Breakfast: a marketing lesson for operators - column

Breakfast represents an opportunity for a multitude of food-service operators from fast food to hotels (Focus Section, pages 67 to 94). What is revolutionary about many of the new breakfast concepts is that the industry is able to promote quality and value and, in many cases, expand the customer base critical for future growth.

Breakfast historically was a coffee shop monopoly, but like all givens in marketing, when quality and value fail to match price, consumers are open to other options. McDonald's proved that breakfast, which is convenience-oriented with obvious time and price constraints, was certainly open to the development of a fast-food program. The amazing fact was that it took the rest of the industry 10 to 12 years to recognize this opportunity. Also give credit to Jack Fulk, who as a Hardee's franchisee, introduced fresh-made biscuits to the market, and later even improved upon the concept as the founder of Bojangles.

Now we not only have a biscuit explosion in the industry but see crescent rolls served at Jack in the Box and croissants being introduced by Burger King as part of their breakfast programs.

Eggs, juice, coffee, zesty sausage, bacon, biscuits, croissants and danish pastry are all being gobbled up by this "hungry generation" of consumers who in the past either skipped breakfast, ate at home or stopped at coffee shops for their first meal of the day.

The result has been that coffee shops now find they must push for dinner and the fast feeders, not satisfied with existing business, are right on their tails, with Jack in the Box pushing "Dinner in the Box" and Carl's Jr. expanding into dinner entrees and permanentware table settings.

We have been that the simplest operation could be geared to make fresh baked goods and that smells, taste and quality of basic breakfast items can be sold in a convenience store/fast-food environment. All one has to do to believe in the impact of these breakfast programs is to visit Charlotte, N.C., about 6:00 a.m. and witness the traffic cop directing an endless stream of traffic in and out of Bojangles' drive thru.

What about the hotels and restaurants that are promoting brunch across the country? When was the last time anyone had breakfast in a hotel and felt that the price/value relationships existed. Recently I had breakfast at the St. Regis Sheraton in New York, and could not believe that juice, coffee, scrambled eggs and bacon could cost $16.97 without tip.

What was even more upsetting was that the eggs were steamtable eggs not made to order and were inedible. When I complained, the waiter agreed that the eggs were not the best and asked if I would like fried eggs instead. He disappeared and quicker than I could say. "Shazam" reappeared with instant sunnyside ups that had calcified sitting on the grill, evidenced by two neat little white bubbles in the middle of the yokes.

Smart hoteliers, as they raise their room rates, are intelligent enough to merchandise breakfast as a special service provided by the hotel. Examples would be the Pacific Plaza in San Francisco, or the Hyatt Hilton or Marriott chains on their Executive Floors, where continental breakfast is included. Others in the hotel industry seem to be caught up in their own mystique and fail to understand consumer insistence on price/value.

They seem to have forgotten that 12 months ago occupancy rates dropped as hotels suffered through the recession, and now with the turnaround seem to believe that they can rip off the public with poor service and high rates.

The Plaza in New York recently claimed that a room with soiled carpeting, buzzing motel-style TV, no storm windows and a poor heating system that turned on and off intermittently was worth $190 per night.

The success of Granada Royale, Guest Quarters, Mayfair Regent, John Coleman properties, Stamford Court, Pacific Plaza and Raphael Hotels is pegged to hospitable service and luxury that establish a value to the price one must pay.

One might ask what hotel rates have to do with breakfast. The answer is simply a classic example of marketing principles and retailing perspective. Every product for sale has a price point, which means a value level above which it's not worthwhile purchasing and below which it's recognized as a good deal. The fastfood explosion in breakfast is a result of other market segments misjudging the market.

Phil Romano, founder of Fuddruckers, has stated that as the fast feeders kept raising their burger prices without increasing their quality, the market opened up for gourmet burgers. The fresh eggs, fresh baked goods, quality sausage, bacon and coffee being presented by the fast-food industry have halted stagnating traffic counts and provided the opprotunity for this segment to expand its customer base and introduce its concept to a group of new customers.

The bottom line is: remember price/value, remember quality and don't ever say never when evaluating your marketing environment. Each and every time food-service establishments or hotels exceed their price points, the door is opened for new competition. The winner in the end is the consumer, who today can get an old-fashioned, stick-to-your-bones breakfast from outlets supposedly limited to burgers, shakes and fries.

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