business news in context, analysis with attitude

Published on: May 14, 2014

by Kate McMahon

The fast food breakfast brawl is sizzling like sausage on a hot griddle, across the country and on social media.

Consider these most recent developments:

• Taco Bell launched a breakfast menu starring the much-anticipated Waffle Taco, and its ad and Twitter campaign took direct aim at category leader McDonald’s.

• McDonald’s dished it right back on Twitter, offered a free morning cup of McCafe for two weeks and started promoting its McGriddle pancake wrapped breakfast sandwich.

• Starbucks introduced four new breakfast sandwiches created by its La Boulange bakery division, including a savory spinach and sun-dried tomato on ciabatta and a lower-calorie takeoff on the classic Egg McMuffin.

• Burger King took a different tack, and last week announced it would serve burgers as well as breakfast fare each morning. No more wait for a Whopper.

• Dunkin Donuts debuted a new Eggs Benedict sandwich, with Black Forest ham and “spreadable Hollandaise.” (Yes, spreadable Hollandaise. Sounds suspect, I know.)


The skirmish is also spilling into the grocery aisles, with McDonald’s challenging Starbucks and Dunkin Donuts by test marketing its McCafe blend coffee in packages and in single serve K-Cups at select retailers.

Clearly, the fast food industry would have to agree with your mother on this: Breakfast really is the most important meal of the day.

From 2007 to 2012, breakfast sales in the U.S. rose by an average of 4.8% a year, while lunch and dinner sales remained essentially flat.

McDonald’s, which began serving breakfast 40 years ago, is the big dog here with 31% of the $31.7 billion a year market. But channeling its old Chihuahua mascot, Taco Bell is nipping at McDonald’s heels with an aggressive social media campaign.

While all the players have a presence on Facebook, YouTube and Twitter, Taco Bell is also utilizing mobile platforms favored by the millennial generation. Those include ads on the photo and video sharing apps Snapchat, Instagram and Vine, and on the digital music streaming service Pandora.

Taco Bell also sent 1,000 consumers identified as “influencers” pre-paid “breakfast phones” – think burner phones with alerts on missions to win prizes.

But it was the Taco Bell-McDonald’s Twitter war that went viral and launched thousands of re-tweets, for all the right reasons. The tweets were creative and had a light touch – funny without being sarcastic. The Twittersphere’s reaction also reaffirms the importance of being nimble in this era of real-time marketing. For major consumer brands, a social media “war room” may soon be as commonplace as the coffee room.

And, one final thought: Supermarket retailers and manufacturers competing for breakfast sales need to track this competition closely, because it inevitably will erode their sales … people can only eat so many breakfasts, and every breakfast consumed at McDonald's, Taco Bell and their brethren is a breakfast not consumed at home.

LAST CALL FOR THE MNB GRILLED CHEESE RECIPE CONTEST…

There’s still time to submit your favorite grilled cheese recipe, announced in my last column.

Send it to me at kate@mnb.grocerywebsite.com . Our informal panel of judges will award the winner a Panini maker. So choose your cheese wisely and get your grilling game on.

Published on: May 14, 2014

Notes & comments by Kevin Coupe

PORTLAND, Ore. - We may be in Portland, Oregon, but much of the collective wisdom at yesterday's Portland State University (PSU) Center for Retail Leadership 19th annual Executive Forum was coming from Cincinnati … or at least from two senior and influential executives who work for companies based there. (Though, to be fair, both have deep roots in the Pacific Northwest … which, in my opinion, accounts for their perceptiveness.)

Todd Ruberg, vice president of Customer Business Development Strategy at Procter & Gamble, started the day off with a discussion of what he called "the omni channel evolution," suggesting that "we are at a real inflection point in our business," and that "an inflection point, like a disaster, is a terrible thing to waste."

The industry has to adapt to a consumer base that increasingly wants a seamless, relevant experience that begins in pre-shopping mode and extends through the actual shopping experience (whether it is in a bricks-and-mortar store, on a computer, or on a mobile device) and into the post-shopping experience when people are both using products and sharing the experience with their friends. Because the shopping experience can be defined in such broad terms, he said, marketers have to pay attention to the whole continuum.

And, Ruberg said, everyone is part of this shift - it cuts across demographics and generations.

The challenge to retailers, he said, is that the expansiveness of choices actually tends to narrow the list of stores with which they do business. "The stakes are high," he said, and "it is critical to be relevant and present when the shopper is planning the next shopping trip."

In the evening's keynote address, Mike Ellis, president/COO of The Kroger Co., made similar points - saying that it is a high priority for Kroger to "increase the speed at which we make decisions," and "increase the rate of disruption" engineered at the company's various banners. "We're going to make people really uncomfortable," he said, suggesting that Kroger can only continue to be a 131-year old growth company by being so nimble and customer-focused.

