McDonald’s just reported a 3% revenue decline. This is a stunning reversal in the company’s history. From 2005 to 2013 McDonald’s grew revenues by almost 50% or $10 billion.
Why did McDonald’s see their sales fall? In a word, millennials!
By 2014, when McDonald’s began to experience declining revenues, the average millennial was 23 years old. As adults, millennials are now the most employed demographic group in our economy. They are financially recovering from the Great Recession and school debt. They are taking over our economy!
With the emergence of millennials as the economic driver of our economy, McDonald’s faces this realty, only one out of five millennials have eaten McDonald’s signature Big Mac hamburger.
Even more telling for future fast food sales, millennial parents represent 42% of households with children.
The question confronting the fast food industry is whether millennial moms will take their families to eat fast food?
Moraga California millennials define the fast food industry’s revenue crisis
I raised my two millennial generation kids in Moraga, California. Moraga is a suburban town located in the East Bay of San Francisco. When I moved to Moraga in 1997 the town had three fast food national chain restaurants. One is now closed. Another one is about to close.
This is the fast food industry’s worse nightmare come true. Moraga used to be their type of town. It is a town centered around neighborhoods, great schools and kids. “Moraga Mom” is a term of pride earned by dedicated mothers.
What happened to fast food in Moraga?
My own experience is a possible explanation. My millennial generation kids became food activists during their teenage years. I bought them computers and one of things they did with them was figure out how to think for themselves. Thinking for themselves they decided fast food was a threat to their health and future. Because I was thirty pounds overweight at the time my kids began banging on me to stop eating fast food. Everyday they tried to get me to stop drinking my beloved Diet Coke.
This experience with my kids was not an isolated incident. Millennials at Moraga’s local college, Mount St. Mary, started a student operated organic garden. The students invested their time at this garden to achieve both a healthier diet plus food cost savings.
Moraga Moms join millennials to focus on healthy food
At the same time I was becoming aware of how millennials were shifting away from fast food I also began to see increased health activism from Moraga Moms. I was honored to serve on Sustainable Moraga, a volunteer organization growing awareness on what our town could do to be sustainable. When I first joined this group it was a lonely experience of meetings attended by a small number of engaged citizens. But then something telling happened. A Moraga Mom showed up at our meeting in panic mode over the use of pesticides at the town’s middle school. A longer story made shorter, this mom galvanized her peer group. These moms were able to stop pesticide use at our schools.
Examples of increased health activism by Moraga Moms extended throughout the community. For example, my wife joined other Moraga Moms in volunteering at the organic Moraga Community Gardens. Moraga started a farmers market. It is financially anchored by Moraga Moms’ purchases.
It was this nexus of Moraga’s moms and millennials that undercut the sale of fast food restaurants in Moraga. Millennials saw fast food as not being cool and not aligned with their quest for purpose. Moraga Moms rejected fast food as unhealthy for their families. The area restaurants that are growing sales are the ones offering locally grown, fresh and healthier food. Their food still has to be tasty. But now it also has to be healthier.
The three drivers that are pushing fast food sales over the cliff
Based on my experiences, and key demographic trends reshaping our economy, these are the three drivers pushing fast food sales toward a revenue cliff:
- Over 70% of the boomer generation, the anchoring fast food customer, is now overweight or obese. The boomer generation is slowly, but unavoidably, facing a diet based health crisis that will force them to reduce or stop their purchase of fast foods and soda. The boomer generation is emerging into a era where they will be too sick to eat fast food or drink soda.
- The millennial generation is moving past fast food. Lower prices will not win them back. Doing less harm will not win them back. They want purposeful food that is diverse, socially engaging and healthy. Until the fast food industry can deliver that recipe it will not win millennials as customers.
- Millennial moms are emerging as a disruptive demographic group that may forever crush the fast food industry’s revenues. If 80% of millennials have never eaten a Big Mac then how likely will it be that they will ever serve it to their children? That question haunts the fast food industry’s revenue growth potential and will determine its future.
About the author
About the author
Bill Roth is a clean tech pioneer who led the team that launched the first hydrogen fueled Prius. He is a featured contributor on Triple Pundit and Latin Business Today. His book, The Secret Green Sauce, has been used by thousands of business people to implement proven green best practices that make money and a difference. Bill’s latest book, The Boomer Generation Diet, is his personal story on how to achieve sustained weight loss while still having fun and living more. The book’s ten customizable best practices are the sustainable solutions to our national weight crisis that threatens our health and medical cost bankruptcy.