Sales are falling between the big yellow arches, and fast food as we know it is turning over a new leaf as a new generation takes the wheel. (Photo: Flickr/Mike Mozart)
Head over to the website of McDonald’s, and you’ll be greeted with this statement:
“Since 1955, we’ve been proud to serve the world some of its favorite food.”
But are fast-food burgers and fries really our favorite food these days? After the company introduced the “Create Your Taste” program this week — where you can customize your burger by choosing from ingredients such as guacamole, grilled mushrooms, and (in some locations) Gouda cheese — people took to social media this week with photos of lettuce buns, a reminder that even with a new way to order food, people are still trying to make the meals themselves healthier.
The numbers paint a not-so-pretty picture for the fast-food giant. McDonald’s same-store U.S. sales also dropped 4 percent in February and 2.2 percent in May. And just last week, the company reported that its global comparable sales fell yet again — making for unhappy (once-thriving) franchise owners.
What’s to blame? Perhaps it could be changing consumer tastes — namely, those of Millennials, my generation, born roughly between the early 1980s and the early 2000s. “As Millennials, we are more skeptical of the fast-food category than any other generation before us — which is shown through our purchasing pattern, but also in how we are talking about the industry,” Jason Dorsey, a Millennial researcher at the Center for Generational Kinetics (and a Millennial himself), tells Yahoo Health.
In fact, Yahoo Health polled other Millennials to find their opinions about McDonald’s — and while the results were admittedly unscientific, they pointed largely to the idea that the fast-food giant has a bad rep to shake. (Respondents noted that they perceived the food to be something reserved for long car rides; unhealthy and cheap; and with unclear ingredients.)
Industry experts aren’t shocked by these sentiments. Born in the age of technology, we’ve managed to impact almost every industry we’ve touched — and the food industry is no exception, says Dorsey.
“Millennials have hit lower-dollar items first,” he says. In part, that has to do with our age: “Millennials currently have a lot more interaction with McDonald’s than with automobile companies, for example.”
Other areas our generation is affecting: membership organizations like country clubs (who needs to pay money to hang out with your friends when you can reach them on Twitter?); car-buying (partly because we’re buying cars later, and partly because we’re now buying through social media and digital decision-making); the housing market (we’re getting married later, so we’re buying homes later and renting longer — sending rents sky-high); the workplace (with technology, we don’t want to work in a cubicle!); and, too, the restaurant biz.
And these changes have many industry experts hooked: What’s to become of fast-food chains like McDonald’s as our generation continues to grow up?
The Fast-Food Problem
One study Dorsey and his colleagues conducted found that ingredients are incredibly important to our generation. Sixty percent said they aim to avoid synthetic hormones, high-fructose corn syrup, trans fats, and artificial preservatives — all ingredients that are often found in fast food.
We’ll tell you ourselves that transparency matters, too. “I want to see what’s going into the food, if I’m in a fast atmosphere,” Christina Panagakos, a 25-year-old from Kansas City, Missouri, tells Yahoo Health. “At a place like The Mixx in Kansas City, it is a faster atmosphere, but you go down a line and people assemble your salad behind a glass — Chipotle does this for salads.”
Meanwhile, something like Wendy’s Strawberry Fields Chicken Salad could very well include fresh fruit in the dish. But because Panagakos isn’t actually able to see the restaurant workers make it, “all I imagine is freeze-dried strawberries,” she says.
Mike William, a 26-year-old from Somerville, Massachusetts, shares the same sentiment: “You can’t see what they are doing at McDonald’s, Burger King, or Wendy’s. I’m skeptical about everything that’s in my food,” he tells Yahoo Health.
Transparency is just a part of the way Millennials make decisions about what they eat, says food-marketing expert Phil Lembert, editor of supermarketguru.com, a nutritional site that analyzes food trends to help consumers. But transparency hasn’t always been a non-negotiable factor. For Baby Boomers (born between 1946 and 1964), it was more about taste and convenience. And for Gen-Xers, born between the early 1960s and the early 1980s, it was about saving money and sharing — not about taste or creativity.
“Millennials look at a whole different series of criteria for what foods they’re going to purchase: the quality of food, the transparency of a company, where the food comes from, and the sustainability of that food,” Lembert tells Yahoo Health.
And, for the most part, we hear those conversations coming out of fast-casual joints like Chipotle. Recently, the company stopped selling pork at hundreds of locations because of a violation in how the animals were being raised. Chipotle is also incredibly vocal about only using “good” ingredients. Walk inside a store and you’ll see that décor and messaging alike focus on “food with integrity” and how the company values how food is raised and cultivated. (Interestingly, McDonald’s was a major investor in Chipotle for nearly 10 years.)
