Wednesday, October 26, 2022

Coffee and Breakfast Treats McDonald’s Focusing on AM Daypart


Can you believe that McDonald’s is expanding another Co-Branded product?  That’s right after testing McPlant with Beyond Meat they are now testing selling Krispy Kreme doughnuts.  The morning daypart once owned by McDonald’s has become the envy of most every other food retailer from Convenience Stores, Fast Food Taco Chains, Burger Outlets, even Wendy’s is back in the breakfast game.

According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® it will be very interesting to see if branded doughnuts drive an increase in check average, return visits during the AM Daypart, and incremental sales as in a dozen at a time?

McDonald’s in Louisville, Ky., said that it will start selling three varieties of Krispy Kreme doughnuts at nine locations in the market in what is described as a limited-time operations test of the concept.

In a page out of the Krispy Kreme operating playbook, McDonald’s will not be making the doughnuts. Rather, Krispy Kreme will make the doughnuts at one of its large doughnut-making shops and will deliver them daily to those locations.

McDonald’s will sell Krispy Kreme’s Original Glazed, a Chocolate Iced with Sprinkles and a Raspberry Filled Doughnut. The doughnuts will be available all day starting Oct. 26.

The small-scale test will help McDonald’s understand how offering bakery items from a company like Krispy Kreme would impact operations. The nine locations are all company-operated units.

The center point of the test will be on the operating impact of the sale. So, it’s uncertain how revenues would be split between McDonald’s and Krispy Kreme. It’s also not certain how this would impact franchise restaurants.

It’s also a rare move. McDonald’s generally does not sell other brands’ items inside its restaurants outside of beverages yet it does that. Now for instance, its McPlant burger does not feature the name of Beyond Meat, even as its competitors have branded their plant-based burgers with one of the fake-meat making companies’ names, but if they thought it would help.  Might they?

This is all about the AM Daypart the McDonald’s once owned.  McDonald’s has been pushing more into sweet treats that make natural companions to its coffee beverages. Regular readers of this blog know that they added an apple fritter, blueberry muffin and cinnamon roll to its menu in 2020. However, let’s face it the product was average at best.  These doughnuts will be much fresher.

This test could prove a much bigger for Krispy Kreme, which is eager to expand the availability of its doughnuts in the U.S.

Regular readers of this blog know that Krispy Kreme operates a hub-and-spoke model where it makes doughnuts at 245 large retail shops in the U.S. and Canada. It uses those shops to supply more than 5,500 kiosks inside grocers and other retailers, which it calls “DFD Doors,” or delivered fresh daily doors.

Yes, Krispy Kreme is hoping those doors can anchor a network of more than 10,000 points of access in the U.S. The company is also hoping to have 50,000 points of access globally. So, McDonald’s, with more than 13,000 U.S. locations and 40,000 global restaurants, could certainly help them get there.

What are you testing?  How will you drive new customer into your restaurants?

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