Young Diners a Fast-Food Challenge

Most consumers will tell you they prefer fresh, tasty, healthy food over processed, greasy, assembly-line fare. Millennials, though, may be the first generation to back that up with their wallets.

Fast-food operators say they are getting increasing pressure from the demographic — generally defined as those aged 18-34 — to boost the quality of menu items or risk losing millennials. At stake is more than $1 trillion in spending by the group to the fast-casual category, which includes chains such as Chipotle Mexican Grill or Moe’s Southwest Grill.

Readers of Consumer Reports, including millennials, the biggest generational group behind baby boomers, recently put such traditional chains as Burger King, Krystal and Church’s Chicken near the bottom of lists ranking fast-food chains on quality, value and healthy options.

The magazine noted that despite higher prices, fast-casual alternatives such as Firehouse Subs and Five Guys Burgers and Fries were gaining in popularity, because quality increasingly matters more to millennials than the convenience that has been fast food’s advantage for decades.

“Millennials have a renewed fascination with food,” said David Farmer, vice president for product strategy and development for Atlanta-based Chick-fil-A. “They grew up on food (media) and are more knowledgeable about ingredients. And social media has put a lot of attention on quality and customization.”

Esther Yi, 25, counts herself among that group. Yi, a business-affairs coordinator at Georgia State University, is a foodie who thinks knowledge of the subject has been assimilated into the everyday lives of millennials. She thinks that leads them to be more interested in menu innovation, service and an expectation that food be “fresh” and sourced as locally as possible.

And because of their internet savviness, food is a social experience for millennials, who post dinner pictures to websites or critique menu items in reviews.

Working in fast food’s favor are the economic struggles of millennials. Though their economic clout is great because of their sheer number, they are faring worse financially than their parents — a reverse of typical monetary trends in America in which each successive generation does better than the last.

In fact, millennials’ economic struggles have been blamed in part for the market-share losses of more-moderately priced sit-down chains such as Olive Garden, Red Lobster and Ruby Tuesday, experts said.

But fast-food companies have struggled with the group, because they are boxed into a menu that has to entice the broadest customer audience possible. And the more items they add to menus to grab more market share, the more crowded and confused their menus become.

“Most marketing leaders will tell you to figure out who you are and be true to yourself,” said Karen Bremer, executive director of the Georgia Restaurant Association.

As with all trends, there are caveats. Millennials, like all customers, will demand healthy choices in surveys, but they are not beyond buying the traditional meals that are the core of fast-food menus, said J.M. Owens, president of the Greater Atlanta McDonald’s Operators Association.

“All of us want to do a better job on what we put in our bodies,” he said. “(In reality), having salads on the menu gives us the psychological permission to come to McDonald’s and buy a burger.”

In a sense, that is what may have affected Krystal’s score with the Consumer Reports survey, said Doug Pendergast, the company’s president. Krystal moved its headquarters to Atlanta in late 2012, from its hometown of Chattanooga. Pendergast noted that Krystal has salads on the menu, but sales amount to only one-tenth of 1 percent of the total.

“In our research, we have seen a trend where the average customer has asked for more healthful options,” he said. “However, what people say in a survey and what they purchase in an actual restaurant are two different things. About 60 percent of all customers buy at least one Krystal hamburger with their order.” (Chicken, hot dogs and breakfast items are other big sellers.)

Still, Pendergast and fast-food industry leaders said they are taking notes. While millennials are no more monolithic than any other generation, there are common characteristics.

They like food they can share, are more willing than past generations to experiment with different types of food, love snacking and seek out chains with strong social-responsibility credentials.

Chelsea Phillips, 22, said she knows the big fast-food chains have salads, but she prefers getting them from Moe’s or Panera Bread because she perceives their ingredients to be healthier.

“Moe’s has free-range proteins, and that’s important to me, because I focus on healthy eating,” the Vinings resident said. “It’s a choice for me. I can’t digest what they have at fast-food restaurants, because the grease makes me sick.”