Taco Bell's $1 breakfast burrito: The latest skirmish in the 'breakfast wars'?

Taco Bell has doubled down on breakfast, introducing a new dollar menu on Thursday. Breakfast seems to be a winning strategy for fast food.

Toru Hanai/Reuters/File
People line up for the first Taco Bell fast-food restaurant in Japan at Tokyo's Shibuya shopping district, in this April 21, 2015 file photo. Taco Bell has joined the breakfast crush, opening a new breakfast dollar menu on Thursday.

Breakfast has become the most profitable battleground for a slowing fast-food industry, as the appeal of a.m.-friendly foods shows a chance of winning the hearts and wallets of Americans. 

Taco Bell announced its latest move in this direction Thursday, with a new $1 breakfast menu

The company began actively experimenting with breakfast in 2013. That year, the waffle taco, a scrambled egg-and-sausage concoction served inside a stiff waffle, tested well at five southern California locations, Julie Jargon reported for The Wall Street Journal. The new breakfast line-up does not include either the unusual breakfast taco or the a.m. Crunchwraps, which debuted in 2014.

Notwithstanding that omission, Taco Bell has good reason to expect success. An all-day breakfast promotion is widely credited for increasing otherwise dragging sales at McDonalds in 2015. The promotion began in October, and fourth-quarter sales rose by 4.1 percent in 2015, and similar rises are predicated for the early part of 2016, Scott Hume reported for Burger Business.

The improvement has been so dramatic that other companies such as Jack in the Box are noticing a negative sales impact, Business Insider reported.

The company insists its new menu has nothing to do with McDonalds' successful all-day breakfast promotion – "Our decisions are not based on reacting to what others are doing," Chief Marketing Officer Marisa Thalberg told The Wall Street Journal – but comparisons are hard to miss. 

Why is this shift proving so dramatic for McDonalds, enough that Taco Bell seems to be imitating it? The breakfast menu changes offer an opportunity to fast-food chains struggling to find their footing as more Americans seek nutritious food options. In a survey of 26 US franchises, Nomura restaurant analyst Mark Kalinowski found that McDonalds' all-day breakfast had "raised the brand profile," and many new consumers came in citing attractive media coverage. 

As one franchisee wrote, "[Temperate] weather last year, All-Day Breakfast, more positive coverage by the media,” were the reasons for success.

The breakfast market has proven a good bet for fast-food businesses. A recent survey showed Millennials turn away from cold cereal because it takes too long, as The Christian Science Monitor reported.

"Millennials aren’t the only ones who prioritize convenience above all else at mealtime,” Joe Cross, maker of a new documentary about the need for healthy, but convenient food, told The Christian Science Monitor. “Busy parents, harried professionals, sleepy kids – just about everyone is looking for a grab-and-go solution."

As Americans shift toward a convenience-driven mealtime, they turn away from the last generation's high-carbohydrate approach, but a simple, high-protein breakfast is an area where fast-food can excel, The Wall Street Journal reported. Taco Bell must counter the temptation of a Greek yogurt from home by offering consumers both low prices and bacon, according to a Taco Bell "survey" that, conveniently enough, coincides with the launch of a new breakfast menu.

"84 percent of consumers cite their radical preference to spend $1 vs. more than $1.... When thinking about $1 breakfast items, 80 percent say Americans should be given the option to have breakfast with bacon," the company notes.

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