MONEY Food & Drink

7 Reasons Our Coffee Habit Is Costing More These Days

dollar sign made out of coffee beans
Andrew Unangst—Getty Images

In a relatively short period of time, the American coffee habit has gotten a lot more expensive.

Monday, September 29, is National Coffee Day, when restaurant and coffee chains around the country are giving out free (or extremely cheap) cups of Joe to the masses. The day is quite the exception, however, given how as a nation we are spending more and more on coffee.

Here are 7 reasons why:

We’re drinking coffee earlier in life. A study published this year by S&D Coffee & Tea shows that on average, younger millennials start drinking coffee at age 15, while older millennials picked up the habit at 17. Typical members of Gen X, meanwhile, started drinking coffee at 19.

More of us drink coffee regularly. U.S. coffee consumption rose 5% in 2013, according to a National Coffee Association survey, meaning that today 83% of the adult population drinks coffee; 75% have coffee at least once a week.

And we’re drinking higher-priced coffee at that. Data from 2014 shows that 34% of Americans drink gourmet coffee daily, an increase of 3% over last year. Young people in particular are willing to pay higher prices for coffee: In a new PayPal poll, 18% of people age 18 to 34 said they are willing to pay more than $3 per cup, compared with just 8% of those age 50 to 64.

We eat breakfast outside the home more often. Our fast-moving, on-the-go culture has been blamed as a reason for declining sales of cereal and milk, as more Americans are skipping the traditional breakfast at home and opting for foods that can be eaten on the run, like Pop Tarts and fast food via the drive-thru. In fact, breakfast has become enormously important to quick-serve restaurants because it’s the one mealtime experiencing strong growth lately. Coffee purchased at a restaurant or on the go at a convenience store or café is always more expensive than coffee brewed and drunk at home.

One word: Keurig. “In 2002, the average price of a coffee maker was about $35,” a recent post at the Northwestern Kellogg School of Management blog stated. “By 2013, that number had risen to around $90.” Truth be told, it’s still easy to find a coffee maker for $35 or even less, it’s just that the type of machine—the traditional kind that brews ground coffee by the pot—is no longer typical. It’s been replaced by the pricier single-cup brewer that came into the mainstream over the last decade thanks to the Keurig company. For many consumers, the speed and convenience of such machines outweighs the premium one must pay beyond the plain old-fashioned coffee maker. Some 1.7 million single-cup Keurig brewers were sold in the second quarter of 2014, an increase of 200,000 over the same period a year before.

Plus, K-Cups themselves are pricier. It’s not just the single-cup machines that cost more—the cups themselves do too. The price per single-serve K-Cup pod varies widely depending on the style of roast, whether you’re buying a small pack or stocking up in bulk, and how strategically you shop for deals. But no matter how good you are at snagging deals, you’ll almost always pay more for coffee pods than you will for old-fashioned ground or whole bean coffee. One price-comparison study conducted a couple of years ago indicated that K-Cup coffee cost more than $50 per pound, roughly four times the cost of a bag of Starbucks or Dunkin’ Donuts beans. What’s more, K-Cups are subject to a 9% across-the-board price hike in early November. (Side note: Mother Jones and others have pointed out that single-use K-Cups cost more and are worse for the environment than recyclable pod filters, though Keurig Green Mountain has plans to make all K-Cup pods fully recyclable by 2020.)

All coffee is simply getting more expensive. A long-lasting drought in Brazil (the world’s biggest producer of coffee beans) has pushed global coffee prices to near-record highs, and the market may be affected for years to come. Already this year, java junkies have faced price hikes from coffee brands such as Starbucks, Folgers, Maxwell House, and Dunkin’ Donuts. Interestingly, even as coffee has gotten more expensive and economic growth hasn’t exactly been sizzling in recent years, Starbucks sales have outpaced lower-priced competitors Dunkin’ Donuts and McDonald’s. What does that show us? For the most part, coffee lovers are passionate about their caffeinated beverages and aren’t going to trade down to what they view as an inferior cup of Joe, even if doing so would save a couple of bucks here and there.

MONEY buying a home

The Surprising Feature Millennials Insist on When Buying a Home

Century 21 CEO Richard Davidson explains what young, single home buyers value in a new house.

MONEY Shopping

You’ll Never Guess What Store Sells the Most Vinyl Records

Urban Outfitters Store in Herald Square, NYC, 2014.
Urban Outfitters Store in Herald Square, NYC, 2014. Patti McConville—Alamy

It's the same store known for selling supposedly hip, intentionally offensive clothing—and then apologizing in mock surprise when people are offended.

