McDonald's Faces 'Millennial' Challenge by: Julie Jargon
Aug 25, 2014

TOPICS: Change; Competitive Positioning
SUMMARY: McDonald's is losing its luster with younger consumers. Customers in their 20s and 30s are defecting to competitors, in particular so-called fast-casual restaurants like Chipotle Mexican Grill and gourmet-burger chain Five Guys. Younger diners are seeking out fresher, healthier food and chains that offer customizable menu options for little more than the price of a combo meal.
TERM PAPER APPLICATION: In analyzing the predicament, it is vital to cite facts and numbers, not just subjective impressions. To start with, Consumer Reports magazine said that in a survey of more than 32,000 subscribers, readers rated
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McDonald's U.S. sales have been flat or falling for much of the past year. (John Taggart for The Wall Street J …
During the same period, the percentage of 19-to-21-year-olds increased their monthly visits to fast-casual restaurants by 2.3 percentage points, and 22-to-37-year-olds by 5.2 percentage points, Technomic says.
Alec Petersen, a 21-year-old from Hoboken, N.J., rarely visits McDonald's anymore. "I do have nostalgic memories of McDonald's, but Chipotle has much better quality food, or at least it feels like they do," said Mr. Petersen, who recently graduated from Duke University.
McDonald's says new items like its McWrap sandwiches—chicken and vegetables rolled in tortillas—are helping to woo millennials, consumers in their midteens to mid-30s. The Oak Brook, Ill.-based company also is trying to enhance its credibility with young customers by marketing more on digital channels and testing mobile ordering and payment.
"The millennial generation has a wider range of choices than any generation before them," McDonald's Global Chief Brand Officer Steve Easterbrook said in an interview. "They're promiscuous in their brand loyalty. It makes it harder work for all of us to earn the loyalty of the millennial generation."
McDonald's U.S. sales struggles have also been compounded recently by other woes challenging