One symbol of how things have changed: "Kroger serves eight million customers a day," Ellis said, and just recently, Kroger passed a significant benchmark - more than one billion digital coupons have been downloaded from its site and app. The pace is accelerating: "It took us two years to hit 500 million downloads,:" he said, "and just another six months to hit one billion."

The industry has to focus on "the datafication of everything" and "real time everything" - using customer data to offer relevant and real-time solutions to shopper needs and wants. And he echoed Ruberg's comments when he said that to the consumer, "Where you buy doesn't really matter … there are too many choices."

Which, I think, is the kind of thing we talk about a lot here on MNB. These trends ratchet up the pressure on marketers to change the way they do business.

Old-world thinkers need not apply. The good news is that here in Portland, old-world thinkers seemed in short supply.

Published on: May 14, 2014

It is a big week for food retailers opening downtown stores…

• In Minnesota, the Pioneer Press reports that Lund Food Holdings is scheduled to open a new store tomorrow in St. Paul, a 27,000 square foot unit described as a "full service, gourmet supermarket."

“There has been a renewed vitality taking place in downtown St. Paul," says Tres Lund, the company's CEO. "One thing the community has lacked, until now, is a full-service grocery store."

• And USA Today reports that Marsh plans to open a new store in downtown Indianapolis tomorrow, described as being a "43,000-square-foot high-ceiling, open-concept" store with amenities designed to cater to busy urban shoppers.

Published on: May 14, 2014

Reuters reports that the International Vine and Wine organization is saying that for the first time, the United States passed France in terms of total wine consumption. However, on a per-person basis, the French still drink a lot more than Americans.

According to the story, "U.S. consumers bought 29.1 million hectoliters of wine in 2013, a rise of 0.5 percent on 2012, while French consumption fell nearly 7 percent to 28.1 million hectolitres." However, "the average French person still gets through almost 1.2 bottles a week, about six times more than the average American. Nevertheless, the downward trend in consumption through recent years is fairly dramatic in Europe's wine-drinking heartlands."

Published on: May 14, 2014

The Boston Globe reports that the US Census Bureau has released its first-ever commuting report, looking at how people get to and from work, and the study says that "the number of Americans who biked to work in increased by 60.8 percent in 2012 (786,000 people), the largest percentage out of any other commuting style …."One percent of workers biked to work in 2012 compared to 0.6 percent in 2000."

The story goes on to say that "out of 140 million workers, 2.8 percent walked, 0.6 percent biked, while still a whopping 86.2 percent drove or carpooled. In terms of planning the transit systems of major American cities, vehicles are still the dominating force for cities who inform their planning and municipal budgets with data points like these.

The story goes on: "The West dominates the bike commuter population, but only 1.1 percent opt-in. Portland has the highest percentage of bike commuters at 6.1 percent. With the higher concentration of smaller cities, the Northeast has the highest percentage of walkers with 4.7 percent walking to work. Somewhat expected, commuters living in urban areas are almost twice as likely (4.3 percent) to walk to work than suburban residents (2.4 percent). The South is at the bottom of the list for both biking and walking."

Published on: May 14, 2014

The Private Label Manufacturers Association (PLMA) is out with a new look into the shopping habits of millennials, concluding:

• "Millennials represent a multi-trillion dollar marketing opportunity. By 2016, they will become the country's most powerful consumer bloc and, over time, will become the most economically impactful generation in U.S. history, outspending even the Baby Boomer generation. They already account for $1.3 trillion in overall direct annual spending and it is predicted they will buy $60 billion in consumer packaged goods over the next decade."

• "Millennials overwhelmingly see their generation as different from previous ones and are optimistic about their future. But many express resignation about their status. Half say their generation is financially less well off than previous ones and one in five say their life is worse than that of their parents. They expect big changes in the future: Half say stores will look nothing like they do now and a third believe many of today's national brands will no longer be around."

• "Brand loyalty is not a major pull for Millennials. When a national brand they wish to buy is not available at the shelf, four in ten choose the store brand, one third pick a different national brand and one in eight look elsewhere for the national brand they initially wanted.

• "Millennials are universally familiar with store brands and buy them regularly.Almost four in ten said they buy store brands frequently, the highest rate offered in the study. Seventy-one percent said value is the main reason they purchase the store brand product as opposed to the national brand. Product quality improvements and a good prior experience will drive their future store brand purchase."

Published on: May 14, 2014

• The Seattle Times reports that Matt Williams, a 12-year veteran of amazon.com, has launched a new website called Pro.com that "aims to simplify the process of pricing home-improvement projects, finding a contractor and scheduling an appointment to get the project started. The goal is to get this all done with a just a few clicks, making the process easier and more transparent for customers.

"Homeowners click on the projects they need done, enter their zip code and a few details and are presented with a menu of typical labor costs - dubbed 'Prestimates' - for each project. They also receive a list of vetted service providers, with moderated ratings, and available dates and times when the work can be scheduled. Contractors can list their services for free but pay a commission on completed jobs provided through pro.com."

“The vision of this company is to price and book reliable local services in under a minute and that goes beyond home improvement,” Williams says. “Long term we want to build this out across many categories.”