It’s Urban Outfitters, the clothing chain that recently received grief and load of media attention by marketing a seemingly blood-stained—or was it just vintage and discolored?—Kent State sweatshirt, (The store has also in the past has sold controversial, ill-conceived designs such as a T-shirts with slogans like “Depression” and “Eat Less” and bottles that look like they hold prescription drugs.) Urban Outfitter stores have been selling vinyl records for years, in a campaign that’s been so successful it’s drawn imitators trying to attract hipster music lover customers. You can get vinyl with your kale at some Whole Foods stores.

Now Urban Outfitters is claiming to be the biggest seller of vinyl records in the world. “Music is very, very important to the Urban customer,” CEO Calvin Hollinger said in a meeting with analysts this week (HT: Buzzfeed). “In fact, we are the world’s number one vinyl seller.”

At first glance, it might seem odd for a youth-focused apparel retailer to be in the business of selling music—especially one using technology that was considered old-fashioned and dying in the 1980s. But when you think a little deeper about vinyl records, and who’s interested in them, the sales category makes more sense. For one thing, records tend to have a longer shelf life than fast fashion. No matter how many fashion cycles pass, people will still want to listen to (and buy) the music of the Sex Pistols and Bob Marley and the Ramones. It doesn’t take up a whole lot of space in a store to hold a few hundred records, and the same customers who enjoy flipping through the albums are likely to be put in the mood for browsing other merchandise.

What’s more, in many parts of the country, there are no record stores left, so Urban Outfitters is the only option left—a surprisingly good option, as many skeptics have found. “I kept finding more and more crates full of more and more records,” one Village Voice writer stated regarding a shopping venture to Urban Outfitters last summer. “And pretty decent ones! And not super expensive (generally between $10 and $20).”

Perhaps most importantly, even as streaming has crippled sales of CDs and digital downloads, vinyl record sales are on the upswing. Nielsen data shows that for the first six months of 2014, vinyl LP sales were up 40% compared to the same period of a year prior. What’s behind the surge in vinyl?

“Ask any number of your friends who collect and listen to vinyl records, and there’s a good chance they’ll tell you vinyl just sounds better than anything else,” a recent Motley Fool post summed up. There’s also the hipster factor, combined with nostalgia and the collectability of classic and obscure record album covers. “In short, vinyl is cool.”

Also interesting: Starting in 2008, an event dubbed Record Store Day has been celebrated every April, in which more than 1,000 independent stores in the U.S. have special promotions and roll out new albums on vinyl for sale. The 2014 edition of Record Store Day was the most successful ever, with sales up 58% over the previous year’s event, and up 91% compared to the previous week, according to Rolling Stone.

Last year, a Record Store Day imitation event was added to the mix, and its second incarnation actually takes place this Saturday in select stores. Something tells us it won’t be quite as successful as Record Store Day, however. It’s called Cassette Store Day.

TIME singles

Why 25% of Millennials Will Never Get Married

A new report from Pew Research predicts that more folks under 35 will be single forever. Here's why

The number of Americans who have always been single and will never marry is at a historic high, says a new Pew Research report, partly because they don’t have jobs and partly because marriage is becoming less highly-regarded. Most people think it’s important for couples who intend to stay together to be married, but the number of single Americans who want to get married has dropped significantly even in the last four years.

The report, based on census data and Pew’s surveys, is the latest in a series of indicators that marriage’s stock is on a sharp downward trajectory. Fewer young people are getting married and many are getting married later. About 20% of Americans older than 25 had always been single in 2012, up from 9% in 1960. In the black community, the numbers are even starker: 36% of black Americans older than 25 have never been married, a fourfold increase from 50 years ago.

The one number that hasn’t really budged is the percentage of 64 year olds who have never been married. In 1960, it was 8% and in 2012, it was 7%. But the report’s authors Wendy Wang and Kim Parker say this might be changing. Each decade, the percentage of people of marriageable age who are single has grown. “When today’s young adults reach their mid-40s to mid-50s, a record high share (roughly 25%) is likely to have never been married,” they write. “This is not to say that adults in their mid-40s to mid-50s who still haven’t married will never marry, but our analysis suggests that the chance of getting married for the first time after age 54 is relatively small,” adds Parker.

Why aren’t people getting married anymore? The three main reasons people give for their singleness are that they haven’t found the right person (30%), aren’t financially stable enough (27%) and are not ready to settle down (22%). Many more young people are eschewing tying the knot, at least for a while, for shacking up. The researchers don’t see that as the new normal yet. “Cohabitation is much less common than marriage and cohabiting relationships are much less stable than marriages,” says Parker.”It’s hard to imagine marriage being replaced any time soon.”

But the Pew researchers teased out a bunch of other reasons by asking what people wanted in a partner.

The quality most women want in a husband, somewhat unromantically, is a secure job, followed very closely by similar ideas on raising kids, which was the quality most men wanted in a spouse. The problem is, the report points out, that young men are increasingly less likely to be employed. “In 1960, 93% of men ages 25 to 34 were in the labor force; by 2012 that share had fallen to 82%.” Those young men who are employed are not bringing home as much bacon as they once did. In fact, if you adjust for inflation, the median hourly wages of men aged 25 to 34 are a fifth less than they were in 1980.

