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Taco Bell Bucks Breakfast; Is McDonald's Worried?

By Rick Munarriz – Mar 10, 2016 at 9:07AM

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Yum! Brands broadens the value-priced offerings for its Taco Bell breakfast menu.

Image source: Taco Bell.   

There's a new dining option for early-rising penny-pinchers. Taco Bell parent company Yum! Brands (YUM 1.23%) is rolling out a new dollar menu for its bargain-priced breakfast offerings this morning. 

The new $1 Morning Value Menu features four new items including a miniature skillet bowl with either sausage or bacon, a breakfast soft taco, and a sausage flatbread quesadilla. 

It's been just two years since Yum! Brands' popular quick-service chain specializing in affordable Mexican eats launched its breakfast menu nationwide. It set itself apart with unique items including a hash brown-stuffed grilled wrap and the short-lived waffle taco.

Overall comps have been consistently positive since the rollout, so it clearly isn't hurting. However, the push to make a dent in breakfast drive-thru titan McDonald's (MCD 1.13%) hasn't really happened. If anything, overall comps at McDonald's have improved since Taco Bell's arrival on the breakfast scene.

Yum! Brands will have to try harder, and hitting McDonald's where it hurts -- with buck-based bargains -- is a logical shot in this price war. Taco Bell already offered a handful of value-priced morning items, but this pushes the selection to 10 items for a buck. The offerings are now diverse enough where Taco Bell can market the $1 breakfast staples.   

The four additions weren't the first new breakfast offerings of the year. Taco Bell surprised diners last month by introducing a breakfast version of its new Quesalupa. However, this morning's moves will go a long way to wooing morning commuters looking for cheap sustenance. 

No one is going to catch up to McDonald's in the near term, but let's not underestimate what is possible now with the $1 Morning Value Menu at Taco Bell. Yum! Brands will have a louder platform to promote its market position as a place for cheap morning pick-me-ups. The louder Yum! Brands gets about promoting the new $1 breakfast menu, the more noise it gets into the marketplace to blur McDonald's and its long-standing leadership. 

With most locations holding off until 9 a.m. to roll out the regular lunch and dinner menus -- just after the morning rush fades at McDonald's and everywhere else -- there's a lot riding on Taco Bell's breakfast menu. It hasn't gotten things wrong, but the market is still waiting for its first real difference maker. It hasn't come in the form of a single game-changing product, so maybe it will come as the result of several new items that will set hungry diners back by just a buck.

Rick Munarriz 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.

Stocks Mentioned

Yum! Brands Stock Quote
Yum! Brands
$129.85 (1.23%) $1.58
McDonald's Stock Quote
$273.39 (1.13%) $3.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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