The Wall Street Journal (WSJ) recently claimed that McDonald’s has a millennial problem. The company is rapidly losing customers in their 20s and 30s, once a key demographic to rival fast casual chains like Chipotle and Five Guys Burgers and Fries. Likewise, the number of people aged 19 to 21 who visited McDonald’s in the last month has fallen by 12.9 percent since 2011, and the number of 22 to 37 year olds making monthly visits has been flat.
It’s not that young people aren’t visiting fast food chains. In fact, they’re going more. The WSJ cites a Technomic report stating that 19 to 21 year olds have increased their monthly fast casual visits by 2.3 percentage points since last year, while 22 to 37 year olds are 5.2 percentage points more likely to frequent.
So what gives? Why do brands like Panera Bread and Chipotle continue to see their popularity soar with 18 to 33 year olds, that elusive group known as millennials, while mainstay brands like McDonalds fail?
McDonald’s chief brand officer Steve Easterbook blamed younger customers for the company’s falling sales. He said, “They’re promiscuous in their brand loyalty. It makes it harder work for all of us to earn the loyalty of the millennial generation.”
But according to Jinal Shah, global strategy director of JWT, brand perception is McDonald’s biggest problem. Culturally, there’s been a “seismic shift” in what we value as a society, Shah says, and millennials have “led the charge on it.”
Millennials seem to value authenticity in advertising above all, and Shah cites “authentic” favorites like Chipotle and Five Guys as examples. She says, “Chipotle was living and breathing its values long before it started sealing its reputation (with its Back to the Start and Scarecrow campaigns). Those Five Guys employees love the food they’re serving. Culture builds brands.”
Lately, McDonald’s culture problem seems as though it could be a driving factor behind its millennial problem. Negative press over labor protests and reports of contaminated meat in China makes the company’s new campaign “Fun makes great things happen” ring false to a generation that values transparency in advertising.
Casual dining chain Denny’s faced a similar problem in 2012. Millennials saw the restaurants as an outdated product of their parents’ generation, but chief marketing officer Frances Allen was able to turn that perception around by spearheading efforts to create the company’s much loved Tumblr. Instead of focusing purely on marketing, the Tumblr uses memes, gifs, and even haikus to encourage millennials to upload their own Denny’s photos. Denny’s food is still featured heavily in each post, yet viewers aren’t bombarded with coupons and specials. Instead, customers are invited to share in a like-minded community through inspired content.
Jen Catto, vice president of global solutions and content production for Say Media, believes that transparency is the secret to success for companies like Denny’s. Catto was recently involved in the #STANDFORSOMETHING campaign for Dr. Marten. Being as transparent as possible was key to the campaign’s efforts, she says.
“If there’s not transparency around the message, millennials feel like you’re trying to hoodwink them,” Catto notes.
The #STANDFORSOMETHING campaign includes a post created by Rookie editors highlighting the achievement of six young female activists from New York. Each of the girls was photographed modeling the latest Dr. Marten boots, but the campaign’s main focus was to drive engagement by focusing on the overlap between what Catto calls “the rebellious, free thinking, free spirited” message of the brand and similar qualities in Rookie readers. To appeal to millennials, Catto says that marketers must “find a conversation where they fit organically” be it Tumblr memes or social activism because, contrary to popular belief, millennials “don’t mind advertising as long as there’s transparency.” The strategy certainly worked for Dr. Martens. The #STANDFORSOMETHING post delivered over 100 percent of promised enjoyments along with 8.9 million impressions.
McDonald’s could certainly learn a thing or two from Denny’s and Dr Marten. Charlie Hopper, author of Selling Eating and principal at Young & Laramore, says that one of the biggest problems McDonald’s faces with millennials is its communication – the tendency to present models in ads that represent either a “falsely perfect ideal”, or a portrayal of “whatever target audience they want to lure”. Therefore, McDonald’s recent attempts to class-up its image by offering reporters and bloggers high-end versions of its cheap menu staples is probably yet another misstep in the company’s efforts to win a younger audience.
Brunch could be an avenue for turning around the company’s shaky relationship with younger customers. In July, McDonald’s quietly trademarked the name “McBrunch,” which has led many industry insiders to speculate that better breakfast offerings might be coming soon.
Betting on breakfast could be the best move as the company struggles to find its place among millennials. The age group loves brunch, and the past year has seen breakfast sales at fast food restaurants surge 5 percent from 2012, according to a Packaged Facts survey from August.
But the company’s main problem is the fact that it remains tone deaf to milennial’s preference for transparency. “McDonald’s should probably take care to present their more authentic side—to be as truthful and transparent as possible for a mega corporation,” says Hopper. Brands that have created successful engagement with millennials in the past are the brands that try to facilitate genuine conversation rather than trying to control the narrative.
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