Last Thursday McDonald’s made an important step towards becoming McDonald’s 2.0, a Millennial-friendly fast food chain that makes healthy food a more substantial part of its value proposition. In partnership with the Clinton Foundation’s Alliance for a Healthier Generation, the company announced its plans to make significant changes in its menu and marketing, increasing “access to fruits and vegetables to help families make informed choices.”
This is not the first time McDonald’s has taken such steps, but so far these were mainly baby steps. Now, for the first time, it looks like the company is really ready to get serious about embedding healthy food into its business.
How serious? McDonald's said on Thursday it will provide customers in 20 of its largest markets a choice of a side salad, fruit or vegetable as a substitute for French fries in value meals.
Other important changes are related to the promotion and advertising of Happy Meals: McDonald’s will start promoting and market only water, milk, and juice as the beverage in Happy Meals on menu boards and in-store and external advertising, utilize Happy Meal and other packaging designs “to generate excitement for fruit, vegetable, low/reduced-fat dairy, or water options for kids” and ensure 100 percent of all advertising directed to children includes a fun nutrition or children’s well-being message.
So why did McDonald’s announce all of these steps now? In one word: Millennials.
Let’s be clear – it’s not that McDonald’s was shocked to find out recently that french fries and soft drinks are unhealthy and decided to act on it. The company has known this for too long. I also don’t believe these changes come out of pressure from their current customers, as the very limited success of the healthy items that were added to the menu so far suggests. I believe that while the company is interested in not being associated with childhood obesity, the main driver behind this move is finding new ways to attract the people that don’t go to McDonald’s – the Millennials.
As The New York Times pointed out, “the millennial generation, a key demographic that is being wooed by fast-casual restaurants like Panera Bread and Chipotle, in particular has not become a loyal patron of McDonald’s.” And McDonald’s knows too well that in order to attract Millennials it needs to make a significant shift towards healthier and better food that will change the perception of McDonald’s in this market segment. Its competitors, from Burger King to Subway advance similar agendas, so it's easy to see why McDonald’s is suddenly interested in making such a shift.
The challenge McDonald’s is facing is quite interesting – how to become a Millennial-friendly fast food chain? It can start by looking at Millennial preferences and key drivers. One study found that fast food is also the primary restaurant format for Millennials, not just for non-Millennials and that taste, value, accuracy (getting orders right every time) and cleanliness drive Millennials’ fast-food purchase decisions.
Interestingly, offering healthy food choices or having nutritional value printed on menus or available were pretty low on this list of drivers, which seems to suggest that Millennials prefer Chipotle over McDonald’s not because they think the food at Chipotle is necessarily healthier but because Chipotle provides them an overall experience they value more - one that is tasty, offers good value for the money, fun, interesting and feels authentic. And this is probably why McDonald’s efforts so far to attract Millennials haven't achieve significant results – it was about changing few items on the menu, not changing the McDonald’s experience.
This might be a difficult change for McDonald’s from its traditional marketing plans. According to The New York Times, the company said “it would use its arsenal of marketing tools, from menu boards to national television advertising campaigns, to help customers understand the nutritional choices available." This might be the time to remind the company that Millennials value social networking and interactive digital content, and not TV ads so much. It can certainly take a lesson or two from Chipotle’s playbook that lately produced the viral Scarecrow YouTube film and app.
In all fairness, McDonald’s is also moving ahead of Chipotle in some aspects – for example, with its commitment to retain “an independent, reputable third party organization to verify progress on the commitment in a clear and transparent manner as part of the agreement.” This is the sort of transparency that skeptic Millennials will probably appreciate.
It will be interesting to see it this remake of McDonald’s will succeed, because while this plan is quite comprehensive, especially compared to what McDonald’s has done in the past, the new McDonald’s will still maintain too many elements of the "old" McDonald’s formula. On one hand, it makes sense – McDonald’s is too big and still too successful to make very drastic changes (even the current ones will take some time and will be implemented in 3-7 years). On the other hand, McDonald’s might find out that a hybrid value proposition, combining the old and the new, is still not good enough for generation Y.
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.
Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.