To reach millennials, that trendy group roughly aged 18-28, McDonald's is pulling out all the stops.
McDonald's (MCD) is revamping its menu in an attempt to appeal to millennials, so pretty soon you'll be able to get your Big Mac with a nice side salad.
Acknowledging a nationwide trend toward healthier food, McDonald's is targeting this younger demographic, who are already less devoted to one of America's most recognizable brands than their predecessors. While McDonald's is still the most valuable restaurant chain in the world, a survey published this spring in AdAge showed the company ranks 17th among millennials, behind, well, most of the other chains you can think of.
And it's not even that twenty-somethings don't like their burgers – franchises like Burger King (WEN) and In-N-Out are still popular. Part of the problem, according to McDonald's insiders and marketing specialists, is that young people are far more concerned with choice than brand loyalty. That's the line of thinking encouraging major beer companies to purchase microbrews by the bushel and re-fashion their brands with swanky labels and new product line extensions.
It's also that line of thinking which is prompting young people to flock to brands like Chipotle (CMG), Panera Bread (PNRA), Subway, and other restaurants where the items are made to order. It's not as if a steak burrito is much healthier than a Southern Style Chicken – but millennials are increasingly insistent that their food be catered exactly to their taste.
To be more accommodating, McDonald's has refashioned their wraps to come in a variety of flavors, and lets customers specify whether they prefer their chicken grilled or fried.
And to court young parents, they've even eliminated soda from their Happy Meals – unless you make a special request, of course.
That's just another example of how McDonald's has focused on marketing. They started posting their nutritional information on the walls before it was required by law. And their advertising campaigns have taken an artsier, more etherial bent – like this one – a far cry from the feel-good ads we remember from our youth.
And while McDonald's has already rolled out a number of healthier options, like the McMuffin with less calories and, to quote NPR, "one fewer yellow dot." But they've also conceded that their full roll-out of healthier options, which will include melon slices and kiwi on a stick, won't be available in most stores until 2020.
Luckily for them, McDonald's still dominates with older age groups. And there's plenty of time to figure out how to get more traction with the supposedly cool kids.
Ironically, it's a former subsidiary that appears to be leading in this area. A new ad by Chipotle, which breaks pretty much every classical marketing rule in the book (it's over 3 minutes long, and doesn't even mention the brand by name until the final second), went viral on its first day, and currently has close to 7 million views on YouTube.
The next question is, which investors will put their money where their mouth is?
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Do you see investment opportunities in retail? Use the list below as a starting point for your own analysis.
1. Chipotle Mexican Grill, Inc. (CMG, Earnings, Analysts, Financials): Develops and operates fast-casual, fresh Mexican food restaurants in the United States. Market cap at $12.99B, most recent closing price at $420.34.
3. Yum! Brands, Inc. (YUM, Earnings, Analysts, Financials): Operates as a quick service restaurant company in the United States and internationally. Market cap at $32.86B, most recent closing price at $72.37.
4. Burger King Worldwide, Inc. (BKW, Earnings, Analysts, Financials): Operates and franchises fast food hamburger restaurants, primarily under the Burger King brand worldwide. Market cap at $6.95B, most recent closing price at $19.81.
5. Domino's Pizza, Inc. (DPZ, Earnings, Analysts, Financials): Operates as a pizza delivery company in the United States and internationally. Market cap at $3.75B, most recent closing price at $67.65.
(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research, all other data from Finviz.)
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- Chipotle Mexican Grill, Inc.(CMG, Chart, Download SEC Filings)
- McDonald's Corp.(MCD, Chart, Download SEC Filings)
- Yum! Brands, Inc.(YUM, Chart, Download SEC Filings)
- Burger King Worldwide, Inc.(BKW, Chart, Download SEC Filings)
- Domino's Pizza, Inc.(DPZ, Chart, Download SEC Filings)
- Panera Bread Co.(PNRA, Chart, Download SEC Filings)
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