Hungry Jack’s, Macca’s vying for Aussies’ morning dollars, analyst says
Restaurants with competitive prices and a drive-thru service will get an advantage.
Australian quick-service restaurants (QSR) may be poised for a breakfast war, starting on the coffee front, as they try to lure more customers into a market that could give them more than a tenth of their revenue.
These fast-food chains have been looking for ways to counter declining foot traffic and grow beyond the crowded lunch and dinner space, starting with improving their breakfast menus with good barista coffee as an entry point, Ben Dixon, CEO at consumer research firm Fonto, told QSR Media.
“QSR brands we worked with spent a lot of time researching and testing hundreds of bean varieties and they went and bought the best espresso coffee machines on the planet,” he said. “Then they train 400 to 500 baristas to produce good-quality coffee at $3 or $4 a cup.”
Quick-service restaurants account for the biggest share of the global breakfast restaurant market, according to Grand View Research. McDonald’s offers breakfast in selected regions globally and gets as much as 15% of its sales from its breakfast menu.
Hungry Jack’s, an Australian fast-food franchise of Burger King Corp., has been incorporating more breakfast options in seasonal menu releases, whilst McDonald’s has attracted more customers by bringing cheaper items on its so-called Loose Change menu.
Others like Soul Origin have rebranded toward coffee using dedicated coffee zones that aim to showcase their passion for barista-made beverages. The brand said this was based on two years of research.
Dixon said fast-food chains have focused on breakfast, particularly coffee, because of the margin it brings.
“It doesn’t cost a lot when you’re making it en masse,” he pointed out. “Even when you are selling it for $4 or $6, there’s plenty of margin in that.”
He added that coffee is a good entry point, allowing customers to see other items for sale. “It’s about getting consumers in the restaurant to buy something else.”
Winning the breakfast war in Australia ultimately hinges on location and pricing, Dixon said. Consumers consider convenience, and fast-food chains with a drive-thru service get an advantage.
Guzman y Gomez, a Mexican casual and fast-food restaurant based in Australia, in March, said it would focus more on drive-thrus as they expand in Australia. Meanwhile, KFC and healthy fast-food brand Oliver’s have been experimenting with artificial intelligence to optimise their drive-thru service.
“Overall, the brand that is doing very well in the breakfast category is Guzman y Gomez,” Dixon said. “It’s very appealing to the younger generation as this consumer group is interested in the fresh and healthy approach, as well as the brand’s style.”
“I am also seeing consistent growth in Hungry Jack’s, which has innovated in that space. Other brands may have a breakfast offer, but I don’t think they are innovating enough just yet,” he added.
