Why breakfast is key in fierce fast-food war

McDonald's rolls out all-day breakfast
McDonald's rolls out all-day breakfast

On Tuesday, McDonald's is ditching a long-held stance: that it's just too difficult to flip burgers and serve McMuffins at the same time.

There's good reason why the Golden Arches would want to pivot and launch all-day breakfast: the restaurant chain needs to reverse domestic sales declines, and breakfast is the only segment delivering strong growth for restaurants.

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Breakfast visits jumped 5 percent in the year ended in June, while lunch ticked just 1 percent higher and dinner visits were flat, according to data from the NPD Group.

"Breakfast has been such a growth area because consumers feel it's a good way to jumpstart their day. It's a lower priced occasion. Especially for fast food, it's convenient," said Bonnie Riggs, a NPD restaurant industry analyst.

McDonald's competitors are also doubling down on breakfast.

McDonald's Egg McMuffin
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Last year, Taco Bell launched its own spin on the meal, which has already grown to 7 percent of its sales mix with particular strength on the West Coast. Its offerings include portable takes on typical breakfast fare, like the biscuit taco or the AM crunchwrap .

Meanwhile, Starbucks CFO Scott Maw told analysts in September that breakfast remains the chain's "biggest opportunity" on a dollar basis. During its last quarter, breakfast sandwiches grew 30 percent.

As McDonald's retools operations to accommodate a pared-down version of its breakfast menu all day, Riggs said its strategy will likely have limited downside.

"The only potential risk is it's a growth opportunity, but it could cannibalize other menu items," she said.

The bright side?

"It may generate repeat business or attract those customers who just come to McDonald's for breakfast," Riggs added.