Compounding that issue is that women have entered the labor force in much higher numbers. So while there are more men than women who are single and available, there are far fewer employed men who are single than employed women. Fifty years ago there were 139 single young men with jobs for every 100 single young women; that ratio has now dropped to 91:100. “If all never-married young women in 2012 wanted to find a young employed man who had also never been married, 9% of them would fail,” says the report, “simply because there are not enough men in the target group.”

But lest that bum all the single ladies out too much, the report points out that single young women don’t have to marry single young men: they can marry guys who are divorced, widowed or much older. Should they bother? Now that comedian Sarah Silverman has declared marriage barbaric, is it done? The Pew researchers don’t think so.

“Marriage hasn’t fallen out of favor,” says Parker, “but financial constraints and imbalances in the marriage market may be holding people back from taking the plunge.”

MONEY

Student Debt Could Cost Housing Market $83B This Year

It might as well be a curse word for young adults. Student loans are now blamed for what would be a staggering, industry-shaking drop in home sales.

MONEY retirement planning

Why Housing Costs Are the Biggest Threat to Your Retirement

House on top of cash
Caroline Purser—Getty Images

We should be looking at smaller "starter" homes as our "stay put" homes.

If there is one thing we have been trained to fear about retirement, it’s crippling medical bills that threaten to force us out of our homes and decimate our nest eggs. But it turns out that we might be better off worrying about our future housing expenses, as these costs are the single largest category of spending in retirement.

Moreover, the costs of maintaining a home remain stubbornly high as we age, according to a new analysis by the Employee Benefit Research Institute. For those 75 and older, housing expenses accounted for a whopping 43% of spending, even as other expenditures (except for health care) dropped.

Time was that retirees were supposed pay down their mortgages or drastically downsize their homes before retirement. But that behavior has changed, perhaps as a result of the refinancing boom or the housing crash—or both. According to the Consumer Finance Protection Bureau, more people are carrying mortgage debt into their retirement years, up from 22% in 2001 to 30% in 2011.

Even as the rate of homeownership has remained stable, the median amount owed on mortgages for people aged 75 and older increased 82% during that same decade, from $43,000 to $79,000. Delinquency in paying mortgages and foreclosures also greatly increased for seniors from 2007 to 2011.

The lesson in all this is that while financing one’s home can be hugely beneficial, mortgages can grow into significant burdens when you’re living on a fixed income. The time to stretch yourself financially on a home is not when you’ve already left the workforce and have no way to make more money.

It’s not just larger mortgages that saddle retirees—it’s everything that comes with homeownership, including property taxes, homeowner’s insurance, home repairs, housecleaning, gardening and yard services. At the same time, transportation, entertainment and travel expenses all tend to decline as a natural course of retirement.

It seems that people have an easier time forgoing vacations and restaurant dining than they do square footage and lawns, which is understandable. The comforts of home can bring great stability during a time of transition. But as we struggle to figure out how much money we will need in retirement, we might need to consider how to defray the expense of these patterns.

For those in mid-career, now is the time to get control of our mortgage costs. As a recent study by Pew Charitable Trusts shows, Gen X has lower wealth than their parents did at their age, in large part because they hold nearly six times more debt, including student loans, unpaid medical bills and credit card balances. And that’s despite having generally higher family incomes than their parents did.

Given these headwinds, we may want to rethink the American way of constantly trading up to larger houses through our 40s and 50s. The more we grow accustomed to more luxurious living, the harder it will be to downsize when it makes sense. Perhaps instead of looking at smaller houses merely as “starter homes,” we should be looking at them as “stay put” homes instead.

Millennials face a different challenge. After taking longer to get started in their careers, they will end up buying houses later in life, which means they risk carrying significant mortgages into retirement. They would benefit from not biting off more than they can chew—putting more cash down than the minimum, not buying more house then they can really afford, and making sure to max out out their 401(k)s or IRAs. Home equity can be an excellent investment, but only if it enhances rather than jeopardizes financial security—now and in the future.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

MONEY Millennials

10 Places Millennials Are Moving For Bigger Paychecks

140918_CAR_MillennialsMove_NewOrleans
With 5.1% unemployment and low-priced homes, New Orleans is a top town for millennials. John Coletti—Getty Images

Over the past five years, Gen Yers have decamped for some surprisingly pricey cities in search of a higher-paying job.

Millennials are on the hunt for high-paying jobs, and they’re moving to some unexpected places to find them, according to a new report out today.

Bruised by the rough post-recession job market, Gen-Yers are moving from lower-cost cities to places with a higher cost of living but more plentiful and lucrative jobs, a RealtyTrac analysis of Census data from 2007 through 2013 found.

