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    Friday, May 10, 2024

    Fast food fights sales slump with late-night hours, items

    Chicago - Fast-food restaurants are staying open later, providing sustenance to night owls and a rare source of growth for the beleaguered industry.

    Late-night customer traffic at fast-food places jumped 12 percent in the year ended in August, according to data from Port Washington, N.Y.-based NPD Group. That compares with a 0.2 percent gain for total traffic.

    The increase follows a push in the past few years by more restaurants to stay open until the wee hours and offer special menus designed to appeal to nocturnal customers. Checkers and Rally's are introducing deep-fried grilled-cheese strips, while Jack in the Box Inc. is selling chicken nuggets slathered with cheese, bacon and ranch - part of a "Munchie Menu" that starts after 9 p.m.

    Attracting a late-night crowd has brought both risks and rewards to restaurants, said Darren Tristano, executive vice president at research firm Technomic in Chicago. While the crowds can be rowdy or drunk - putting more demands on security - customers come hungry and often don't apply the same restraint in ordering food as they might during the day.

    "They're looking for food to sop up all the beer, wine and spirits they've been drinking all night," he said. "It's impulse-driven - things that are crave-able."

    Yum Brands' Taco Bell chain helped spur the industrywide shift to late-night menus in 2006 when it introduced the "Fourth Meal" campaign. It was part of the company's strategy to give people more reasons to come to Taco Bell besides lunch and dinner.

    Participating Taco Bell locations are open until 3 a.m. on Friday and Saturday nights, with some operating until as late as 4 a.m. or 5 a.m. About 95 percent of U.S. Taco Bell stores are open for late night. That's helping spur sales at the chain, which expects to expand to at least 8,000 locations in the U.S., Chief Executive Officer David Novak said during a conference call in July.

    "We have great progress now at breakfast. We have happy hour. We have the Fourth Meal," Novak said. "We see this as a power brand that can be leveraged throughout the day."

    The Fourth Meal features includes 760-calorie nachos and a 540-calorie Crunchwrap Supreme filled with beef and cheese sauce.

    The late-night expansion also comes at a price. Longer hours can bring fights, higher labor costs and the potential for more burglaries. In July, McDonald's lost a $27 million jury verdict over a claim that lax security at one of its restaurants led to the deaths of two teens, one who was beaten to death by a mob.

    The restaurant where the teenagers were attacked had drawn police attention for fighting during late-night hours in the past, according to a plaintiffs' document summarizing depositions and police reports.

    Terri Hickey, a spokeswoman for McDonald's, declined to comment on the case because it's a pending legal matter.

    "Whether at our company owned or franchisee-owned restaurants, the safety and well-being of our customers and employees is of the utmost importance, and we strive to provide a safe environment in our restaurants," Hickey said.

    Not all late-night customers are party-hopping teens. Restaurants also attract people working the graveyard shift, said Rick Silva, CEO of closely held Checkers Drive-In Restaurants. His company operates about 800 stores under the Checkers and Rally's brands, with $750 million in systemwide sales this year.

    "There is a group of people that are actively working during that time," Silva said. Others are up late playing video games with friends and don't have much to eat at home. "So they'll do food runs," he said.

    This month, the company is introducing grilled-cheese sandwich strips that are breaded and deep fried - a four pack is $1.99. They also sell chicken wings and Baconzilla fries slathered in cheese, ketchup and bacon.

    Customers aren't typically looking for healthy fare at that hour, Silva said.

    "Our menu is built for late-night cravings," he said. "If you're out late and you're partying with friends, you're not craving salads."

    Dunkin' Brands, which owns both Dunkin' Donuts and the Baskin-Robbins ice-cream chain, also is homing in on the late-night crowd. The company is focused on getting more customers to eat ice cream at odd hours to help boost sales. While there are more than 500 Dunkin' Baskin-Robbins combo stores open all hours in the U.S., none of the standalone ice cream shops are 24-hour locations.

    "If you're a worker and you have your break at 2 in the morning, an ice cream following that might be nice," Nigel Travis, CEO of Canton, Mass.-based Dunkin' Brands, said in an interview.

    Part of the after-10 p.m. surge can be attributed to a broader shift in American consumers' habits, said Technomic's Tristano. Millennials are grazing and snacking more, rather than just eating three square meals, he said.

    "They're having smaller meals more frequently," Tristano said. "These traditional day-part meals are shifting."

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