21 Jun 2013 Restaurants crack it with breakfast

Breakfast has become the most important meal of the day as consumers opted for a heavier morning meal and cut back on dinner, according to Famous Brands’ chief executive Kevin Hedderwick.

This trend helped breakfast and coffee sales become strong growth drivers in the food service sector, Hedderwick said during the release of results for the quarter to May.

Famous Brands, which owns franchises including Wimpy, Steers, tashas, Mugg & Bean and Debonairs Pizza, has identified several trends in the food sector, such as a shift in the consumer profile.

The number of black middle class consumers had grown from 1.6 million in 2004 to 4.2 million currently as a result of a 35 percent increase in disposable income.

Other trends were that customers had become better able to identify value and they were no longer eating the traditional three meals a day.

“What we have found is that people are eating breakfast at all times of the day, so what is happening is that breakfast is becoming a new dinner.”

He said people would rather have a big breakfast than a big dinner. This was not because breakfast was cheaper, but because lifestyles had changed.

“Particularly strong drivers of growth in the industry are breakfast and coffee, with ‘all-day’ breakfast identified as a key future trend,” he said.

“Coffee is no longer seen as a meal accompaniment, but is increasingly being purchased as a snack meal.”

Chris Gilmour, an equity analyst at Absa Investments, believed the breakfast trend was growing because the offering was cheaper to prepare.

“Breakfast is easy to make and the ingredients are cheaper too,” he said. “Through breakfast, the food service sector can get away from charging high price points.”

The reason companies such as KFC and News Cafe had jumped on the bandwagon was that consumers were financially stressed and were looking for value in everything, including a simple breakfast.

“The question is: what happens to all the breakfast offerings from other companies, especially those that are new in the breakfast business, once the economy improves? Will they drop it for a much higher-margin product?”

“The breakfast add-ons are generally doing fine and everyone is reaping some benefits, but I am not sure if the same will happen once the economy turns,” Gilmour said.

Another trend was snacking on fragmented meals, such as a packet of chips or a small pizza, at non-traditional times.

“People are buying smaller portions, but more frequently,” Hedderwick said.

Source: Business Report