Unemployment Takes a Bite out of Breakfast

(Feb. 21) -- With millions of Americans unemployed, there are simply fewer morning people venturing out for their daily coffee and bagel. That's bad news for the once-$57 million breakfast business.

As unemployment rates hit 10 percent, breakfast sales dipped 4 percent, according to the NPD Group, a consumer behavior research firm.

Burger King executives reported breakfast was the only meal with declining traffic in the most recent quarter, according to The Washington Post, and sales of breakfast sandwiches at 7-Eleven were down 8 percent by the end of last year.

A cheese, sausage and egg McGriddles breakfast sandwich at a McDonald's

Joe Raedle, Getty Images

McDonald's chief executive said breakfast sales are "rocky" in some areas with high unemployment.

Even a golden standard of breakfast -- the McDonald's Egg McMuffin -- isn't immune to the unemployment sales slump: McDonald's chief executive described "rocky" breakfast sales in some areas with high unemployment despite the company's overall growth.

"Typically, if you're unemployed, you're not getting up at six and not going through the drive-through," Jeffrey Bernstein, an analyst at Barclays Capital, told The Washington Post. "There is a direct correlation between unemployment and breakfast sales."

The lingering effects of the recession are giving breakfast a bad name, as even those who are still gainfully employed trade fast-food breakfasts for cereal at home. It's a blow to a once-booming breakfast industry that provided up to a quarter of sales at some fast-food chains.

In the pre-recession years, chains like Starbucks and Subway broke into the breakfast food business with new offerings, while Wendy's expanded its menu. That menu has since been scrapped because of lackluster sales.

In an effort to lure people back to breakfast, chains are making recession-friendly adjustments to their morning menus, with McDonald's creating a special breakfast version of its dollar menu and 7-Eleven offering two breakfast burritos for $2, a move the company says boosted hot food sales.

Fast-food chains can only hope that job growth, however slow, will bring their customers back to breakfast.

In Montgomery County, Va., Lonnell Buford, 38, has cut back his once-daily McDonald's breakfast trips to twice a week.

"I'm on a budget," he told the Post after a $2 meal of coffee and a sausage biscuit. "I need to hold on to the little bit that I have."