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Whether to Strike While Breakfast is Hot

Aug 10, 2016
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SMITH BRAIN TRUST — Recent headlines signal breakfast has been sizzling. "Americans are increasingly obsessed with breakfast," Eater reports, while USA Today adds: "Breakfast an increasingly tasty strategy for restaurant industry." Meanwhile, market research firm NPD projects that breakfast and morning snack consumption will grow by 5 percent — faster than the 4 percent U.S. population growth rate — over the next few years.

Time Inc. subsequently launched Extra Crispy, touting it as a “new digital editorial brand dedicated to obsessively documenting breakfast, brunch and the culture surrounding it all.” Unfortunately, experts at the University of Maryland’s Robert H. Smith School of Business warn that profitably pivoting to meet the breakfast demand is not a sure thing for restaurateurs.

Smith School marketing professor Janet Wagner says a “wearout effect” helps explain McDonald’s recently lagging all-day breakfast move. "Like any other innovation, consumers get used to it and start to lose interest," she says. "To give its all-day breakfast menu a boost, McDonald’s will have to offer new breakfast items, which may add to expenses.”

Three questions

Smith School alumnus Harry Geller, an entrepreneur-in-residence at the Smith School's Dingman Center for Entrepreneurship, says restaurateurs need to consider three questions when considering whether to expand or shift to serving breakfast: 1. Will serving breakfast compliment your brand or confuse your brand? 2. Do you have a location where breakfast will be supported, and who else of your local competition is offering it? 3. Do you have the enough staff and the proper equipment for a breakfast operation to succeed?

Geller speaks from experience, as founder of the fine-dining seafood restaurant group SoDel Concepts, plus a few fast-casual establishments. "My experience has been that it's hard to rebrand into a breakfast menu when you have started out as something else, like fast-casual of finer dining," he says.

Geller experimented adding breakfast to one of his seasonal restaurants in Bethany Beach, Del. "Although we didn't fully like our answers to the above three questions, we decided to trial-run a weekend brunch for the summer," he says. "In the end the demand wasn't really there to make the effort pay off."

Go mobile

Geller says food trucks and delivery to business meetings stand out as effective ways to tap into breakfast’s upward trend. "You also see a lot of corporate demand for delivered breakfast items," he says. "This is very popular in central business districts of larger cities."

Regarding food trucks, recent examples include an Oxford, Miss., bakery planning to dispatch a bagel truck targeting Ole Miss students this fall en route to morning classes, and a Dallas, Texas, food truck startup specializing in Belgian waffles

The latter could represent what Geller describes as a trend illustrated by “savvy entrepreneurs using food trucks to establish demand for limited breakfast items and leveraging the venture into storefront operations." He says breakfast burritos and variations of donuts have especially been successful within this trend.

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About the University of Maryland's Robert H. Smith School of Business 

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty masters, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.