||Late-Night Sales on a Roll for U.S. Fast-Food Outlets
Fast-food chains are extending their hours to feed a burgeoning market of night owls and ultra-early risers and help wring more sales out of their existing restaurants.
At McDonald's Corp. -- which reported another quarter of strong earnings last week -- the hours of midnight to 5 a.m. are the fastest growing time segment in its U.S. business. Nearly 40% of its U.S. outlets are now open around the clock, up from about 30% seven years ago.
Burger King Holdings Inc., which requires its U.S. restaurants to remain open until midnight on Fridays and Saturdays, and until 11 p.m. the rest of the week, now has several hundred restaurants around the country open 24 hours, according to a spokeswoman. And Dunkin' Donuts has doubled its number of 24-hour restaurants in the past 10 years, with nearly a third of its more than 7,000 U.S. outlets now open all day and night.
Industry executives and analysts say the trend is driven partly by changes in the American work force. One-fifth of all employed Americans now work mostly in the evening, at night or on a regularly rotating schedule, according to Harriet Presser, a University of Maryland sociology professor and author of the book, The Economy that Never Sleeps.
"Whether it's taking on an additional job or just working a late shift, we're seeing more people out later at night," says Steve Levigne, McDonald's vice president of consumer and business insights. The company wouldn't disclose what percentage of overall sales come between the hours of midnight to 5 a.m., but said those hours have experienced double the growth rate of its lunch or breakfast business.
Pat Treffiletti, a franchisee who owns four McDonald's in Albany, N.Y., was taken aback when a student in a college class he addressed a few years ago asked him why he couldn't get a Big Mac at 3 a.m.
"I said it's because we're not open," he responded.
He decided to see if there was any reason to be open at that hour, so he drove around the city late at night and was surprised by how much traffic he saw on the streets. Health-care centers were open late and delivery drivers were dropping off goods at stores.
"I started talking to my customers and they said they'd love it if we'd be open late. Customers' lifestyle patterns have changed dramatically. Years ago, convenience was about having the right location. Now it's a lot more than that," he says.
Mr. Treffiletti, who put two of his restaurants on a 24-hour schedule two years ago and a third 18 months ago, recently began offering a limited breakfast menu after midnight, in addition to burgers and fries, since some people are just starting their day when they come in and others are ending it.
McDonald's said one reason for its growth in the latest period was its efforts offer more convenience, which includes things like extending hours. For the fourth quarter ended Dec. 31, McDonald's beat analyst expectations with a profit of $1.38 billion, up from $1.24 billion a year earlier, on revenue of $6.82 billion, which was up 9.8% from a year earlier. The company forecast global same-store sales in January would be up 5.5% to 6.5%, after rising 7.5% in the fourth quarter.
Mr. Treffiletti says his wee-hour customers are a mix of college students seeking a bite after the bars close, late-shift workers, some of whom have taken on second jobs to make ends meet, and elderly patrons who are up early.
At 2 a.m. on a recent Friday, more than 20 customers were dining inside a 24-hour McDonald's on Chicago's North side.
Ernest Roberson, a security guard at the McDonald's, said the customers usually consist of bar hoppers and homeless people, but also a steady stream of police officers, transit workers, parking attendants and construction workers.
"This time in the morning it's about the only place you can eat," said Mike Pittman, a 65-year-old construction worker eating a cheeseburger on his break. He's been working nights renovating a nearby store, and has been frequenting this McDonald's on his break.
To some degree, McDonald's and others are just satisfying late-night appetites that have long had few options. But companies say market research shows demand is growing. Dunkin' Donuts, long a morning destination, has been pushing deeper into the evening because "our research and feedback from franchisees indicates we're seeing very strong growth in the evening hours," says John Costello, chief marketing and innovation officer for Dunkin Brands Group Inc. He declined to break out specific sales trend information.
"I think we really have moved to a clockless day," Mr. Costello said. "People are working longer hours, in many cases multiple jobs, and are more time-starved than ever before and they want the flexibility to have a full variety of products that aren't limited by time of day."
(Source: The Wall Street Journal, 01/25/12)
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