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3 Reasons Why McDonald's Breakfast All Day is a Terrible Idea

Starting today, you can now get your favorite McDonald's ( MCD ) breakfast items all day, as the company abolishes its dreaded 10:30am cut-off. That means McMuffins for lunch, and pancakes for dinner if you are so inclined.

Many are praising the decision as a great move for the struggling fast food giant as pretty much everyone can agree that McDonald's breakfast is tasty, and in general who doesn't like breakfast foods anyway? Plus, breakfast accounts for roughly a quarter of MCD's sales already and it has been a bright spot for a company that is seeing sagging revenues and intense competition.

But while many might think this is a great idea, I am not a fan of this expansion. I think this further distracts the company from its main business-the one that generates 75% of sales-of burgers, fries, and the like, and that while it might cause a temporary boost, eventually the glow from an afternoon egg sandwich will fade. If anything, I think this is going to cause more problems than it solves and McDonald's will probably regret it for the following three reasons:

Lower price point

Breakfast is cheap

, we see prices of $4.19 (bacon, egg, & cheese biscuit) and
$3.39 (Big Breakfast) McDonald's breakfast value meals while a
double quarter pounder with cheese value meal is $5.39 on average
and a Big Mac meal is $5.69. While the breakfast may be more
profitable, getting more consumers to these lower price points are
likely to do nothing for McDonald's main problem which is
flat-lining sales.

While having breakfast at all hours might draw in some new people, many of the late breakfast eaters will probably be those who were going to eat at McDonald's anyway. And if it is, McDonald's could see a hit to the top line as many breakfast value meals are far cheaper than what we see for lunch or dinner.

According to Secretmenus.com , we see prices of $4.19 (bacon, egg, & cheese biscuit) and $3.39 (Big Breakfast) McDonald's breakfast value meals while a double quarter pounder with cheese value meal is $5.39 on average and a Big Mac meal is $5.69. While the breakfast may be more profitable, getting more consumers to these lower price points are likely to do nothing for McDonald's main problem which is flat-lining sales.

It also seems very much opposed to McDonald's latest initiatives in the chicken market as the company looks to expand its premium offerings there. The latest is the Premium Buttermilk Crispy Chicken which costs $4.59 for the sandwich alone , so why wouldn't you push more people towards that instead of the cheaper biscuits and hot cakes?

Longer wait times/Too Many Choices

Wait times are already pretty long at MCD drive throughs.

McDonald's franchisees have long complained about the bloated menu and that there are just way too many items right now. At the start of the year, MCD had over 100 menu items which is huge growth from its nine item menu back in 1948. And while the new team at McDonald's has managed to trim some of the fat in preparation for the launch of all-day breakfast, the fact remains that McDonald's is experiencing some of its slowest drive through and wait times ever.

And contrast that to some of the upstarts in the fast food world. Chipotle ( CMG ) basically has a handful of menu choices and same with Chick-fil-A. Even relative newcomer Shake Shack ( SHAK ) has a slimmed down menu (and remains true to its burger and shake heritage) while McDonald's is seemingly adding more choices all the time.

Given this, does it really make sense to offer even more items throughout the day? Franchisees have already had to pony up for more equipment and there seems to be little guarantee that this will not move the needle even more in the wrong direction when it comes to already historic wait times.

You want what you can't have

good luck getting this in certain parts of the country after 10:30am

What you may not have seen in the McDonald's commercials is that it won't be a complete breakfast offering. There will be no hash browns at some restaurants (though the vast majority will have hash browns), and either biscuits or Egg McMuffins depending on your location (but not both). In other words, many are going to be disappointed already by the McDonald's breakfast all-day program.

And I think part of the appeal of the McDonald's breakfast is that you have to go early in the day and that it is for just a limited time. Once you can get breakfast sandwiches all hours of the day I think the McDonald's breakfast will lose its luster. Why bother waking up for breakfast anymore when you can get some of your favorites at 3pm?

Bottom Line

Sure, breakfast at McDonald's all day might seem like a good idea and we might see an uptick in sales as a result. It could even get some more people in the door and particularly on the weekends in that late-brunch period.

However, I question whether this will be worth the extra wait times and if losing the exclusivity of the breakfast hours will hurt the McDonald's breakfast brand in the long run. Plus, without some key items, many consumers are likely to be disappointed or unlikely to partake in the expanded program anyway.

So let's see if this all-day breakfast is more than just a passing fad or a step in the right direction for the company. Perhaps some people will change their habits because of this, but I can't see it being the silver bullet that McDonald's needs right now.

But let's face it, we have all just barely missed the McDonald's breakfast and been disappointed by this at least once in our lives. But once you missed the cut-off have you ever jumped back into your car and didn't bother to get McDonald's altogether when that happened? I know I haven't, and I have a hard time believing anything will change now, except that I will probably be disappointed that only some breakfast items are available leading me once again to order that lunch value meal same as always, though I'll probably have to wait a bit longer now.

Do you think McDonald's breakfast all day is a good idea?

Yes, bring on the McMuffins!

No, eventually the novelty will wear off

Quizzes

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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