The New Fast Food: The 3 Millennial Trends That Are Killing McDonald’s

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The fast food industry is struggling — but not because consumers are eating out less. In fact, despite reports of fast food failures — from Subway closing over 500 locations, to Logan’s Roadhouse and Friendly’s filing for bankruptcy — Americans are eating out now more than ever before (see graph below). So what are fast food restaurants doing wrong? NewtonX conducted a survey with 300 restaurant executives and food industry market researchers to understand the shifting habits of consumers and why their evolving preferences have left fast food in the dust.

fast food disruption dining

Millennials Rule the Workforce, and They Want a New Dining Experience

Over the past ten years, restaurant and bar sales have grown at twice the rate of general retail spend. The problem for fast food giants, is that this spend has moved into new, healthy, sustainable, and tech-friendly restaurants, and away from traditional quick service models. While millennials still value speed, they prefer fast-food alternatives such as MealPal or sushi Kiosks, or delivery services like Seamless, UberEats, and PostMates.

Additionally, millennials value options and ambiance, as reflected in new cafeteria/ food hall style markets with artisan fare. Food cart pods have also become increasingly popular; in San Francisco there are numerous pods, such as Spark Social by UCSF, that include outdoor seating and decorations. In New York, food halls such as Urban Space in Manhattan or North 3rd St. Market in Brooklyn provide tens of options for fast dining in an indoor space. Importantly, these spaces differ from traditional conceptions of cafeterias or food halls in that they are well decorated, clean, and have artisan food providers such as Stumptown coffee, alongside small, lesser-known businesses.

It’s not just the vibe of fast food restaurants that has consumers turning away, though: it’s also an interest in health and environmentally conscious dining. For instance, By Chloe, a vegan burger and fries chain, recently raised $31M even as its meat counterparts such as Bennigans and Friendly’s went bankrupt. The Impossible Burger (a meat substitute burger known for “bleeding” like real beef does), which started as a Silicon Valley phenomenon, is now served at White Castles and other chains in over 3,000 locations nationwide.

Millennials value aesthetics, health, and environmental impact — and most traditional fast food restaurants have lacked at least two of these factors. Additionally, with more and more millennials shifting away from personal vehicles and toward public transportation and ride share options, the drive-thru model is not longer as appealing as it once was. Fast food restaurants that are persevering through this period, such as McDonald’s and White Castle, have adapted to include these new preferences into their dining models. Just this February, McDonald’s announced that by the end of 2022 at least 50% of all Happy Menus worldwide will have no more than 600 calories.

Fast Food: Adapt or Perish

Restaurants that want to appeal to consumers ages 22-36 (the demographic with the most buying power) will need to adapt to the preferences of their customers. There are three key ways they can do this:

  • Emphasize aesthetics/ trendy marketing
  • Offer healthy items such as quinoa based dishes and salads
  • Showcase low environmental impact of products and packaging

While some fast food restaurants have instead opted for high-tech initiatives to keep millennials engaged (such as Domino’s AI-powered pizza topping distribution and experimentation with drone delivery), what will keep the aging millennial population returning won’t be robotically-constructed pizzas. In order to avoid the fate of Subway and Friendly’s, fast food restaurants will need to meet shifting consumer preferences for dining experiences.

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About Author

Germain Chastel is the CEO and Founder of NewtonX.

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