McDonald’s so far unfazed by latest entrant in breakfast war


FORTUNE — Waffle tacos and breakfast burritos haven’t yet become a formidable challenger to McDonald’s Corp.’s (MCD) most profitable meal of the day: breakfast.

The fast-food chain said Thursday its global same-store sales climbed 1.2% last month, boosted by strong results in China. Sales were flat in the U.S., although the figure came in line with analysts’ estimates.

It was the first full month since Yum! Brands Inc.’s (YUM) Taco Bell chain debuted a breakfast menu with steak and egg burritos, waffle tacos and flatbread melts, among other items. After Taco Bell entered the market in late March, McDonald’s responded by announcing a two-week promotion that would give breakfast customers a free cup of McCafe coffee at its participating locations. A number of restaurant chains have made a push to offer more breakfast options, competition that could potentially hurt McDonald’s.

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But analysts were encouraged by the burger chain’s latest results, saying Taco Bell doesn’t yet pose a serious threat.

“It’s encouraging that [McDonald’s] hasn’t seen much of a disruption from the Taco Bell launch,” said Morningstar Inc. analyst R.J. Hottovy. “It’s very easy to come up with a breakfast platform, but very difficult to sustain it. I don’t see Taco Bell challenging McDonald’s dominance in the category any time soon.”

Breakfast is an important part of the day for restaurant chains. Over 12.5 billion breakfast visits were made in the U.S. last year, according to research firm NPD Group. NPD said traffic at that time of the day rose 3% in 2013, while restaurant visits for lunch and dinner declined.

Sterne Agee Senior Research Analyst Lynne Collier said that while Taco Bell could eventually eat into McDonald’s business, it will take some time for the Yum! division to build a notable market share in the breakfast business.

MORE: McDonald’s fights back with free coffee

“One thing about breakfast is it’s habitual,” she said. “People get into a routine and it is hard to change that.”

Late last month, McDonald’s Chief Executive Don Thompson told analysts during a conference call that the most recent competitors that entered the breakfast space hadn’t affected the chain.

“There has been breakfast competition for a number of years in the U.S. market,” Thompson said.

Internationally, McDonald’s same-store sales rose 0.3% in Europe and climbed 2.9% in the Asia/Pacific, Middle East and Africa region. Same-store sales track sales at all McDonald’s restaurants that have been in operation at least 13 months.

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