Restaurant Franchises

Franchise Lessons from an All-day Breakfast

Just one famous franchise serves one third of all the fast food breakfasts: McDonald’s. But only until 10:30. How many Egg McMuffin fans have arrived at their local McDonald’s at 10:40, far too early for a burger, and left empty-handed? Apparently a lot, to judge from the number of complaints McDonald’s heard from customers — passed on by franchisees.

As the economy improves and more people go back to work, driving through for breakfast has picked up. It may also be that the drive through Mochalattechino habit extends to McDonald’s, too, especially with its broad new range of McCafe special coffees. Either way, breakfast has been booming even as McDonald’s has been facing a slow-down in their classic burgers and fries sales.

With that combination of customer feedback and sales numbers, McDonald’s naturally started thinking about extending breakfast hours. But McDonald’s had been getting an earful from franchisees about menu changes.

The Dollar Menu was unpopular with franchisees, who felt that selling a Buffalo Ranch McChicken or a McDouble burger for a buck not only cut into profits but also cheapened the brand. What’s more, the Dollar Menu grew (adding $2.00 items as well), slowing down the process. Franchisees complained that they couldn’t hire more crew members for the amount they made on the Dollar Menu items, so service was slowed.

By the end of 2014, McDonald’s restaurants had 121 different items on the menu, increasing the amount of food inventory, machinery, and staff skills required. The large menu slowed down service even further. Some also felt that it gave McDonald’s a confused image, with blueberry pomegranate smoothies and artisanal grilled chicken nestling next to Chicken McNuggets.

So the change to all-day breakfast was approached differently.

  • McDonald’s tested it in specific markets for more than six months before deciding to roll it out. That was definitely better than throwing everybody into the deep end of the pool (of Fruit and Maple Oatmeal and Premium McWraps) and waiting to see who made it across.
  • They held a vote among franchisees, providing more of a sense of ownership. Franchisees accepted the all-day breakfast idea, even though it means adding the 14 breakfast sandwich options to the 15 lunch sandwiches.
  • There was a franchisee-led task force to shepherd the testing, too, and they identified potential problems and helped McDonald’s come up with solutions.
  • For example, McDonald’s has added a special “egg cooker” grill to help teams cook eggs and meat at the same time.
  • They’ve been recommending hiring more workers, though franchisees aren’t buying in to that idea as readily.

Franchisees also have the option of not serving breakfast all day. Here’s where national marketing can backfire. Customers who have seen the all-day breakfast offers may not be receptive when they hear that their local franchise has opted out.

What’s the take-away? Ask franchisors how they handle changes required of franchisees. How much lead time do they give? What kinds of costs will franchisees face, and how much help will the franchisor offer? How flexible are the franchisors when it comes to changes? Do they allow an opt-out? Do franchisees have any input into decisions about changes?

Change can be very good for business. It’s also good to know ahead of time how your franchise handles change.

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