McDonald's is actively losing the millennials, revealed a shocking report about the American fast food giant. Only one in five millennials have even tasted a Big Mac in the lives, which speaks volumes about the company and its dwindling clientele. However, the fast food chain needn't start worrying just yet.
Facing tough competition from new rivals, McDonald's has lost nearly an entire generation of consumers. According to a report, the fast food chain and its operators are acutely aware of the increasingly tough competition from chains like Five Guys, Steak 'n Shake, and Shake Shack. These rivals have steadily steered away the millennials with their customized offerings. The situation is so bad; kids and young adults of the 21st century actively avoid McDonald's, revealed the report about one of the largest fast food franchises in the world, reported The Wall Street Journal.The Big Mac, "his gotten less relevant," wrote a top McDonald's franchise in a memo. Essentially, the burgers put out by the world's largest burger and fast food chain, simply aren't good enough, indicated the franchise. According to the memo, just one in five millennials has tried the flagship product. Needless to say, the youngsters, teenagers and young adults are the fast food industry's core customers who invariable make or break the business. However, it is clear McDonald's is losing out on these customers.
Is McDonald's on its way out? The world's largest fast food chain with presence in almost all cities and even small towns of the world isn't in trouble, yet. While the number of burgers sold by McDonald's hasn't fallen in the past few years, it hasn't climbed either. "The number of hamburgers sold at McDonald's U.S. restaurants has been flat for the past few years." says the memo bluntly.Needless to say, the growth metrics of the fast food chain aren't encouraging. According to some former high-ranking executives, McDonald's was growing only at a 1 percent to 2 percent annual rate before the alleged stagnation.
Customers between the ages of 18 and 34 are avoiding McDonald's and its burgers, especially Big Mac. It appears they are saying no to the frozen and ready-to-cook patties in favor of made-to-order alternatives that are offered by rising chains like Shake Shack. In fact, the changing expectations of the customers have even convinced Chipotle to venture into burger-making.
Big Mac roughly constitutes 20 percent of McDonald's revenue, and hence, is one of the most critical items on the menu from a financial perspective. Realizing that young customers are actively avoiding the mass-produced, and from the freezer and into the fryer patties, the chain is now actively seeking to replicate the approach to burgers that has worked for its rivals. Additionally, in tune with the moral expectations of the millennials, it has already decided to use the eggs that have been laid by cage-free hens. The chain is testing fresh beef, and using naturally bred chicken that isn't pumped with antibiotics.The case of McDonald's is eerily similar to Budweiser (aka Bud Heavy, aka not Bud Light), reported Slate. The publication points out the fact that both enjoyed a massive and devoted customer base, but their products were aimed at a mass market. The new entrants managed to fragment the same with better, and in some cases cheaper, options. These aspects attracted the young consumers.
The American food and drink industry is increasingly becoming more regionalized and customized. While large fast food chains like McDonald's can offer consistency and reliability in taste and flavor, they run the risk of becoming boring.McDonald's has structured its business around the "drive through" model which is known for its speed. The business model is responsible for about 70 percent of the chain's sales in the United States. Anything that is done in the name of customization for the customer, increases the wait times, which McDonald's can't afford.
Interestingly, although McDonald's may lose out on the millennials, the made-to-order chains simply won't be able to beat the ability to serve a piping hot burger within 90 seconds, for the customers who are pressed for time on a highway.
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