Fast-food industry waking up to breakfast’s potential

Forty-three years ago, Santa Barbara McDonald’s franchisee Herbert Peterson shaped an egg, using Teflon rings, to fit perfectly on top of an English muffin, creating the first fast-food breakfast sandwich and transforming America’s eating habits.

The Egg McMuffin still reigns as the breakfast champion, but every fast-food chain has tried to topple the ham-and-egg sandwich. Even restaurants that most would not associate with breakfast food are entering the fray. Taco Bell, long known for lunch and dinner offerings, is running a major ad campaign for its waffle tacos.

That’s because breakfast, once a small portion of revenue, generated $34.5 billion in sales last year and now accounts for 21 percent of the 45 billion customer visits to fast-food restaurants. It is the only meal that is growing in an otherwise flat fast-food industry.

“More than anything, fast-food breakfast satisfies the need for convenience,” said Bonnie Riggs, restaurant analyst for NPD. “It’s been growing year after year, so there is demand.”

One of the most important aspects: A breakfast meal should be able to be held in one hand, particularly important for eating while driving, said Kevin Burke, founder and managing partner of Trinity Capital, which counts Yum Brands, owner of Taco Bell, among its clients.

That can lead to breakfast foods like the waffle taco and biscuit taco that have shown up on Taco Bell’s breakfast menu, Burke said. These new creations are an attempt to lure hungry millennials, who have significantly cut back on eating out since the recession.

The number of restaurant visits by the average millennial has dropped by 50 in the six years since the recession, Riggs said. Millennials, ages 18 to 34, make up almost 25 percent of the population.

“You lose that much volume from that group, the industry is not going to grow,” she said. “They are looking for healthier options, and there’s a lot that we can do to attract them, but first, they have to feel comfortable in terms of employment.”