Consumers have picked up new habits throughout breakfast’s slow COVID recovery.
Breakfast took a back seat over the past year as the work-from-home shift deterred people from their morning food commute. Now, the dip in breakfast consumption is reversing, albeit gradually.
“In early March, grocery store shelves were stripped bare, so we didn't have to leave the house. Our pantries, our refrigerators, and our freezers were overstocked,” analyst David Portalatin, of market research company The NPD Group, says. “Then gradually people started to get over the initial shock of what was happening. They started to venture out again. You started seeing restaurant transactions in general, not just breakfast, start to improve really dramatically from April through June. Then in summer, we started to have different surges of the virus in different parts of the country. So everything sort of hit a pause. And that's kind of where we've been since then.”
The breakfast segment had an uphill battle from the beginning. Even pre-pandemic, NPD estimated only 15 percent of the foods and beverages people consumed at breakfast came from restaurants, whereas 85 percent were prepared at home. In the uncertain environment, Americans were more than ready to cut breakfast’s budget compared to other meals. Quick-service breakfast consumption dropped 35 percent in April from the previous year, compared to dinner’s drop of only 22 percent.
As the pandemic changed breakfast habits, Portalatin was not surprised to see these statistics. But the restaurant industry was blindsided.
For the instances people did venture out, items like coffee and the breakfast sandwich continued to perform strongly throughout the year. Portalatin says the staying power of these items is in their ability to encompass a mixture of qualities people want in their morning meal, pandemic or not.
But people’s return to the home also meant time for more indulgent foods. Pre-COVID, people gravitated toward smaller breakfasts that resembled more of a mid-morning snack than a full platter. Now dishes like pancakes, waffles, and egg dishes resurged in popularity, and indicate a craving restaurants can satisfy.
“Especially on the restaurant side of the equation—that's where our exploration, that's where our more indulgent motivations are. Our desire for comfort and satisfying cravings is most relevant. If we're really ultimately motivated by eating something healthy, that's when we're much more likely to just prepare that at home,” Portalatin says. “Not that there's not a role for healthier options at food service. We certainly need to give consumers those choices. But in general, when we're motivated by health, we're more likely to stay home. When we're motivated by taste, experience, and those kinds of things—that's when we want what the food service industry can provide.”
Despite consumers’ retreat to more indulgent and comforting flavors, breakfast concepts can still capitalize on the innovation front. For example, twisting the common breakfast sandwich by using chicken is a way to entice the American consumer with new flavor combinations. McDonald’s is one example taking cues from taste to revamp itself. After removing All-Day Breakfast at the end of March, the fast food chain introduced new bakery items in October, which it hadn’t done since 2012.
But adapting menu items isn’t the only way chains are staying afloat. Embracing off-premises helped open the American consumer up spending habits. For Denny’s, roughly 62 percent of off-premises orders were for breakfast plates in Q4. Starbucks has also noticed the off-premises boon, and now has plans to build drive thru-only stores. By adjusting themselves to the demand for convenience, chains are trying to instill value back into people’s lives.
“There's certain things that are transcendent in the restaurant space—quality, convenience, and value,” Portalatin says. “If it was just about price, we'd just eat breakfast at home. It's always going to be cheaper to eat breakfast at home. But the differentiating factors are always going to be that quality, that convenience, that experience, the innovation, the opportunity to try new things. Those will continue to be opportunities at breakfast.”
The road to a post-pandemic breakfast may seem long, but recovery signs are appearing at the end of the tunnel. NPD Group statistics show a 24 percent improvement in quick-service breakfast consumption from April to December, with consumption hovering at about negative 11 percent from the year prior. Consumer habits suggest a role to play in this turnaround—while 27 percent of people were commuting to a workplace outside of the home in March, the number rose to around 50 percent by the fall.
Portalatin says key factors—like the rate people return to work outside of the home and how quickly school-aged populations return to on-campus education—will indicate how quickly breakfast rises again. But even if breakfast’s return still moves on an uncertain trajectory, the morning meal is once again becoming an affair outside the home.
“Yeah, people are already warming up to the breakfast segment again. The gap between breakfast and all other day parts is narrowing,” Portalatin says. “The demand for convenience will ramp up the hectic pace in the morning, which is really the sweet spot for quick-service restaurants.”