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Restaurants defend breakfast dominion

Family spots such as IHOP and Denny's are adding new dishes and offering meals to go.

August 05, 2008|From the Associated Press

After watching more of their customers turn to drive-thrus for a quick morning meal, family dining restaurants such as Denny's and IHOP are fighting back.

In an attempt to lure diners back to the breakfast table -- or at least to the curb -- the chains are introducing more portable products, offering to-go and curbside pickup programs and remodeling their locations.

The moves come as breakfast has taken on far more importance to fast-food chains that have traditionally put little effort into the morning meal but now see opportunities to expand sales and profit at that time of day. Some are even thinking about serving breakfast all day -- a switch that would directly challenge the 24/7 breakfast menus that drive a large part of sales at family restaurants.

"We're being attacked," Denny's Corp. Chief Executive Nelson Marchioli said. "We can't let that happen. We have to take back what was ours to begin with."

That won't be easy, restaurant analysts say, considering the premium consumers place on convenience, speed and low prices.

"It's hard to beat fast food," said Bob Goldin, executive vice president of consumer research firm Technomic Inc. in Chicago. "The demographics and lifestyle trends are working against" the family dining chains.

Complicating the issue are the slow economy and consumers' desire to spend less on eating out. Goldin said the fast-food chains, particularly McDonald's Corp., use price and promotion "aggressively and effectively."

Denny's -- which has built its business on breakfast offerings such as the Grand Slam -- has seen its sales decline as consumers have cut back on spending and shifted to cheaper fast food. In the second quarter, same-store sales, or sales at locations open at least a year, fell 2.8%.

The company launched a carryout campaign last month that features a layered, domed container meant to keep pancakes hot and bacon crispy. Marchioli said he had seen "a nice increase" in the company's take-out business since introducing the packaging, which is available for the restaurant's full menu.

Denny's is also offering two new breakfast skillets for $5.99 each, both to eat in and to go, and is testing a hand-held Grand Slam.

"Customers are telling us, 'I'd get up 10 minutes earlier for this,' " Marchioli said.

IHOP has also been promoting its to-go options in the last year, leading carryout sales to rise from about 2% of its business to nearly 4%, said Patrick Lenow, spokesman for the chain's parent company, DineEquity Inc.

Lenow added that IHOP was looking into developing "more portable foods for dashboard dining" but declined to give specifics.

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