Consumers’ taste for fast food at traditional chains such as McDonald’s, Burger King and Taco Bell appears to be waning, while fast casual restaurants—Panera, Chipotle and the like—are growing more popular, according to a study by Brand Keys.
The study, conducted in July and August, examined the attitudes and behavior of 3,000 consumers—1000 each in three generational demo groups, millennials (age 18-29), genX (30-49) and baby boomers (50-plus).
“You only have to look at the same-store sales of brands like McDonald’s, Burger King and Taco Bell to see the shift that’s taking place,” says Robert Passikoff, Brand Keys president.
The study finds that consumers in every age demo group are eating less at fast food restaurants and more at fast casual restaurants.
The favorites? Millennials rank Chipotle as their favorite chain restaurant, followed by Five Guys Burgers, Panera, Subway and Papa John’s. GenXers’ favorite chain restaurant is Subway, followed by Chipotle, Au Bon Pain, Panera and Domino’s. Boomers’ favorite is Panera, followed by Au Bon Pain, Applebee’s, Subway and Chick-fil-A.
In the survey, millennials reported a 20% decrease in visits to fast food chains over the past year, but 42% said they increased their visits to fast casual restaurants.
GenXers reported an 11% decline in visitation to fast food restaurants along with an identical 11% increase in visits to fast casual restaurants.
And baby boomer visits to fast food restaurants declined by 18% over the past year, while their visits to fast casual restaurants increased by 20%.
Passikoff says millennials are “the most sophisticated” demo group right now and they are the toughest to reach via traditional TV marketing that McDonald’s and the other chains are heavily into. They’re also the toughest group with whom to build loyalty, he says.
In the study, when asked to characterize traditional fast food brands, 53% of millennials called it “dollar food,” which the report says is “a reflection of the reliance of traditional fast food brands on the Dollar Menu to boost sales.”
Passikoff says, “You don’t build brands or loyalty on the basis of price. That only works for commodities.”
The study finds that 89% of millennials favor fast casual food over fast food because they deem it to be tastier, healthier and more customized, and they are willing to pay more for it.
Unlike the younger millennials, the genXers are more vulnerable to value positioning by the restaurant chains, Passikoff says. However, value does not necessarily mean low pricing, just good value for the amount charged. And genXers in the study feel fast casual restaurants offer equal, and more often, better value than fast food brands.
Lowering the Boom
Of the three demo groups, baby boomers place the highest value on health and living well and they can afford and are willing to pay more for better quality and healthier options. They see fast casual restaurants such as Panera, Au Bon Pain and Applebee’s offering better quality food than the traditional fast food chains.
Another reason driving baby boomers away from fast food chains and to the casual fast food restaurants is better service, the study found.
One interesting point to note is that this week, Panera, which is listed among the Top 5 fast casual restaurants for all three age demo groups, announced the appointment of a new creative agency, Anomaly, replacing Cramer-Krasselt, which had handled Panera’s creative business since 2012.
While the creative of Panera’s campaigns was having a successful impact on consumers, Panera CMO Michael Simon wants to do things a bit differently. In a MediaPost report on Tuesday, Simon said, Anomaly will be “focusing on big ideas instead of the constraints of the traditional 30-second spot. We value this sort of disruption.”
Meanwhile, traditional TV advertising has seemingly played a significant role in Subway’s popularity among consumers. It too appeared among the Top 5 list of favorites in each of the three demo groups.
A consumer survey involving 115 restaurant brands released in Oct. 2013 by research company Technomic found that Subway had the most effective TV ad campaigns in three areas: memorability, relatability and hunger-inducing capability.
Passikoff says a restaurant chain’s menu and how it is promoted does matter to consumers.
“It’s true that consumers in all cohorts have definite expectations about eating out,” Passikoff says, “and a new McWrap isn’t going to do it. The traditional fast food brands have tried to be all things to all customers and failed. Longer menus have just resulted in longer waits, but more significantly, a real dilution of the brand.”
Brands such as Panera, Chipotle and Subway and even Five Guys Burgers are more narrowly focused, and consumers go there for their specialties.
“You really have to stand for something in the mind of the consumer,” Passikoff says. “Otherwise, loyalty for fast food brands is only going to move in one direction—down.”