By Ilan Brat
McDonald's Corp. soon will begin testing sales of McMuffins,
Hash Browns and Hotcakes throughout the day, a sign of new Chief
Executive Steve Easterbrook's willingness to experiment with a
range of measures to reinvigorate flagging sales.
The tests, which start in April at some McDonald's outlets in
the San Diego area, will push sales of certain breakfast items past
the start of lunch service, which is generally around 11 a.m. The
move doesn't guarantee that the company would expand the project
nationwide, a spokeswoman for the Oak Brook, Ill.-based burger
company said on Monday.
"We look forward to learning from this test, and it's premature
to speculate on any outcomes," said spokeswoman Terri Hickey.
The breakfast project highlights McDonald's increasing efforts
to rejuvenate its brand in the U.S. and bolster sales growth that
wilted in the last two years. In February, sales at McDonald's U.S.
restaurants open at least 13 months fell 4% from a year earlier.
Mr. Easterbrook, who took over as CEO at the start of March, has
emphasized the need for rapid change and said he wants transform
McDonald's into a modern, progressive burger company.
Earlier this month, McDonald's pledged to curtail antibiotics
use in its U.S. chicken over the next two years in response to
concerns that overuse in animals of antibiotics used to treat
humans is diminishing their effectiveness. The company also aired a
commercial in January focusing on the important place of McDonald's
outlets within their communities.
Customers have long requested the ability to order McDonald's
breakfasts later in the day, but the company held it was a
challenge to handle orders for breakfast and lunch at the same
time. "Our grills just aren't big enough for breakfast and lunch,"
an official McDonald's Twitter account said in February.
Larry Miller, a longtime restaurant industry analyst and founder
of Atlanta-based MillerPulse LLC, said the all-day breakfast pilot
shows Mr. Easterbrook is open to new ideas to turn around the
company. Extending breakfast throughout the day could help bring
new customers to the stores, he said.
"I think he has a view that he can accomplish most anything" he
tries to do, the analyst said.
Still, McDonald's will have to evaluate whether expanded
breakfast hours outweigh the difficulties for it and its
franchisees in producing breakfast items alongside its burger menu.
Mr. Easterbrook already is grappling with how to simplify a menu
that has multiplied in recent years and spurred some franchisees
and customers to complain about added complexity and longer service
times.
McDonald's dominates the fast-food breakfast business, but in
recent years competitors have muscled in, seeking profitable
growth. Restaurant Brands International Inc.'s Burger King has
beefed up its breakfast focus, and Yum Brands Inc.'s Taco Bell
launched breakfast last year. One of Taco Bell's recent ads shows
two young people escaping a prisonlike structure with yellow slides
where only humdrum breakfast are offered, a veiled reference to
McDonald's children's play areas.
McDonald's executives pointed to breakfast as a key growth area
at an annual investors meeting in December. Mike Andres, president
of McDonald's U.S., said heavier competition from the likes of Taco
Bell wouldn't impede its growth.
"The competition today--there's very few of those folks that
crack an egg, that have a kitchen, that actually make breakfast.
What they do is they reheat breakfast or they reheat a bakery
product," he said. "We're going to start to tell the story about
what you're getting at McDonald's, and it's a great story. And it
goes to real and fresh."
Write to Ilan Brat at ilan.brat@wsj.com
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