Make way for cheaper breakfasts, even giveaways. That seems to be the only strategy left with breakfast sales in the United States falling as fewer people head into work. With unemployment rising, the $57 billion breakfast industry is the latest victim of the economic crisis.
The Washington Post reports that breakfast sales jumped 64% during the boom years but now it's going backwards. The bottom line is that more people are eating their meals at home.
The Washington Post reports: "This month, executives at Burger King reported that traffic rose during every meal except breakfast in the most recent quarter. They blamed unemployment for the falloff. McDonald's chief executive Jim Skinner has said that breakfast sales at its 14,000 U.S. restaurants were rocky in areas with high unemployment despite overall growth. Wendy's jumped into the breakfast bandwagon three years ago, only to end up scuttling its menu amid poor sales. It hopes to relaunch the menu next year."
By the time US unemployment hit 10%, breakfast sales were down 4%. People running breakfast operations say they have never seen anything like it.
The problem for the breakfast providers is that economists fear that the recovery will leave more people behind than in past recessions because it won't create enough jobs to absorb that many unemployed. The New York Times calls them the "new poor", people who once had comfortable middle-class lives but who are now relying on public assistance for the first time in their lives. And that could last for years.
Where does that leave outfits like McDonalds and Wendy's? Expect even lower prices and more giveaways. If unemployment remains high, it will be the only way that can stay in business.
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