My colleague Patricia Cobe wrote yesterday about Burger King’s test of a Smoky Maple Chicken Biscuit in a pair of markets. Chicken in the morning is something of a new frontier in the fast-food world, so it’s little surprise that a chain like Burger King would be doing this.
But it’s also an important move in the chain’s effort to build unit volumes and profitability. If Burger King is going to erase the gap with its competitors, it must get the morning right.
Burger King’s average unit volumes were less than $1.45 million in 2022, the smallest number of the “big three” burger chains including McDonald’s and Wendy’s. The volumes were more than $500,000 less than Wendy’s and $2.2 million less than McDonald’s.
The chain’s unit volumes are also 9% lower than they should be had the company simply kept sales on pace with inflation over the past decade.
A growing number of reports suggest the brand is in the early stages of a turnaround. Shares at Carrols Restaurant Group, Burger King’s largest franchisee with one of seven U.S. locations, have more than tripled so far this year as its sales and profits improve.
“We’re pretty excited with the results we’ve seen so far from their initiatives in the first part of the year,” Carrols CEO Deborah Derby told analysts on the company’s first-quarter earnings call, according to a transcript on the financial services site Sentieo/AlphaSense. “I think there is some good energy around that.”
But, as both operators and executives say, more work needs to be done. There are still many locations in the Burger King system with volumes far lower than average and operators that are still working their way back from the challenges of 2022.
Breakfast remains perhaps the best opportunity for the company to get to that point. A typical Burger King gets about 15% of its sales from the morning daypart—or at least it did in 2019, when we last wrote about this. That’s about half the percentage of sales McDonald’s gets in the morning. On a dollar basis, considering their unit volumes, an average Burger King does less than a quarter of the sales of a typical McDonald’s in the morning.
Simply increasing sales in the morning by 50%, which still wouldn't get it to McDonald's level, could generate another $100,000 in revenue per store, per year.
Meanwhile, Wendy’s introduced breakfast in 2020 and quickly got to 10% of its sales in the morning. Taco Bell, meanwhile, appears to be finding its stride after years of trying to get the morning right. Those two chains are likely bigger true roadblocks between Burger King and a thriving breakfast than is McDonald’s right now. They mean Burger King probably has to work harder simply to keep what share it does have.
Still, few people inside the company can quite understand why Burger King’s breakfast hasn’t become more popular. As one operator noted, Burger King has its Croissanwich. It also has French Toast Sticks, something it’s had for years. Its products should be good enough to warrant better morning sales.
The brand has long mentioned breakfast as a potential source of sales—thus that 2019 story—yet more recently it appears to have taken a back seat as the company worked through operations challenges and labor was painfully short. Executives haven’t mentioned breakfast in relation to Burger King on a call with analysts in more than a year. But it’s a daypart with some clear potential.
At the same time, there are some barriers between Burger King and a stronger breakfast business, perhaps none bigger than its real estate. A restaurant chain is only as good as its real estate will take it, and Burger King has historically had challenges with the locations of its restaurants. Want a strong breakfast business? Locate your restaurants along commuter patterns. That’s why Starbucks and McDonald’s do so well.
Still, fixing breakfast seems to be paramount in Burger King’s efforts to get its unit volumes and profitability where it wants. And maybe this time it will work.