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It is 3:36 a.m. on a Thursday at McDonald's in Garner, N.C., outside Raleigh. The town's taverns closed more than an hour ago, and the last clubgoers are straggling home, sharing the road with cars driven by waitresses, commercial cleaners, musicians, nurses and computer analysts heading home from work. The McDonald's sign, posted high along a commercial strip of big-box stores and chain restaurants, is one of the few still glowing.
Inside the McDonald's (MCD, news, msgs) kitchen, Julia Diaz is making buttermilk biscuits, while Silvia Roldan is grilling sausage patties and eggs for breakfast. At the drive-through window, D.C. Chavis is picking up a Premium Crispy Chicken Ranch BLT sandwich and fries.
Chavis, 24, has just clocked out after 12 hours at a food warehouse. He used to pick up an after-work snack at an all-night convenience store or diner. Now he swings by McDonald's at least five times a week. The food is a lot better at McDonald's, he says, adding that the prices are cheaper and the brand is one he trusts. Says Chavis: "I was raised on McDonald's."
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McDonald's went 24/7 in Garner in April 2005, after a corporate push to boost profits by extending store hours. Franchisee Fred Huebner had doubts at first. He doesn't anymore.
By catering to the area's night owls and early birds on U.S. Highway 70, Huebner figures he has increased his restaurant's revenue by 4.5%, or $90,000, over a year. "There are so many customers out there all times of the day," he says. "We have to be out there, too."
Over the course of an average day, 1,500 people -- the equivalent of one out of every 16 people in the middle-class suburb of 24,095 -- drive in to the Garner McDonald's.
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Eyes off the fries
The clientele is every bit as diverse as the town's population. Old-timers josh with one another over morning coffee. Office workers zip to the pickup window for breakfast behind the wheel. Repairmen stop on a midshift break. Mothers take a breather while their preschoolers scamper in the restaurant's play area. Families order dinner in Spanish. And, in caravans, twentysomethings drop in after a night of carousing.It wasn't always like this. When Ray Kroc launched his first drive-in in 1955, McDonald's was a two-meal place, opening just before lunch and closing not long after dinner. It kept those hours for the next 20 years. Then, with the national introduction of the Egg McMuffin in 1975, the company turned breakfast into a fast-food meal, too.
Now the world's biggest restaurant chain wants to take over the rest of the day. Breakfast is busting out of its old boundaries. It now stretches up to seven hours at many locations, and the company is considering making it an all-day option. Next on the agenda: snack foods and fruit smoothies for between-meal refuelings and late-night munchies.
The all-hours offensive reflects a strategic shift at McDonald's. For most of its history, growth meant one thing: more locations. Until the late 1990s, that worked. Like a juggernaut, McDonald's rolled over the competition and across the nation, opening hundreds of outlets each year and cranking out a run of hit products. Then the company reached a saturation point. Though overall revenue kept climbing, the new sites stole customers from existing locations.
Margins and same-store sales slid into 2002, reflecting diminishing returns on the $1.2 billion a year that the company was plowing into new restaurants during this period. By spending so much time on real estate, recalls James Skinner, a 35-year veteran who was promoted to chief executive in late 2004, "we had lost our focus. We had taken our eyes off the fries."
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