Fast-Casual Chains Are Winning Over Fast-Food Millennials
The Rise of the Fast-Casual Restaurant and What It Means for the Fast-Food Chains
By Steve Penhollow
It seems like just yesterday that the fast-food chains were competing with each other by devising increasingly calorie-packed, fat-saturated sandwiches with names like the Double Down, the Baconator and the Quad Stacker.
What a difference five years makes — many consumers these days want nothing to do with such culinary behemoths. But before we discuss what a difference five years makes, perhaps we should first discuss what a difference four decades makes.
Beloved by Children, Disliked by Nutritionists
It was in 1971 that McDonald’s first introduced McDonaldland, a popular 30-year marketing concept that transformed the restaurant into a fairy-tale realm inhabited by whimsical costumed characters named Ronald McDonald, Grimace, the Hamburglar and Mayor McCheese. So closely did McDonaldland resemble the worlds created for ’70s children’s television shows by Sid and Marty Krofft that the Kroffts successfully sued McDonald’s for copyright violation.
“The obesity epidemic and the health and wellness trend driven by a desire for natural ingredients are now a part of the zeitgeist”
Burger King answered McDonald’s in the late ’70s with its own Burger King Kingdom, inhabited by the king himself, as well as Sir Shake-A-Lot, the Burger Thing, the Duke of Doubt and the Wizard of Fries. As beloved as these characters were and undoubtedly still are among kids of all ages, many food and nutrition experts have long believed that the burger chains’ extremely successful efforts to appeal to children were actually contributing to the childhood obesity epidemic in North America.
The claims of such experts were largely ignored by the general public for years.
The Hunger for Healthier Fare
But it was difficult to ignore a sense that a tide had turned in 2013, when a 9-year-old girl named Hannah Robertson lambasted McDonald’s CEO Don Thompson at a shareholders’ meeting. “It would be nice if you stopped trying to trick kids into wanting to eat your food all the time,” she reportedly told him.
McDonald’s true vulnerabilities as a business were prophetically addressed by Alan Siegel, onetime chairman of brand consulting company Siegel+Gale, in a 2002 New York Times article. Siegel said fast-food chains couldn’t solve their problems by changing their advertising. They could only solve their problems by changing their food.
“Brands known for poor quality will not survive in the long run.”
“Companies must reposition their brands,” Siegel told the Times, “to represent healthier choices, smaller portions, or more transparent health information. And in doing so, the food companies may actually strengthen their businesses.”
A Turning Point for the Fast-Food Industry
Thirteen years later, the chains are still trying to figure out how best to interpret and act on that message.
One more-recent message that the fast-food chains can’t afford to spend too much time mulling over: Millennials are turning away from traditional fast-food fare in droves, according to Darrin Duber-Smith, senior lecturer in marketing at Metropolitan State University in Denver. So-called fast-casual chains like Chipotle, Panera, Noodles & Company and Five Guys Burgers and Fries — boasting healthier and fresher ingredients — are serving millennials their quick lunch of choice these days.
So far, the fast-food chains have responded to the rise of the fast-casual restaurant with marketing efforts rather than substantive menu upgrades.
McDonald’s recently resurrected the Hamburglar as a wrier and more ironic character. KFC followed suit by doing the same with the late Colonel Sanders (assayed this year by former Saturday Night Live cast member Darrell Hammond). Watching a recent KFC ad in which Hammond expresses a desire to put chicken in the chain’s lemonade, a viewer can be excused for wondering who the spot’s intended audience is and what their reaction to it is supposed to be.
McDonald’s and Burger King need to abandon the strategy of complicating their menus with premium burgers and instead “improve core products.”
Even one of the Hamburglar’s creators, former McDonald’s marketing executive Barry Klein, expressed skepticism about the resurrection of the burger thief to the New York Times. “Why they’re using the Hamburglar again, I have no idea,” he said. “To me, it’s just another attention getter. It’s like a gimmick to make people pay attention to the commercial.”
Duber-Smith said these recent marketing efforts are “all meant to attract young males,” and it remains to be seen what impact these efforts will have, if any.
Burger King’s attempt to resurrect the king character as a mute stalker who came to be widely known as “Creepy King” was a “notable failure,” Duber-Smith said.
According to Zach C. Cohen at Time magazine, the reboot was retired in 2011 “in favor [of] a new ad campaign that features [Burger King’s] healthy food options.”
Fewer Gimmicks, Higher Quality
Concerns about the deleterious effects of fast food have existed for years, Duber-Smith said. What’s changed is the ubiquity of those concerns. “The obesity epidemic and the health and wellness trend driven by a desire for natural ingredients are now a part of the zeitgeist,” he said.
Duber-Smith believes there is only one direction for these venerable fast-food companies to go. “They must improve food quality. People are serious about this. They want value not [expletive] products.”
Duber-Smith said the market has moved on and that “McDonald’s has struggled to keep pace with the change in attitudes and behaviors among food consumers.”
Five Guys has succeeded by offering higher-quality burgers at higher prices — a business model that may cause McDonald’s some trepidation. But Duber-Smith said the American Southwest chain In-N-Out Burger has offered Five Guys quality at McDonald’s prices for years. His point: Low cost does not necessarily have to equal low quality.
“Brands can and often must change to survive.”
“McDonald’s prices are higher than In-N-Out despite much lower quality,” he said. “The ‘better burger’ guys are eating their lunch, so there are lessons to be learned.” The fast-food chains, Duber-Smith said, will have no choice but to study and emulate the fast-casual model. “Say adios to artificial flavors and colors, antibiotics and most preservatives,” he said. “Not every older brand will survive.”
McDonald’s and Burger King need to abandon the strategy of complicating their menus with premium burgers and instead “improve core products.”
“Brands can and often must change to survive,” he said. “Brands known for poor quality will not survive in the long run. These are huge companies. They have the means to figure out what to do.”
An interesting and contradictory coda to this blog post can be found in Taco Bell’s success with its breakfast menu, which is lacking in anything that can reasonably be described as healthy. Duber-Smith said Taco Bell made the wise choice to introduce and promote the menu with a straightforward marketing message, free of gimmicks.
USA Today reported in June 2015 that McDonald’s had begun testing an all-day breakfast menu in Mississippi.
For McDonald’s, breakfast may indeed prove to be the most important meal of the day.
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Steve Penhollow
Freelance Contributor
BMDG
Photos: Shutterstock