Chipotle’s messaging aims to get across to consumers its focus on how food is raised and cultivated. (Photo: Flickr/Oleg Brovko)
“I think people appreciate places like Chipotle,” says Panagakos. “You can make your meal as healthy or unhealthy as you want. You see it being put together, and they are open with how their animals are treated and fed.”
In the past, fast-food joints’ focus was on the mass market. For the future, these places must hone in on who they are trying to serve and how they can meet those individual needs, says Lempert. After all, Millennial consumers tend to have more rigid diets as well as higher standards for the food experience in general.
And to serve Millennials, Lempert agrees that the food itself has to evolve — beyond just ingredients. “It can’t be the same food on that menu board every time you go in,” he says. The food needs to create excitement. And while this is more difficult on a larger scale — not to mention expensive — Millennials want unique flavors: “They want ethnic foods — and an ‘Italian sandwich’ is not ethnically inspired.”
In the past few years, McDonald’s has taken strides to do this. The company recently announced that it plans to fade out chicken grown with antibiotics in coming years. It also eliminated eight items from its menu and a whole slew of other ingredients, testing out new menu items and options like the “Create Your Taste” model — allowing people to choose what goes on their burger.
When asked to comment on initiatives to attract Millennial consumers, McDonald’s commented to Yahoo Health:
“Millennials visit McDonald’s today, and we’re taking steps to be an even greater part of the conversation with them. Create Your Taste enables customers to order at a digital kiosk, and select a bun and toppings (such as spicy mayo, chili lime tortilla chips, and lettuce wraps instead of a bun) for a customized burger delivered directly to their table. We’ve introduced menu items that Millennials love, which include the Egg White Delight, McCafé beverages, and shareable menu items, such as the 20-piece Chicken McNuggets. Millennials, families, and our customers share a desire for quality ingredients and freshly prepared menu items. We’re listening to all of our customers — including Millennials and evolving our menu to meet their expectations and changing eating habits.”
So why does McDonald’s continue to lose — even compared with other fast-food competitors? Burger King, for example has actually seen sales increase. Experts suggest that could be due in part to the now-Canadian-based company bringing back the popular, classic menu item Chicken Fries and focusing on the menu. Wendy’s could also be appealing to fast-food customers with higher-end items like a bacon portabella melt on brioche, some say. Taco Bell, owned by Yum Brands, is chugging along, too — hoping that delivery will drive sales.
Burger King’s chicken fries. (Photo: Flickr/Mike Mozart)
Another reason why McDonald’s in particular seems to be the focus of the fast-food backlash: It’s “the biggest target possible in the space in terms of revenue, history, visibility, and employees,” says Dorsey. “It’s naturally the prime target for a multitude of vocal groups, from health and wellness advocates to the labor movement.”
Meanwhile, the company has struggled to innovate in response to changing preferences in a time of unprecedented competition in the quick-service and fast-casual space, Dorsey adds. The result? “Significant negative public focus.”
The Millennial Marketing Scheme
Here’s where it gets tricky. To some extent, companies understand consumer wants — especially when it comes to transparency and cleaner labels, says Lempert. The problem is, that same transparency can quickly become a marketing scheme.
Take, for instance, Pepsi’s Caleb’s Kola, a “craft” soda. Pepsi touts three ingredients: sparkling water, cane sugar, and kola nut — making the product seem healthier than other sodas and the company transparent about what it puts in the soda. But do a little digging and you’ll see the drink also contains a “special blend of spices,” 29 grams of sugar, and caramel color (which has been linked to cancer). “Here’s a company that understands what to do, but they haven’t gone the whole way. We’ve hit ‘Phase One,’” Lempert says. While the effort is there, the product doesn’t match the marketing — and the marketing proves to be a bit of a facade.
But to some extent, this marketing can work: “Bright and healthy-looking places, foods, and drinks seem better and fresher,” says William. “I tend to think healthier-looking food or drink is healthier than fast food, regardless of if it’s the truth,” adds Panagakos.
But that’s just it — sometimes it’s not the truth. “The perception that one fast-food brand is healthier than another isn’t necessarily always true,” says Dorsey. “Many Millennials base that decision on speed, price, taste, or quality of the food — and the vocal part of the generation starts saying certain things are healthier than others.”
