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TheStreet Open House

Can Taco Bell Win The Breakfast Wars Against McDonald's?

Stock quotes in this article: YUM, MCD

NEW YORK ( TheStreet) -- The breakfast wars have gone nuclear. Yum! Brands' (YUM) Taco Bell launched its breakfast menu last Thursday, treading on turf long dominated by hamburger king McDonald's (MCD)

The Tex-Mex chain entered the mix with no holds barred, kicking off its breakfast debut with a cheeky advertising campaign featuring real-life Ronald McDonalds extolling the menu's virtues.

That one-two punch was countered by condescension from McDonald's.

Then, the fast-food chain revealed its hidden trump card. In its latest offensive, it will offer free McCafe coffee in stores for two weeks from March 31 to April 13, a loss-leading bet to encourage store traffic. This marks the first time the company has offered a nationwide coffee promotion. 

The chain throwing its weight around is understandable given how important breakfast sales are to overall revenue. According to Associated Press estimates, sales between the four-and-a-half-hour stretch to 10:30am comprise 20% of total revenue. Research firm Technomic notes the burger giant holds a 31% share of a robust $5-billion on-the-go breakfast market.

The Oak Brook, Ill.-based chain has maintained this strong foothold since it launched its first Egg McMuffin in 1975. Sure, Wendy's (WEN) has its own fast-food lineup and Starbucks (SBUX) and Panera  (PNRA) have their cafe-style fare, but for convenient, on-the-move offerings before 11am McDonald's has reigned supreme. Can Taco Bell end that decades' long winning streak?

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