McDonald's all-day breakfast is causing a crisis in the fast-food world
Sales at McDonald's US locations open for at least one year rose for the first time in two years in the fourth quarter thanks to the company's new all-day breakfast offering.
And as competitors announce results, they're admitting that McDonald's is starting to steal market share.
On Wednesday, Jack in the Box reported both profits and revenues that missed estimates.
Shares of the company were down 17% in trading Thursday.
And here's what the company had to say about the competition in its earnings release (emphasis ours):
Jack in the Box sales in the last part of the quarter were lower than we anticipated as several competitors began promoting aggressive value offers. We also experienced weakness at breakfast and lunch throughout the quarter, which we attribute primarily to our decision to shift the timing of some of our promotional activity around breakfast to the second quarter as compared to the first quarter of last year. In addition, we believe a competitor's messaging around its launch of all-day breakfast had some impact on our results, particularly in the 10:30 a.m. to noon period.
That "competitor," it is safe to assume, is McDonald's, which launched all-day breakfast in October.
Although some McDonald's franchisees have complained that all-day breakfast tends to slow down their operations at non-breakfast times, the impact for McDonald's has mostly been positive.
Howard Penney, an analyst at Hedgeye Risk Management, tweeted that "the market is saying that [Dunkin Donuts] & [Bojangles] are the other companies impacted by the mighty @McDonaldsCorp all-day breakfast."
In the fourth quarter, Dunkin Donuts' same-store sales unexpectedly fell 0.8%. Ahead of the release, analysts had noted that McDonald's all-day breakfast could have some impact on Dunkin's sales going forward. After the fact, Credit Suisse noted a "marginal" impact on its performance from McDonald's.
Dunkin shares were off about 2% on Thursday.
Bojangles' CEO Clifton Rutledge recently told TheStreet.com that, "McDonald's has taken some share." Bojangles is down about 40% since its May 2015 IPO and on Thursday the stock was off about 5%.
As Penney wrote, the market has spoken.