A story in Fortune said McDonald’s partnership with UberEats is bringing in younger customers. A Global Data report said McDonald’s has seen an increase in customers 50 and older. A CNBC article said McDonald’s is losing customers. Wait a minute – more younger customers + more older customers = a decrease in customers? Curious as to how this could be, we called Neil Saunders, Managing Director at GlobalData, producers of more than 15,000 research reports a year. He explained several things to us about what their restaurant research is showing.
He said the new younger customers are typically in their late teens and early twenties, with lower incomes. Because they don’t own cars, they rely on delivery, mostly late at night and mostly pizzas. But now that McDonald’s delivers, they have become new customers switching to an entirely new menu experience. Older customers, he said, are coming more often in the morning for McCafé coffee and bakery items. They are also drawn in by the new interior design, with its neutral tones, softer lighting and more and better seating options.
So who is leaving?
Saunders says the loss is among GenXers and older Millennials. This is a bad sign for McDonald’s, as younger customers has always been their sweet spot. Saunders told us these prime customers are leaving McDonald’s for deal-related promotions and for regional and niche restaurants. We asked him about yet another article, this time in Forbes, that said McDonald’s is losing market share in breakfast and the need to fix it is urgent. He told us it’s true because GlobalData sees former customers going to competitors like Dunkin’ Donuts, Burger King and Taco Bell.
When franchisees are asked about their relationships with McDonald’s executives, the average grade is a D-.
A big source of frustration for franchise operators is how the much-ballyhooed All-Day Breakfast is not bringing in new customers as it was supposed to. Worse yet, sales of burgers and fries are being cannibalized by existing customers who are ordering breakfast items instead. As if that weren’t enough, having to make breakfast all day adds cost, complexity and congestion, a sore spot for franchisees who feel executives are out of touch. Chief Executive Steve Easterbrook, in a McDonald’s press release, said “We’re executing the right strategy to achieve long-term, profitable growth.”