Francesca Basile, a 28-year-old in Manhattan, New York, says that even though the food at fast-casual joints may not actually be healthier, she tends to think it is. “I may be wrong, but I think that when you’re paying slightly higher prices for food that is made out of real ingredients and prepared to order, then it’s healthier and more acceptable,” she tells Yahoo Health.
Some fast-casual joints — even though they tend to serve larger portions, and thus, more calories — have what’s called a “health halo,” Kristin Kirkpatrick, RD, the manager of nutrition services at Cleveland Clinic Wellness Institute, tells Yahoo Health. “A health halo is a classification of wellness, health, or nutrition that individuals may place on a brand that is marketed as healthy. And while that brand may have some healthy food options, the halo gives the illusion that all options under the brand must be healthy.”
Consider Shake Shack — the popular burger chain with “cool” environments, high-quality ingredients (no hormones, no antibiotics), and an interactive social media presence. You may think that because of all these factors, the joint’s food is automatically healthy (or at least, healthier than other fast-food restaurants). Well, look at these stats: A hamburger from McDonald’s has 240 calories and 8 grams of total fat. A Shake Shack single hamburger? 360 calories and 17 grams total fat. Of course, there are other factors beyond calories and fat content to consider — like how the food is produced and the exact amount of meat and bun — but that’s just one example. Even more: Research out of Cornell University has found that people actually consume more calories when they were at an eatery with a health halo.
Customers wait in line at a Shake Shack restaurant. (Photo: Flickr/Drew XXX)
Regardless, it’s hard for fast-food brands to break away from an unhealthy reputation — even with healthier menu choices. “In the food business, perception is reality,” says Dorsey.
Panagakos notes that in her mind, there’s just something inherently unhealthy about fast food. “It could be because of all the media surrounding how unhealthy it is — YouTube videos, documentaries like Fast Food Nation, Michelle Obama even,” Panagakos says. “I think it’s just something that everyone knows is unhealthy because most of these places are decades old and have been doing things the same way for a long time. There’s little chance that any of these restaurants will ever been seen as a healthy option even with all their efforts to provide healthier-seeming choices.”
And it’s sentiments like these — despite the efforts from fast-food giants — that create room for competitors to step in and take that market share, says Dorsey.
After all, Dorsey says, “we still have to eat.”
The Rise of Fast-Casual
While the trust may not be there for classic fast-food joints, if you look at the data, we’re still eating out, says Dorsey. But where? “Fast-casual places, sandwich places, salad bars, and pre-prepared meals are all on the rise — it’s a shift toward what is perceived to be healthier, but also better,” he says. “Millennials who can afford to are spending their money to get a better experience.”
Our generation wants more than just food, though — we want locally or regionally owned, and we want unique. “Millennials grew up with the idea that buying local is a reflection of your values and that makes you a better part of the community,” says Dorsey. We want a great dining experience — something that is unique to our generation. But the ability to choose meals and customize dishes is automatically a challenge for fast food, he says. And while fast food is arguably the most affordable food option, Dorsey says Millennials are OK spending a little bit more for “better” food. We also want good service (which might seem strange, considering ours is a generation that’s received criticism for not being able to look up from the phone). “But great service might mean ordering through your phone,” Dorsey says. We want social media. We want connectedness. We want variety.
These experts agree that all of this points to an even bigger rise in fast-casual joints to come. “If we look at typical fast-food restaurants, the problem is not just the foods — the problem is the environment,” adds Lempert. “McDonald’s, Burger King … the stores themselves haven’t really changed much. They might have new seats or new artwork, but Millennials who love food trucks and all kinds of food experiences don’t want to walk into a store, look at a menu, and be given food that looks the same every single time,” he says. “The model is broken.”
Ultimately, we are the new consumer, and the model has to change. Millennials are said to be one of the most connected, informed generations ever. To some extent that’s harmful — are we too plugged in? (Sometimes, sure.) Is all of the information we receive correct? (Not always, no.) After all, perception, especially when it comes to food, isn’t always the truth.
Regardless, consumer demand is at an all-time high, says Kirkpatrick. And connectedness also means the ability to seek out the truth. While marketing schemes and health halos may work temporarily, companies can’t “fake it” long-term, says Lempert. “This generation will search information out — they grew up with search engines. If they turn to the Internet for answers and those answers are different than what they are being told, then they are going to be angry.” And angry consumers don’t buy.
As Kirkpatrick puts it: “When I was a child, I couldn’t just jump on the Internet to look at a menu for a fast-food restaurant or watch a documentary movie about how farming practices have changed. Information can be powerful, and in this case, it just might be industry-changing.”
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