several quarters of declining sales at U.S. stores. It's the most successful initiative McDonald's has launched in years. Expanding the menu should only help drive sales higher as McGriddles and hash browns are two of the more popular items on the menu. 

Franchisees had initially resisted the all-day breakfast menu, complaining that it would make operations too difficult, but the strong sales seem to have quelled those concerns. Again, operators could be reluctant to expand the menu, but if the trial bears favorable results, McDonald's should take it national.

All-day breakfast has been such a boon for McDonald's that it's taken away sales from competitors like Dunkin' Donuts and Jack in the Box, both of which reported weak fourth-quarter sales. Jack in the Box's CEO even acknowledged a loss in traffic between 10:30 a.m. and noon, just the time when Mickey D's all-day breakfast would be expected to attract customers.

Breakfast has long been a strength of McDonald's. Expanding all-day was the right move, and adding the full menu should also deliver a bump in sales if the fast-food giant chooses to do so.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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