August 1, 2014

Millennials demand more from fast-food restaurants

Fast-food operators say they are getting increasing pressure from millennials to boost the quality of menu items, or risk losing their business.

Most consumers will tell you they prefer fresh, tasty, healthy food over processed, greasy, assembly-line fare. Millennials, though, may be the first generation to back that up with their wallets.

Fast-food operators say they are getting increasing pressure from the demographic – generally defined as 18- to 34-year olds – to boost the quality of menu items or risk losing the business of millenials, the biggest generational group behind baby boomers. At stake is more than $1 trillion in spending by the group on the fast-casual category, which includes chains such as Chipotle Mexican Grill and Moe’s Southwest Grill.

Readers of Consumer Reports recently put such traditional chains as Burger King, Krystal and Church’s Chicken near the bottom of lists ranking fast-food chains on quality, value and healthy options.

The magazine noted that, despite higher prices, fast-casual alternatives such as Firehouse Subs and Five Guys Burgers and Fries were gaining in popularity because quality increasingly matters more to millennials than the convenience that has been fast food’s advantage for decades.

“Millennials have a renewed fascination with food,” said David Farmer, vice president for product strategy and development for Atlanta-based Chick-fil-A. “They grew up on food television and are more knowledgeable about ingredients. And social media has put a lot of attention on quality and customization.”

Working in fast food’s favor are the economic struggles of millennials. Though their economic clout is great because of their sheer number, they are faring worse financially than their parents – a reverse of typical monetary trends in America in which each successive generation does better than the last.

In fact, millennials’ economic struggles have been blamed in part for the market share losses of more moderately priced sit-down chains such as Olive Garden, Red Lobster and Ruby Tuesday, experts said.

As with all trends, there are caveats. Millennials, like all customers, will demand healthy choices in surveys, but they are not beyond buying the traditional meals that are the core of fast-food menus, said J.M. Owens, president of the Greater Atlanta McDonald’s Operators Association.

“All of us want to do a better job on what we put in our bodies,” he said. “(In reality) having salads on the menu gives us the psychological permission to come to McDonald’s and by a burger and milkshake.”

While millennials are no more monolithic than any generation, there are common characteristics.

They like food they can share, are more willing than past generations to experiment with different types of food, love snacking and seek out chains with strong social responsibility credentials.

Chelsea Phillips, 22, said she knows the big fast-food chains have salads, but she prefers getting them from Moe’s or Panera Bread because she perceives their ingredients to be healthier.

“Moe’s has free-range proteins and that’s important to me because I focus on healthy eating,” she said.

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