Hospitality And Restaurant News, September 8, 2015
By Christine Kern, contributing writer
In news this week, McDonald’s prepared to test all-day breakfast to boost sales, and new legislation regarding franchises is heading to the California governor for signature.
McDonald’s To Test All-Day Breakfast In Effort To Raise Sales
In an effort to raise overall sales, McDonald’s has announced that it will test all-day breakfast, beginning in the San Diego area, according to the Nation’s Restaurant News. “We know our customers love McDonald’s breakfast and they tell us they’d like to enjoy it beyond the morning hours,” Terri Hickey, a spokeswoman for McDonald’s, wrote in an email statement to Nation’s Restaurant News. “So next month, we will begin testing all-day breakfast at select restaurants in the San Diego area.” The San Diego test is anticipated to be a full-fledged, all-day breakfast offering. The new pilot continues the chain’s effort to lift sales following a two-year slump. This new offering is also in part the result of the fact that breakfast has always been the strongest daypart for McDonald’s, with steady sales despite the chains overall struggling sales. “We believe customers generally want to see McDonald’s offer breakfast items all day,” Mark Kalinowski, an analyst at Janney Capital Markets wrote. “Arguably, the two most craveable items on the McDonald’s menu are its French fries and breakfast items such as the various McMuffin permutations and the utterly delicious McGriddles. Having those breakfast items available to sell all day would also serve as a reminder to customers (and the media … and Wall Street) that McDonald’s does indeed have craveable food to sell.”
And a survey by YouGov Brand Index has found that 42 percent of those polled would chose McDonald’s for their next breakfast visit, putting them second behind Subway. The poll also suggests that customers would be willing to patronize McDonald’s for all-day breakfast. “When you have the second highest percentage of fast-food breakfast eaters considering making their next fast-food stop at your place, you have to seriously consider taking advantage of that desire,” said Drew Kerr, spokesman for YouGov Brand Index. “These people are committed fast-food breakfast eaters. If they’d rather go to your store to eat ahead of just about every one of your rivals, that’s practically a captive audience.”
California Franchise Bill Heads To Governor For Signature
A franchise compromise bill is heading to the California governor for signature. The new bill would make it more difficult to terminate franchise agreements. Assembly Bill 525 was authored by Assembly Majority Leader Chris Holden (D-Pasadena), Assembly Speaker Toni Atkins (D-San Diego), and Assembly members Bill Dodd (D-Napa), and Scott Wilk (R-Santa Clarita). A revised version of the bill passed the Senate and won final approval form the Assembly in a unanimous vote. This compromise bill also enjoys the support of franchise operators and the Service Employees International Union (SEIU), and the International Franchise Association (IFA). According to the Nation’s Restaurant News, the bill redefines the terms related to the termination, nonrenewal and transfer of franchise businesses and prevents franchisors from terminating a franchisee without proper cause, and requires reasonable notice and an opportunity to correct the issue. “This bill represents a historic compromise between the franchisees who own businesses and struggle to stay profitable and the corporations that have promised to support them,” said Holden. “Following a multi-year stalemate, these amendments add clarity that decreases the potential for litigation and increases franchisor accountability.”
The legislation is being closely watched throughout the franchise community, as California is a big state and other states could decide to follow its lead. In response to the version of the bill approved by the Senate, the IFA released a statement that read,
““After obtaining the necessary negotiated amendments from the supporters of the legislation, IFA has removed its opposition to AB 525. This compromise was reached by franchise groups coming together to reach an agreement absent interference from outside groups with their own agendas. “California’s franchise statutes are unique in their breadth, depth, and history. In dropping its opposition to AB 525, IFA carefully considered these factors combined with the Legislature's staunch effort last year to pass similar legislation as well as Governor Brown's request, in vetoing that legislation, that the two sides work together to reach a compromise.”