The story notes that the site has $3.5 million in seed funding - from Amazon founder Jeff Bezos and "a handful of venture capital firms."

Published on: May 14, 2014

• The US Commerce Department released figures yesterday saying that April retail sales edged up a paltry 0.1 percent, "held back by declines in receipts at furniture, electronic and appliance stores, restaurants and bars and online retailers," Reuters reports. Economists say that the poor growth level probably was a case of consumers "catching their breath" after strong growth in February and March, and expectations are for stronger consumer spending for the balance of the year.


• The Associated Press reports that "Coca-Cola has raised its stake in Keurig Green Mountain Inc., the beverage dispenser maker," and now owns 16 percent of the company.

According to the story, there's a specific reason that Coke is interested in Keurig Green Mountain: the company "is in the process of developing a machine for cold drinks that is expected to debut in the company’s fiscal 2015. The machine is expected to let people make sodas, sports drinks and other beverages with the touch of a button. Like its coffee machines, the cold machine would use pods to make a variety of drinks."

Published on: May 14, 2014

• Swiss artist HR Giger died Monday at age 74, from injuries sustained in a fall.

Published on: May 14, 2014

Got a lot of reaction to Michael Sansolo's column about irradiation yesterday.

MNB reader Annie Hoy wrote:

Michael's Sansolo Speaks was so far from reality that I am compelled to respond!

First of all, microwave ovens are not the same thing as irradiation.

Irradiation uses actual radioactive material to irradiate the food, like Cobalt 60. This is actual nuclear waste, recycled for use in the food industry.

It allows, for example, a meat processor to be lax in their prevention of e coli contamination, then package the meat, put it on palates, move the product into a lead chamber, expose it to radiation so that all the e coli and other bacteria are killed (and in some early cases change the texture of the beef), and then lift up the back door and move the palettes onto a truck for transport. This is nothing like microwaving food in your kitchen.

Thank goodness irradiation is not accepted. It's just a clever way to use nuclear waste.

From another reader:

The industry has no one to blame but themselves when supporters confuse the irradiation to kill pathogens (using ionizing radiation - the "dangerous" kind) and microwave ovens (which use non-ionizing radiation). An industry that claims to want to make a scientific case better make sure that it's got its science right.

MNB reader Rosemary Fifield wrote:

In my position as a consumer advocate and educator, I’ve been addressing irradiation of food for twenty years, and I take exception to Michael Sansolo’s approach to the topic. Just because the Washington Post states something as being so, doesn’t mean it’s the whole story. Nowhere did I see mention of what irradiation does to the quality or nutritional value of the irradiated food. No one I know worries about mutant life forms. They worry about meat that doesn’t taste right or produce that’s been damaged by the process. Most spices are irradiated, and I, for one, couldn’t care less. But don’t irradiate my ground beef or my chicken or my spinach “to protect my family.” Instead, improve slaughtering and handling procedures, lay off the antibiotics in animals, and tighten up on inspections.

Oh, and by the way, I do remember talking to a group about irradiation of meat and having a person say, “Does that mean I’d be able to keep a roast in the pantry instead of the refrigerator?” It’s going to take more than irradiation to protect that family.

I suspect Michael will weigh in on this debate in next week's column…




Yesterday, we had a story about how adults under 35 are moving less than they used to, and "economists and demographers say a combination of relatively low-paying opportunities, the burden of student loans and an aversion to taking risks explains the reluctance to relocate. Student-loan debt rose $114 billion in the year ended in December to $1.08 trillion, according to the Federal Reserve Bank of New York."

I commented:

Funny … my first thought when reading these sentences is that it is extraordinary that we have a system in which student load debt, accumulated by people trying to go to college, is crushing … and the beneficiary is the banking system. The government subsidizes the banks, but not the students … which strikes me as a lousy sense of priorities. Especially, because if the analysis is correct, it hurts the country in a lot of different ways.

Which led one MNB user to write:

It’s incredible to me that the enormity of student loan debt, and the burden it places on those that have it, the negative it places on the economy, and this group of debtors not being able to move forward, why this is not front and center, or why someone has not been able to spark this group to organize and be heard, is beyond me. All someone has to do is create the spark, be out front, use social media to organize, and this is just waiting to be a political hot potato. It baffles me why someone’s not leveraging this pain and getting the government to switch priorities . . .

Y'know, the more I think about it, the more I am convinced that this country has its priorities pretty much all wrong … and that most politicians - on both sides of the aisle - are misguided. And, to be honest, the more I think about it, the more pissed off I get. (Sorry for the use of the vernacular, but I tried a bunch of other words and they didn't seem to capture my increasingly foul mood about the state of politics and government in America.

I'm starting to think that I'm going to adopt two Howards as my role models - Howard Beale and Howard Prince.

Yes, these are movie references … and you can see the relevant clips here and here. (Warning: some of the language in these clips is rougher than mine. But appropriate.)