Oatmeal is the new burger.
Burger King, the world's second-largest hamburger chain, added oatmeal to its breakfast menu this week, joining a slew of other chains that have brought the hot cereal out of the cupboard and into restaurants and drive-thrus.
Burger King says it is trying to offer customers a healthier breakfast option beyond its sausage croissant sandwiches and French toast dipping sticks. It's also an attempt by the struggling chain to catch up to competitors and boost sagging sales by appealing to customers beyond its base of burger-and-fries fans.
"We are definitely looking to broaden our target and our audience," said Leo Leon, vice president of global innovation for Burger King Corp.
Breakfast is becoming the most important meal of the day for restaurants — accounting for nearly 60 percent of traffic growth between 2005 and 2010. And oatmeal is the latest battleground. It's low-cost, easily prepared and doesn't spoil quickly. It also appeals to people who want quick, affordable food they perceive as healthier than the typical fast-food breakfast fare.
Starbucks Corp., the world's biggest coffee chain, said its $2.49 oatmeal has become its most popular breakfast item since it launched in 2008. Last year, McDonald's Corp., the world's largest burger chain, added $2.99 oatmeal to its menu. Fast food chain Chick-fil-A and Denny's casual dining restaurants also offer oatmeal, for $2.49 to 2.85 and 3.49 to 4.49, respectively. Burger King's oatmeal, at $1.99, is the cheapest of the group.
Restaurants are trying to capitalize on oatmeal's good-for-you reputation. But some industry experts say it's not a good fit for fast-food chains.
McDonald's has faced scrutiny for its oatmeal's 4.5 grams of fat and 260 to 290 calories. That's roughly equal to the number of calories in its own hamburger or cheeseburger. By comparison, Burger King's oatmeal, which was created by Quaker Oats Co., has 110 to 270 calories and 1 to 4 grams of fat.
Still, Steve West, an analyst at Stifel Nicolaus, said: "People don't go to Burger King or McDonald's for their oatmeal ... they go for an Egg McMuffin."
For Burger King, oatmeal is part of a larger strategy. It's critical for the chain to find a convenient new breakfast option. Burger King said 10 percent to 15 percent of its customers visit during breakfast. And the fast-food chain sells the majority of its food to go or at the drive-thru.
The company also is eager to replicate the success of McDonald's, which has reinvented itself as a more hip and healthy place to eat, remodeling stores, offering wireless Internet service and introducing new salads, smoothies and coffee drinks. That's brought in higher-income customers than the young males fast-food chains typically depend on — a demographic hit particularly hard by unemployment in the weak economy.
Burger King, based in Miami, has a lot of catching up to do. McDonald's brought in more than $32 billion in U.S. sales last year, nearly four times Burger King's $8.7 billion, according to research firm Technomic. That was a 4.4 percent increase for McDonald's and a 2.5 percent decline for Burger King.
In the second quarter, Burger King's profit fell 13 percent and its revenue fell 4 percent to $596.2 million, compared with a year earlier, due in large part to weakness in its North American operations. McDonald's profit rose 15 percent and revenue grew 16 percent to $6.9 billion during its comparable period.
It's going to take more than a hot meal to turn around Burger King's business. Industry experts say the company has let its product lineup grow stale, and the quality of its stores has deteriorated.
"You can sell all the oatmeal and lattes and smoothies you want," said West, the analyst. "But they've got to remodel the stores — for the most part Burger King stores are very old and rundown."
Burger King, which has been reevaluating its business since it was acquired by investment firm 3G Capital last year, recently made other changes. The chain said Friday that it was retiring its mascot "The King" and launching a new campaign focused more on food. The company also added new salads and "Apple Fries" — apple slices cut to look like fries for its kids' meals.