The fast food industry has been suffering as of late. When the economy took a dive, people started looking for ways to save money and one thing that took a major cut was grabbing a burger or sandwich from a local fast food place. Add to that the rising popularity of “fast casual” restaurants that offer better-quality food in a similar time frame and several fast food chains have been struggling to continue growing even as the economy improves.
I’ve discussed before how McDonald’s Corporation (NYSE:MCD) began shifting its marketing strategy to include limited-time promotions and seasonal offerings, and also how some of its more recent attempts have fallen a bit flat. Though the company’s most recent quarterly earnings report fell in line with analyst expectations and stock prices are once again on the rise, dropping sales even when introducing a new fish option during Lent has the company looking for new ways to drive future sales.
Late-night munchies
A new initiative being tested by McDonald’s Corporation (NYSE:MCD) in certain markets is the introduction of a new “After Midnight” value menu aimed at late-night customers. Available from midnight until the start of regular breakfast hours, the new menu includes favorites not only from the standard McDonald’s Corporation (NYSE:MCD) menu but items from the company’s breakfast menu as well. While not the whole breakfast menu will be available before standard breakfast hours, several options including the Egg McMuffin (and its “Egg White Delight” variant), sausage burritos, hot cakes, oatmeal and hash browns do make the cut. These menu options will coexist with standards from the regular menu, including the Big Mac and Chicken McNuggets.
Of course, it remains to be seen whether the “After Midnight” menu will be rolled out nationwide. McDonald’s Corporation (NYSE:MCD) sometimes runs products in test markets that never see a wide release, even if the products are popular in the locations they are available in. If the new menu does become available nationwide, it will only be offered in those McDonald’s Corporation (NYSE:MCD) locations that offer 24-hour service. Out of approximately 14,000 McDonald’s locations in the United States, around half of them are open 24 hours a day.
The late night craze
While the “After Midnight” menu could make McDonald’s a trendsetter among its peers, the company certainly won’t be the first to try and capitalize on “late night” customers. The Wendy’s Company (NASDAQ:WEN) has been advertising its late-night hours for years, and Yum! Brands, Inc. (NYSE:YUM)’ Taco Bell has put a major advertising push into branding itself as the place to go for a late-night snack (going so far as to coin the term “Fourth Meal” in some of its advertising.)
Of course, the “After Midnight” menu has the potential to hurt some of these late-night competitors due to the popularity of some of the breakfast items that McDonald’s offers. The Wendy’s Company (NASDAQ:WEN) has struggled to establish itself as a restaurant with a major breakfast presence, and even with its focus on fresh ingredients and unique breakfast items it still falls behind McDonald’s. The company could worry about what additional pressure on its late-night customer base could have on its sales, especially since in its most recent quarterly report it surpassed consensus earnings expectations but fell short on total revenues. Potential customers might be willing to wait a little longer to head to McDonald’s for some favorite breakfast items instead of picking up a burger or Spicy Chicken Sandwich from The Wendy’s Company (NASDAQ:WEN) late at night, driving down late-night drive-thru activity. Fortunately for The Wendy’s Company (NASDAQ:WEN), most of its locations close at midnight so it won’t have to worry about direct competition against the new menu since it doesn’t have any specific after-midnight offerings of its own.
