Rise and shine it’s breakfast time

Lifestyle changes and new products on offer at high street food outlets are changing the breakfast-eating habits of Brits.

Changing eating habits have led to a sharp increase in the number of people buying breakfast on the go, according to research seen exclusively by Marketing Week.

Although the number of Britons going out for lunch and dinner fell in 2012, the number of ‘out of home (OOH) breakfast occasions’ surged by 8.4 per cent to 1.14 billion, according to the study by NPD Crest.

The market research platform calculates the figures from a representative sample of over 80,000 annual transactions from its online panel on which people reveal their daily eating habits. It then scales this against demographic data to produce annual figures for the population of Britain.

Breakfast occasions in the quick service sector,  including coffee chains and fast food outlets, grew by 10.5 per cent last year to 553 million. Meanwhile, full service restaurants saw a 7.8 per cent rise in early morning traffic to 70.4 million breakfast occasions. This contrasts with the total OOH lunch and dinner markets, which fell by 0.9 per cent and 1.5 per cent respectively.

NPD business development director Guy Fielding says this trend partly reflects people’s increasingly hectic lifestyles and the fact that more are skipping breakfast at home and buying on the go. He points out that all of the major high street food chains have developed their presence in breakfast in recent years to take advantage of this changing consumer habit.

“It’s a case of catching up with North America and some of the European countries where breakfast is around 20 to 25 per cent of the [OOH food] market; here it’s just over 10 per cent,” he notes.

“People aren’t going out in the evening during the week or going out for lunch as much as they used to so the question is how can these companies increase frequency and get more visits. Breakfast is seen as a good way of doing that.”

KFC is among the brands seeking to increase its presence in the early morning market. Last year, breakfast accounted for only 2 per cent of all traffic at the fast food retailer compared to 13 per cent for McDonald’s and 22 per cent for Pret A Manger. KFC is seeking to attract more breakfast customers by extending opening hours at high traffic restaurants and by introducing new products such as bacon buns, porridge and premium coffee supplied by Italian firm Lavazza.

KFC UK vice-president of marketing Jennelle Tilling confirms that the chain has identified an opportunity to increase its revenues in breakfast, as well as meet a growing consumer need. “We’re obviously very busy at lunch and dinner, as well as for snacking late at night,” she says. “So from a business perspective [breakfast] is an incremental opportunity for us.

Little Chef breakfast
Little Chef breakfast

“On Facebook people are asking us ‘why aren’t you open for breakfast?’ so there’s clearly both consumer demand and a business opportunity.”

Given that fried chicken is not a traditional breakfast dish in the west, KFC faces the  challenge of convincing people that it has a choice of food to suit them in the morning with its other menu options. Tilling says the brand’s relatively small presence in breakfast has given it licence to be more experimental and innovate in its marketing and product development.

“You’ve got to be more creative with the product and packaging formats because people are looking for simple things they can walk out with and carry,” she adds. “That’s why we do more soft buns and things that aren’t too tall so they don’t collapse.”

Fielding at NPD believes KFC and other major food service chains are encouraging a culture shift in Britain, away from in-home breakfast dining and towards eating out. He suggests that the spike in the OOH breakfast market last year, following a 1.7 per cent decline the year before, is the first demonstration of a culture change that has been occurring over a number of years.

“It takes quite a long time to shift cultures and habits,” he says. “Look at the growth of coffee shops in recent years – Costa Coffee and Starbucks are everywhere. We’re now much more educated about those coffee shops and what they offer than we were three or four years ago.”

The rapid growth of the OOH breakfast market is having an effect on breakfast products for the home, although figures do not conclusively suggest this market is declining. According to Kantar Worldpanel, sales of breakfast cereals in Britain rose by 0.9 per cent in the year to 12 May 2013 to 496 million units. While this is growth, it is obviously much lower than the sharp jump in OOH activity documented in the NPD research.

Although quick service outlets are driving the growth, there are several pub and restaurant chains also aiming to attract more customers at breakfast time. Breakfast accounts for at least 50 per cent of sales at Little Chef, for example, and the roadside eatery has taken steps in the past year to improve its early morning offerings
to customers.

This includes developing a new takeaway business called Little Chef Express, which is present at 23 sites across the country. The chain has also focused on presenting quality ingredients and products through tie-ups with other brands. This includes Lavazza coffee, which contributed to a 24 per cent increase in coffee sales at Little Chef last year.

“If you go back over the history of Little Chef, tea was always the biggest selling item we had,” says Darren Moore, director of dining at Little Chef. “But with the growing competition from all the other coffee companies in the market, the customers’ demand has turned towards quality coffee.”

Little Chef’s turbulent recent history is well known. Earlier this year, Rcapital, the investment group that bought Little Chef out of administration in 2007, confirmed that it has put the business up for sale after coming to the end of its turnaround plan. Late last month, the firm admitted that the Little Chef brand could disappear completely if one of the interested buyers – believed to include McDonald’s, KFC and Costa Coffee – take over.

“The market is changing and fast food and coffee houses are growing in popularity,” Rcapital said in a statement. “It is not a surprise that the majority of the offers for Little Chef are from companies that may want to rebrand the estate.” It seems that the rapidly growing breakfast market – and food and coffee chains’ desire to expand – could soon spell the end for one of Britain’s oldest restaurant brands. Meanwhile, other names can cash in on this tasty trend.

Marketers’ response 

Jennelle Tilling

Jennelle Tilling
UK vice-president of marketing
KFC

One of the biggest issues for KFC is that we’re famous for our fried chicken and yet if you walk in at breakfast, there is no chicken on the menu. That’s given us permission to innovate with our products and packaging, such as new sandwich forms, platters and bowls, rather than just saying ‘here’s chicken in a different way’.

We’re also being much more experimental in our marketing because people act differently at breakfast time. For example, we’re using the Metro newspaper and radio more than we might have otherwise, as well as digital channels to be really targeted with things such as coupons. We’re trying a number of different things for breakfast and will look to apply those learnings back to the core brand.

Darren Moore

Darren Moore
Director of dining 
Little Chef

At Little Chef we’ve focused on going back to basics as well as using quality ingredients. For example, on our Olympic breakfast we’ve got an award winning British sausage, free range eggs and so on. It’s one of the things Heston [Blumenthal] introduced when he was working with us and we’ve kept that.

We’ve also got healthier options. We have a partnership with Lavazza which started last year, so we’ve got quality Italian coffee and we continue to see strong demand for breakfast and coffee through our takeaway option. We also offer free Wi-Fi at every site for business users. We’ve seen an increase in business customers who will stop and have breakfast while they do their emails and work at the same time.

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