America is hungry for breakfast, yet its biggest doughnut chain is missing out

Falling through a doughnut hole.
Falling through a doughnut hole.
Image: AP Photo/Matthew Mead
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American consumers love breakfast, and they increasingly want access to it all the time. According to market research firm NPD Group, US breakfast and morning snack consumption is slated to grow by 5% in the next few years, faster than the US population.

“The need for speed, affordability, and portability are the reasons why morning meal traffic, which includes breakfast and morning snack, at traditional quick service restaurants has been growing,” the firm said.

McDonald’s CEO Steve Easterbrook, who began leading his company in March 2015, pushed his burger business into serving all-day breakfast, essentially plunging into the doughnut chain’s territory. That move turned out to be a huge success. In fact, ever since McDonald’s began to rollout all-day breakfast in mid-2015, the company’s same-store sales performance has been in recovery mode.

But in a space it should dominate—Americans have tended towards pastries for a morning meal—the country’s top-selling purveyor of the humble doughnut is struggling to keep up with competitors. Dunkin’ Donuts has found itself ceding in-store sales. McDonald’s is now outpacing Dunkin’ Donuts, thanks in part to breakfast.

How did a doughnut spot wind up scraping against a burger chain over breakfast? “Dunkin’ Donuts problem started when they shifted away from combo meals to à la carte items,” says Howard Penney, a food industry analyst, which weakened sales at the 8,900-store chain during the lunchtime hours. When hungry customers were out looking for deals on meals, the individual items at Dunkin’ Donuts weren’t going to cut it.

Realizing it risks losing more ground, the doughnut chain is beginning to simplify its menu, first across many of its store locations in New England, according to The Boston Globe. “We have conducted extensive consumer research and our customers have told us that our menu was too complex and confusing,” a company spokesperson told the newspaper.

The chain has already put up posters for its employees to use when talking to consumers about the many items slated to be removed from the menu.