Food-industry giants compete over breakfast

SANTA ANA, Calif. — When Starbucks customers began entering cafes clutching takeout bags stuffed with breakfast food, executives at the Seattle coffee giant took note.

"When you have people walking in with a competitor's bag, it tells you we have a need to fill," said Cheryl Garner, division food manager for the cafe chain's regional headquarters in Huntington Beach, Calif.

That led to the launch of five $2.95 breakfast sandwiches in 40 Starbucks cafes in Orange and Los Angeles counties earlier this year. The items, ranging from Eggs Florentine to a reduced-fat turkey-bacon sandwich, are now in 700 stores and have become a popular grab-and-go item for busy java lovers, Garner said.

"We've had people flat out tell us, 'You're saving me a stop,' " she said. Industry experts say Starbucks and other quick-serve chains are waking up and noticing the $40 billion morning-grub market — a category dominated for years by burger giant McDonald's.

Some, including Starbucks, are also opening earlier and providing breakfast all day.

Still, breakfast is a tough sell, some analysts say.

While many people like variety for lunch and dinner, most consumers "don't change breakfast habits very readily," said Bob Sandelman, president of Sandelman & Associates in San Clemente, Calif.

In a 2006 poll conducted by his firm, Sandelman said 11 percent of fast-food eaters bought meals at breakfast. That figure was up only 1 percent from the year before.

Fast food "is still a lunch-and-dinner business," Sandelman said. Yet he and other industry experts said many chains are focusing on breakfast by trying to capture eaters at rival drive-throughs.

Take Burger King.

The nation's No. 2 burger chain introduced the industry's first Breakfast Value Menu featuring 10 items for $1 each. The strategy was employed earlier this year to lure time-starved morning eaters, the company said.

"We want to grab our fair share and more," said John Schaufelberger, Burger King's vice president of product marketing and innovation.

Here's a closer look at what fast-food chains are doing in the morning:

Taco Bell

The Irvine, Calif.-based Mexican fast-food chain is testing eight new breakfast items in four regions: Fresno, Calif., Nebraska, Ohio and Arizona.

New: Bacon and Egg taco; Sausage and Bacon Grilled Stuft Burrito; Guacamole Bacon Grilled Stuft Burrito; Bacon and Egg Crunch Wrap; Cinnamon Toastadas; Southwest Sausage Burrito; Egg, Bean and Cheese Burrito; Bell Breakfast Potatoes and Tropicana orange juice.

Starbucks

New sandwiches: Peppered bacon, egg and natural-aged cheddar cheese; Black Forest ham, egg and cheddar; turkey bacon, cholesterol-free egg and reduced-fat cheese; Eggs Florentine with baby spinach, egg, havarti cheese and herb spread. (All served on a toasted English muffin.)

Burger King

The nation's No. 2 burger joint broke new ground this year by introducing a $1 Breakfast Value Menu. New: The BK Breakfast Value Menu features Cheesy tots, three-piece French Toast Sticks, Sausage Biscuit, small hash browns, Cini-minis, small coffee, milk, orange juice, soft drink, Hamlette sandwich.

Wendy's

After exiting breakfast in the mid-1980s, Wendy's announced plans in June to get serious about breakfast again. The chain plans to offer breakfast in 650 restaurants by the end of this month, expanding from 160 restaurants currently testing breakfast products.

New: A proprietary premium Folgers blend; Buttermilk Frescuit, a square biscuit with egg, cheese and choice of sausage, bacon or ham; Steak and Egg Breakfast Sandwich; Big Breakfast Sandwich; Grande Breakfast Burrito; and French Toast Sticks. Some units offer value breakfast items.

Jack in the Box

Jack in the Box serves breakfast all day. It is a pioneer, having introduced the first breakfast sandwich at a major fast-food chain in 1969, company spokeswoman Kathleen Anthony said.

New: In January, the chain introduced the Bacon Breakfast Jack, a twist on the Breakfast Jack, a fried-egg-and-cheese sandwich that traditionally comes with ham.

McDonald's

The Golden Arches is the one to beat at breakfast, according to industry experts. Since introducing the famed Egg McMuffin in 1973, McDonald's has dominated the fast-food breakfast category for more than 30 years.

Breakfast accounts for 30 percent of the chain's annual sales.

However, McDonald's has not introduced a new breakfast food since it launched the McGriddle in 2003, said company spokeswoman Danya Proud. But "stay tuned" because that could change, she added.

Proud also debunked industry rumors that McDonald's plans to serve breakfast all day. For the near future, she said breakfast will remain a morning-only offering.