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McDonald’s Turning Late Night into Early Morning

McDonald’s is taking aim at quick-service restaurants’ last unconquered frontier: late night sales. And it is doing so by treating the time from midnight to 5 a.m. as an early-breakfast opportunity rather than a late-dinner or snack period.

Source: The NPD Group/CREST

In 127 24-hour central Ohio locations, the chain has launched a Breakfast After Midnight program, offering such breakfast staples as Egg Muffins, Sausage McMuffins, Fruit & Maple Oatmeal and breakfast burritos after midnight rather than after 5 a.m. As reported by Business First, a marketing campaign targeting late-night eaters—using the newly coined term “nocturnivores”—was created by local agency Fahlgren Mortine.

As BurgerBusiness.com reported in April, McDonald’s recently trademarked its 24-hour-operation logo (moon and stars on the left hemisphere; the sun on the right) as it expands all-day locations. The number of U.S. McDonald’s open around the clock increased to 40% at the end of 2011 (up from 36% a year ago), with 89% open by 5 a.m.

Still, late-night remains an untapped market for quick-service restaurants. According to NPD Group/CREST data that Wendy’s presented during its June 28, 2012, Investor Day event, less than 1% of total QSR customer traffic arrives between 2 a.m. and 5 a.m. (see chart).

But the stretch between 5 a.m. and 10 a.m. sees nearly 14% of traffic. And breakfast is the growth daypart for QSRs, which is why Wendy’s is trying so hard to get a morning menu right and rolled out. Other NPD/CREST data presented by Wendy’s execs showed that morning-meal customer traffic has increased 7.1% since 2007 while total-day traffic has declined by 0.8%. Lunch traffic is down by 0.5%; supper is off 0.4%; pm snack traffic is down 2.1%.

Jack in the Box makes its total menu available 24/7 and recently adopted a new late-night logo to promote night sales. Most other burger chains have opted to view late-night hours as a way to extend dinner sales. Earlier this year, Sonic tried its half-price-shakes Happy Hours promotion after 8 p.m. Without a breakfast menu to offer, Wendy’s promotes burgers and its smartphone app for finding late-night units.

The strategy McDonald’s is testing in Ohio transforms midnight into the beginning of morning rather than the middle of the night, making breakfast essentially a 10-hour (midnight to 10 a.m.) daypart.

Round-the-clock operations are not always popular with franchisees, who see little reason to be open for that 0.5% of customer traffic available. Burger King in 2010 succumbed to franchisee pressure and dropped a requirement that all its stores be open at least until 2 a.m. on Fridays and Saturdays. It lags its competitors in 24-hour service.

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