By Kristine Cannon
Breakfast joints are sweeping the area
Earlier this year, Oregon-based Biscuits Café expanded into the northern Scottsdale area.
In late spring, popular Phoenix-based Matt’s Big Breakfast announced its expansion into the Scottsdale area, to take place sometime in the fall.
In September, Tucson’s popular brunch hot-spot, Prep & Pastry, celebrated its grand opening at the Scottsdale Waterfront.
Calgary-based OEB Breakfast—which celebrates its 10th anniversary this year—opened its first U.S. location late last month in Scottsdale.
There’s been an influx of breakfast and brunch restaurants in Scottsdale and throughout the Valley in 2019.
But why now? And why the Valley?
“We’ve always been unique in a way that we’ve been a test market,” says Steve Chucri, president and CEO of the Arizona Restaurant Association. “Because we’ve been a melting pot of California, people from the Midwest out West, people from the East coast, very few people are natives here. And so as, as such, we have had ideas and concepts tested here.”
The breakfast segment may be thriving now, but according to Ryan Field of Plated Projects, Over Easy was one of the first to hit the market.
“And we look forward to ongoing continuous growth throughout Arizona,” says Field, Over Easy’s franchise partner.
Over Easy opened its first restaurant in 2008 in Phoenix. Now, the franchise has six locations in Arizona with two more opening in Downtown Chandler and North Scottsdale this month.
Over Easy also plans to expand into Flagstaff by the end of the year – and open new eateries in Mesa, Queen Creek, the West Valley and Tucson next year.
According to Chucri, homegrown restaurants, like Over Easy and Wildflower Bread Company, began to expand around 2012 or 2013.
This was also around the time that out-of-state breakfast restaurants, like Snooze and First Watch, expanded into Arizona.
Snooze first arrived in 2013 after opening its first restaurant in Colorado in 2006; and in 2014, First Watch purchased The Good Egg and converted all 19 locations into First Watch restaurants.
“Arizona was our third state we expanded to after starting in Colorado and expanding to southern California,” says Andrew Jaffe, chief marketing officer for Snooze.
“Our CEO, David Birzon, had lived in the Valley for about 17 years and knew the market well as a great place for business. We understood that the Valley offered great long-term opportunities for growth.”
Snooze has done so well in Arizona, it now has five locations, with a sixth to open at Circle Records and Tapes in downtown Phoenix in December.
“It’s an incredibly cool building and we have wanted to bring Snooze to this neighborhood since we first began looking at the Arizona market,” Jaffe says.
Jaffe says he’s seen an influx of—and emphasis on—the breakfast and brunch businesses over the last three to five years.
“I think this is a convergence of two things happening, the first one being that breakfast is part of a morning routine. I think people are wanting to start their day off right and including breakfast in that routine is important,” Jaffe explains.
And he’s right.
According to a 2017 report by NPD Group, a food and consulting research firm, out of the three mealtimes, only breakfast has seen a growth in traffic and breakfast visits for the year ending in March 2017 increased by 1%.
Additionally, Technomic’s 2016 Future of FSR Consumer Report found that 22% of consumers are more likely to visit full-service restaurants in the daytime hours than they were two years ago.
Further, NPD estimated that breakfast consumption, both in and away from home, would grow by 5% through 2019.
Jaffe says the second, broader trend that explains the increased interest in breakfast is people seeking more meaningful experiences.
“People are connecting with brands who provide deeper experiences and opportunities like that,” Jaffe says.
What Jaffe says Snooze does differently—and well—is making its guests feel part of the Snooze family and delivering an “uncompromising guest experience.”
“Our ever-evolving Snooze menu will continue to be innovative and will evolve ahead of guest needs and current food trends,” he says, adding:
“We believe that continuing to tell our larger story about who we are and how we do breakfast differently from the way we think about our community and sustainability initiatives to the emphasis we put on our responsibly sourced, Snooze-approved ingredients.”
But why are restauranteurs choosing breakfast? What makes opening a breakfast-centric restaurant so appealing?
OEB Breakfast Co. founder, owner and chef Mauro Martina wanted to create his own schedule, one that would allow him to spend more time with his family.
“I wanted to have a restaurant. I wanted something small, something cozy, something that I can make the ingredients shine. And I want to have the right hours,” Martina explains. “Ten years ago, I thought it was the right thing, and I still today think that’s the right thing to do.”
Jaffe adds the advantage of owning and operating a breakfast restaurant is the ability to balance one’s career in the hospitality industry while still maintaining a personal life.
“Work-life balance is important at Snooze and being a breakfast restaurant allows for Snoozers to work and then be home with their families in the evening,” Jaffe says.
For the most part, breakfast restaurants also have the advantage of lower cost of goods, like eggs, bacon and bread—but not at OEB.
“Sure, there are huge profit margins, but that’s not who we are,” Martina says. “It’s European bacon. We’re working with truffles. We’re working with sturgeon caviar. We’re working with duck fat. It’s not cheap.”
OEB’s is a farm-to-table, chef-driven concept. For example, at its Scottsdale location, OEB uses pasture-raised eggs and butter from Vital Farms based in California and Texas.
“We had a pretty hard time finding the perfect egg for us because I wanted a cage-free, free-range pasture, vegetarian-fed, GMO-free egg,” Martina says.
Martina says he chose Scottsdale as OEB’s first U.S. location because it’s already a year-round travel destination for Canadians.
He had plans to expand into Arizona two years ago.
“That sector’s exploding right now in the U.S. and in Canada, not so much in Europe, but I think it will eventually,” Martina says. “I’m not surprised. I’m actually excited because this generates interest; this generates, for anybody in this sector, to explore further, and it’s fun. An egg is not just an egg. There’s so much you can do with it.”
Chucri, however, is surprised to see the increased number of breakfast restaurant openings in the Valley.
He says that while it’s unsurprising to see existing restaurants like Snooze expand, it’s concerning to see so many restaurants brand-new to a niche market open up.
“That’s when you start to raise an eyebrow and say, ‘OK, this is good. However, how much capacity do we have as an industry for a very narrow niche when it comes to breakfast and lunch places?’” Chucri says. “I do get a tad concerned when I see more and more independent restaurants that are new to the marketplace opening.”
Add to that the increasing minimum wage, which will lead to food-service companies responding to the higher wages via increasing menu prices.
Currently, the minimum wage in Arizona is $11 per hour and will increase to $12 on January 1.
“We’re keeping our eye on that because it’s not easier to stay in the restaurant industry. It’s getting harder with these labor issues,” Chucri says.
He added that as the minimum wage increases, production costs will increase – then lead to increased menu prices.
According to Chucri, Arizona sold just under $13 billion worth of food last year, around an $800 million increase compared to the previous year.
On a national basis, the U.S. sold $863 billion worth of food last year, a 3.6% increase from the year before.
And of that 3.6% growth, 3% was due to menu price increases, not increased transactions, Chucri says.
“So, what does that tell you? Are we going to hit a critical mass where people are going to refuse to pay $12 for an omelet?” he says.
How restaurants will succeed, according to Chucri, is strong branding and distinguishing the restaurant from the competition.
“If you don’t define yourself, if you don’t stand out, you’re not going to succeed — plain and simple,” he says.