Morning has Broken Open | Food Newsfeed
Continue to Site
Another Broken Egg

Morning has Broken Open

Underline Image
Full-service brands are rising to the breakfast occasion, despite quick-service domination of that daypart.
By Barney Wolf June 2014 Chain Restaurants

Indianapolis is considered a fairly quiet Midwestern city, but in recent years it’s become a battlefield among breakfast-brunch-lunch concepts looking for new territory.

Since early 2012, segment leader First Watch has opened four units in the market, while two other chains, Another Broken Egg Café and The Egg and I, entered the metropolitan area. Chicago-based Yolk plans to open a restaurant there this summer.

They join established chains like Le Peep and local brand Café Patachou.

“For a long time we were underserved in the breakfast-brunch-lunch segment, particularly with the boutique brands,” says Steve Delaney, a regional restaurant expert and a principal with Indianapolis-based brokerage Sitehawk Retail Real Estate.

“We had the larger chains, like IHOP and Bob Evans, that do a big breakfast business, but not many of the smaller ones that open in the morning to mid-afternoon,” he notes. “It just didn’t seem to be a niche that was exploited as much as others.”

Many observers didn’t notice the success of smaller players, says Nick Binnings, vice president of brand development for the Miramar Beach, Florida–based Another Broken Egg. “People were so focused on the bigger brands that nobody paid attention.”

But as the morning meal has become an increasingly important daypart for restaurants, some daytime-only concepts have flourished.

“Breakfast has been one of the bright spots for the restaurant industry,” recording four consecutive years of traffic growth, says Bonnie Riggs, research analyst at NPD Group, a market information and advisory services company.

More than 12.5 billion breakfast visits were made to American foodservice outlets last year, 3 percent more than 2012, NPD reports. The growth was driven largely by quick-service restaurants, which account for 85 percent of all breakfast visits.

“Consumers have begun to realize that breakfast is a healthy way to start your day, so more people are eating breakfast,” Riggs says. And whenever a restaurant trend gains momentum, “A lot of people will try to jump on that growth opportunity.”

Still, NPD numbers show small full-service chains lost breakfast traffic four of the past five years, including 6 percent in 2013. However, market research firm Technomic also finds that daytime-only chains recorded better-than-average sales gains last year.

The single-shift segment has also seen some consolidation. Early this year, University Park, Florida–based First Watch acquired Arizona’s The Good Egg, which has 20 company-owned restaurants in the Phoenix and Tucson markets.

First Watch has nearly 120 units in 16 states, while the Egg and I, based in Fort Collins, Colorado, has more than 90 locations in 23 states.

Targeting a Higher Demographic

Most chains in this niche are franchised, operate between 6 a.m. and 3 p.m., and feature daily specials. They typically offer fresh, creative breakfast menus, including specialty egg dishes, and lunch with various sandwiches, salads, and soups.

Each has its own spin, and Another Broken Egg, which was started in 1996 by Ron Green in Mandeville, Louisiana, shows its New Orleans roots with items such as Bananas Foster, beignets, and the Mardi Gras omelet ($10.99) that includes Andouille sausage, crawfish, and red bell peppers topped with tomato hollandaise.

The company has since grown to nearly 40 units in 10 states, mostly in the Southeast, with Indianapolis being the northernmost store. Three of its restaurants closed last year.

Most of the early growth came from single-store franchisees, but once the chain got to 20 stores, the company launched an aggressive growth campaign.

“That switch took place about three years ago,” Binning says. “We wanted experienced multi-unit operators who would be able to penetrate a market quickly and grab market share. They provide efficiencies of management and costs.”

He says the concept is attractive to franchisees because startup costs range from $500,000 to $800,000 per unit, with average annual revenues of $1.3 million to $1.8 million.

The targeted customers are higher income—households with more than $100,000 annual income—located in and around submarkets that are home to both upscale retailers and strong Class A office space “that helps grow our lunch business,” he notes.

A key difference of Another Broken Egg is that its restaurants have full bars, serving brunch favorites Bloody Marys, mimosas, and Champagne, as well as beer. Bar sales range from 3 percent to 8 percent of total sales.

The restaurants, which seat more than 100, also feature a variety of signature benedicts, grilled burgers for lunch, and specialty brunches like Low Country favorite Shrimp and Grits. The most popular items are relatively simple: Two eggs, English muffin, and country potatoes, or the Granola, Fruit & Quinoa Bowl for breakfast and the BLAST (bacon, lettuce, avocado, Swiss cheese, and tomato) sandwich or spinach salad for lunch.

Binning expects the chain to have 45 units open by year-end and notes there are plans to build out several markets and enter some new ones in the next few years.