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As office workers mostly work from home, coffee and breakfast chains scramble to boost sales

Kristin Schwab Nov 5, 2020
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Fast-food chains were investing more heavily in breakfast foods before the pandemic started. Bruce Bennett/Getty Images
COVID-19

As office workers mostly work from home, coffee and breakfast chains scramble to boost sales

Kristin Schwab Nov 5, 2020
Heard on:
Fast-food chains were investing more heavily in breakfast foods before the pandemic started. Bruce Bennett/Getty Images
HTML EMBED:
COPY

Before the pandemic, fast-food and fast casual chains were investing more in breakfast, developing new items, installing fancy espresso machines and rolling out all-day breakfast. Now, with more of us working from home, those sales are way down. 

So why is breakfast so valuable to these restaurants and how are chains trying to get customers back in?

Breakfast is one of those meals that a lot of busy workers, parents and students do on auto-pilot, said Aaron Allen, a restaurant consultant.

“When you think of morning, you think of coffee,” Allen said. “And for many, Starbucks is a ritual — a daily ritual. But that’s changed since COVID.”

That’s a drag for restaurants, which had been investing more and more in breakfast because coffee and eggs have huge profit margins — and breakfast sells. Usually, a third of the McDonald’s sales come from breakfast alone, said R.J. Hottovy, consumer strategist at Morningstar.

“Restaurants had seen what McDonald’s has done, and so I think this was really an area focus for a lot of companies,” he said.

But in the pandemic, McDonald’s said breakfast has been its biggest loser. Still, chains are likely to take a gamble that breakfast will bounce back, Hottovy said.

“I don’t think restaurant companies are going to give up on the breakfast category, but I think you’re going to start to see more innovations to satisfy changes in consumer behavior,” he said.

That might mean adding more bacon, butter and biscuits to menus, said Lizzy Freier, senior research manager at Technomic, with a focus on menu trends. It’s an emotional time, and consumers have been doing some emotional eating.

“The reason that people were ordering from restaurants was because of cravings,” she said. “That increased from the first quarter and has continued to increase into the third quarter as well.”

Freier said companies will also have to rethink packaging for delivery, because breakfast food can be tricky.

“Especially if you have, you know, an overeasy egg or something. You know that’s not going to be overeasy in 10 minutes,” Freier said.

And that’s a challenge when the biggest competition is the eggs already in a customer’s fridge.

COVID-19 Economy FAQs

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

How long will it be until the economy is back to normal?

It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.

How are those COVID relief payments affecting consumers?

Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.

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