McDonald’s weighs the return of all-day breakfast

All-day breakfast was a major hit for fans of McDonald's and a major headache for franchisees.

As the fast-food giant weighs whether to bring it back from its pandemic hiatus, one fact has recently become apparent: The company doesn't need to offer round-the-clock McGriddles and Egg McMuffins to grow sales.

Chicago-based McDonald's on Thursday said sales in U.S. restaurants open at least 13 months grew 4.6 percent during the three months that ended in September, exceeding Wall Street's expectations.

That's also a sharp reversal from the 8.7 percent decline that occurred during the previous quarter.

Large group orders and a busier dinner business drove the boost, while overall guest counts remain down.

McDonald's said sales growth accelerated into the double digits in September, when it did a promotion with rapper Travis Scott.

The 13-month measure removes the effect of new openings and closings.

McDonald's, which won't announce third-quarter earnings until Nov. 9, offered the advance look at its performance because the earnings release is later than usual.

Sales were down 2.2 percent globally.

For McDonald's, the results suggest a recovery - after sales were battered by a pandemic that meant closed dining rooms and the disappearance of commuters as workplaces shut down.

But things are not back to normal. Just 2,000 of its 14,000 U.S. dining rooms are open. McDonald's in July paused its reopening process as COVID-19 cases surged.

Drive-through, which before the pandemic comprised about two-thirds of sales, now is responsible for 90 percent.

The company has focused on shortening wait times, long an Achilles' heel, and in June the wait was 20 seconds shorter than the year before.

It credits the use of artificial intelligence in its digital menu boards to suggest items to consumers in the form of a picture, so employees don't have to spend time doing it, as well as the removal of menu items that took long to prepare.

The company, which stopped offering items such as salads and grilled chicken sandwiches, will be 'very thoughtful and judicious” in deciding what is worth reintroducing to the menu, said Joe Ehrlinger, president of McDonald's USA.

That also goes for all-day breakfast, a popular offering introduced in 2015 that was halted in March to help streamline operations.

If all-day breakfast does come back, it may not offer as many items or be served at all times as it did before.

'Compelling facts indicate it doesn't actually need to be 24 hours and it can cut off at some point in the afternoon,” Ehrlinger said.

'And that would make more sense from a consumer and franchisee perspective.”

The company is working with franchisees to weigh whether the revenue benefits of all-day breakfast made it worth the complexity it added to their operations.

'You can see by the improvements that we had this quarter that we can really grow this business and we don't need all-day breakfast to do that,” he said.

Meanwhile, the company still is fighting for morning breakfast customers, a contingent that dwindled with the loss of commutes just as Wendy's launched its own breakfast menu.

McDonald's this week announced it is introducing apple fritters, blueberry muffins and cinnamon rolls to its bakery menu, the first bakery additions in eight years, which will be available any time of day.(