Yahoo Finance McDonald’s vs. Taco Bell: Who wins breakfast?
It’s a turf war over breakfast in northeastern Pennsylvania, and McDonald’s (MCD) restaurants there have a new strategy to take on the challenge of Yum Brands’ (YUM) Taco Bell-- free food.
In a message on its Twitter (TWTR) site, the regional McDonald’s is offering customers a free Egg McMuffin if they bring in a receipt from Taco Bell.
Bring your Taco Bell brkfst receipt into NEPA McD's through 4/17 for a Free Egg McMuffin. 1 per person, per day pic.twitter.com/gotuBDkw1D
— McDonald's of NEPA (@McDNEPA) April 13, 2015
Yahoo Finance’s Aaron Task says Taco Bell has become a real threat to McDonald’s in the morning.
“The breakfast wars are a real thing,” he argues. “Taco Bell had the waffle egg sandwich and they have other breakfast items that have-- pun intended-- eaten into McDonald’s business.”
Task feels this move is just the latest effort by the world’s biggest fast-food chain to put the brakes on sagging sales, which have fallen for nine-straight months.
“McDonald’s was the leader in breakfast, they’re facing more competition and we know about the competition they’re facing in their core burger business,” he notes. “So they can’t afford to lose any more market share, and that’s why they’re trying all these different things.”
But Peter Kenny, Chief Market Strategist at Clearpool Group, sees a real risk here.
“This could backfire,” he says. “If they’re giving away a free breakfast, that’s a cost. And they’re giving away a free breakfast if another company is being paid. That’s cannibalizing. And it’s a net neutral-- at best case-- scenario for McDonald’s.”
Task points out another potential danger for McDonald’s.
“They’re betting you’re going to like the Egg McMuffin better than the Taco Bell breakfast,” he says. “And you might not.”
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Kenny feels McDonald’s has a lot bigger problems than whose breakfast is really better.
“The real headwinds are generational,” he explains. “The younger consumer is looking for something different from what their parents had-- organic, fresh, something that speaks to the lifestyles that the younger generations identify with.”
Still, Task feels everyone might be able to take advantage of the McDonald’s Taco Bell breakfast promotion soon.
“This is just one little region,” he admits. “But if it works you have to believe they’re going to do it all across the country.”
But Kenny doesn’t think so.
“This could be a regional turf war. This could be an experiment,” he says. “I don’t think you’re going to see it expanded beyond northeast Pennsylvania.”
However, Task knows one group of customers who are rooting for it to happen.
"If I was in college, I would love this,” he laughs. “Because I would be there every morning at Taco Bell, then I’d go across the street to McDonald’s.”
