海角大神

You鈥檒l recall that this spring when Motley Fool was running frantic headlines such as, 鈥淟ook Out McDonald鈥檚, Here Comes Taco Bell With Its Breakfast Menu,鈥� BurgerBusiness.com was talking sense. I聽wrote聽that Yum! Brands CEO David Novak鈥檚 proclamation that 鈥渨e鈥檙e in to win at breakfast鈥� was a bit of sleight of hand because he was predicting only $100,000 in per-store incremental sales or about 7 percent聽of sales at breakfast. With victory defined so modestly (breakfast鈥檚 share is at least聽double聽that at every burger chain that sells breakfast), Taco Bell couldn鈥檛 help but 鈥渨in.鈥� But it sure wasn鈥檛 going to spell doom for the Arches.

McDonald鈥檚 Corp. reports its Q2 sales next week and even if they鈥檙e not pretty, Taco Bell shouldn鈥檛 claim victory. But it did, of course, just as predicted. Yesterday, Yum鈥檚 Novak called March 27, the day Taco Bell began selling breakfast, 鈥渁 day that will go down in history.鈥� That鈥檚 enough swagger to make you lose your breakfast, but there鈥檚 more.

鈥淎 day that will go down in history鈥� Yum鈥檚 CEO calls it.

For Q2, Taco Bell reported a 2 percent gain in same-store sales鈥攂elow the Consensus Metrix number of +3.6 percent聽鈥攁nd a 1 percent聽gain in units. Most analysts called the numbers disappointing. Novak said they smelled like victory in the morning. 鈥淥ur breakfast day part mix [is] around 7 percent聽of sales in the second quarter. We fully expect breakfast to be incremental and [bring] anywhere from $70,000 to $120,000 per unit in annualized sales,鈥� Novak told analysts during a聽conference call.聽 He added, 鈥淎nd for the long term there is no question we鈥檝e enhanced our brand position as the choice of the new generation.鈥� OK, but that new generation can turn on you faster than you can say 鈥渟elfie.鈥� He must have forgotten that many Millennials and others abandoned Taco Bell after the much-publicized lawsuit in 2011 questioning how much meat was in its tacos.

OK, so breakfast is a hit, Novak has declared. 鈥淣ow the big question you鈥檙e probably asking is this: Given the success of the breakfast launch, why did same store-sales increase only 2 percent聽in the quarter?鈥� he asked. And he had an answer ready: 鈥淜eep in mind that during the first two months of the quarter, our immediate emphasis was almost totally on breakfast. Once we returned to advertising our core business, it was with Cool Ranch Spicy Doritos Locos Tacos chicken. And frankly, this product underperformed versus our expectation.鈥�

In other words, it spent so much time and money promoting breakfast鈥攚hich won鈥檛 account for more than 7 percent聽of sales, compared with 25 percent聽of sales for McDonald鈥檚鈥攖hat sales for its more-important core menu suffered. But when it did promote the core menu, their highly touted taco loco-doco LTO didn鈥檛 sell so well. If McDonald鈥檚 CEO Don Thompson offered that kind of convoluted explanation, Wall Street pundits and Motley Fool snarkers would be all over him. But that鈥檚 Novak鈥檚 explanation for Taco Bell鈥檚 underperformance.

鈥淥ur franchisees are in breakfast to win,鈥� Novak said once again yesterday, adding that 鈥渢hey have been cheering us on to broaden our breakfast offerings with new products that we had already in the pipeline.鈥� So they want new products that Taco Bell already had in development. That鈥檚 good. And Taco Bell also will be innovating with its core menu to drive business and will introduce mobile ordering, Novak said.

I鈥檒l stand by what I said in April: Taco Bell鈥檚 breakfast will be a success because the chain has set the success bar so low. But McDonald鈥檚, Burger King, Carl鈥檚 Jr., Jack in the Box and other QSRs don鈥檛 have to 鈥渓ook out鈥� or panic. They鈥檒l all be fine.