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Breakfast Menus Could Decide the Fates of YUM, MCD Stock

Taco Bell makes a big leap into breakfast menus

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Other Failed Attempts

mcd-stock-yum-stockMy earlier suggestion that McDonald’s just needs to add a grill exclusively for breakfast was said partly in jest. Taco Bell might have great products and public relations, but if customers don’t feel it provides good value, or if it takes forever to serve the meals, then all the good press goes up in smoke.

Execution is critical, as a few other companies know quite well.

Wendy’s (WEN) tried breakfast and failed miserably. Not just once, but several times since Dave Thomas founded the burger chain in 1969. It’s not as easy as it looks. At the same time, coffee chains like Starbucks (SBUX), Tim Hortons (THI) and Dunkin Brands (DNKD) have all managed to wrangle some breakfast business for themselves. Even there the results have been mixed.

Tim Hortons is in the midst of shrinking its menu to make it easier for staff to execute orders. The competition in the breakfast space — and fast food in general — is so intense, restaurants have little wiggle room to dither.

Burger King Worldwide (BKW) ran a promotion in January that gave customers a free cup of Seattle’s Best Coffee with every purchase of a breakfast sandwich. It wants some of McDonald’s estimated 20% market share at breakfast. I don’t know if a free coffee is going to do it, but it shows just how intense the competition really is.

Bottom Line

Taco Bell’s decision is a shot across the bow of MCD stock. YUM stock throwing down the gauntlet. The breakfast menu isn’t just a lighthearted change — it’s a serious attempt to redefine its business. If McDonald’s is truly listening, it will figure out all-day breakfast sooner rather than later. If it doesn’t, someone else will, and those shareholders will reap significant rewards.

As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, http://investorplace.com/2014/02/mcd-stock-yum-stock-breakfast/.

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