“Millennials are attracted to markets with good job prospects and low unemployment, but that tend to have higher rental rates and high home-price appreciation,” says Daren Blomquist, vice president of RealtyTrac. “It’s a tradeoff.”

In the 10 U.S. counties with the biggest increase in millennials, the average unemployment rate is 5.2%, well below the national average of 6.1%. The average household income is $62,496, vs. $51,058 nationally. The median home price is $406,800 (nearly double the U.S. median of $222,900), while a three-bedroom apartment rents for $1,619 a month on average, just over the national average of $1,550.

Riding the robust job market in the D.C. area, two counties in Northern Virginia with unemployment rates below 3.7% top the list. But not all places that the 69-million-strong millennial generation are flocking to are expensive. New Orleans, where the median home price is $140,000, edged out San Francisco, where tech jobs may be plentiful but the median home price is nearly $1 million.

New Orleans, where the unemployment rate is 5.1%, is a transportation center with one of the busiest and largest ports in the world, as well as tons of jobs related to the local oil refineries. Denver, Nashville, and Portland, Ore., all top 10 areas, offer median home prices below $300,000 and a diversity of jobs in technology, health care, and education.

Perhaps the most surprising millennial magnet: Clarksville, Tenn, the fifth largest city in the state behind Nashville, Memphis, Knoxville, and Chattanooga. Forty five miles north of Nashville, it benefits from spillover from that city’s strong job market, but Clarksville also has its own industrial base, plus nearby Ft. Campbell and Austin Peay State University. The unemployment rate: 4.7%.

Here are RealtyTrac’s top 10 destinations for millennials on the move:

Rank County State Metro Area % Increase in Millennial Population, 2007-2013 Milennials % of Total Population, 2013 Median Home Price, April 2014 Average Monthly Apartment Rent (3 beds), 2014
1 Arlington County Va. Washington, DC 82% 39% $505,000 $1,996
2 Alexandria City Va. Washington, DC 81% 34% $465,000 $1,966
3 Orleans Parish La. New Orleans 71% 30% $140,000 $1,190
4 San Francisco County Calif. San Francisco 68% 32% $950,000 $2,657
5 Denver County Colo. Denver 57% 33% $270,000 $1,409
6 Montgomery County Tenn. Clarksville 46% 31% $128,000 $1,016
7 Hudson County N.J. New York 44% 31% $330,000 $1,643
8 New York County N.Y. New York 43% 32% $850,000 $1,852
9 Multnomah County Ore. Portland 41% 28% $270,000 $1,359
10 Davidson County Tenn. Nashville 37% 29% $160,000 $1,131
TIME technology

The Few, The Proud: The Millennials Who Still Use Flip Phones

Teenage girl checks and sends text message while waiting in
Couldn't care less about the iPhone 6 John Greim—Getty

Yes, they exist. No, it's not normcore.

Some people care a lot about the new iPhone, available in stores Friday. This is about people who don’t.

This is about people who, in the year 2014, still use flip phones. And not in a dog cone of shame, “I dropped my real phone in the toilet and am currently between upgrades,” kind of way, but willingly. Notable evangelists include Anna Wintour, Warren Buffett and Andrew Luck — and according to Forrester Research, 29% of internet-using American adults don’t use smartphones as their main phones. That figure includes 15% of 18-24 year olds and 13% of 25-34 year olds. “It is more rare for the younger generation, the first to adopt new devices are millennials,” says senior analyst Gina Fleming, “but there are some.”

So who are these 20-somethings who don’t swipe to love or tap twice to “like”? Who don’t punctuate heated conversations with poop emojis but rather with the satisfying fwap close of a flip phone? And where are they? (Literally, can they tell me where they are without a map app?) Hours after the world worked itself into a tizzy over Apple’s iPhone 6 unveiling, I found myself sitting across from an old high school classmate, 26-year-old Angelica Baker, and her pink Motorola Razr phone.

Why They Flip

While many millennials can’t imagine not having regular access to the internet and email 24/7, Baker, a tutor and writer, actually exchanged her Android in for her mom’s retired flip phone in April. “It just seemed like it would be better for my addled brain than a smartphone,” she says. “Personally I’m too scattered and unfocused to handle email and Facebook on my phone.” And she hasn’t missed the Droid.

Gwen Cullen, a 25-year-old getting her MFA at Ohio State who has never owned a smartphone, agrees. “If I had a toy with internet attached to myself, I would cease to exist in the world,” she says.

Others haven’t upgraded their dumb phones for more practical reasons. Sam Hertz, a 27-year-old living in Oakland, Calif., has held onto his Samsung flip phone for 5 years simply because it’s survived. “It has lived through torrential rainstorms, and I’m pretty sure that I’ve dropped it three stories from a stairwell,” he says.

And of course, there’s the issue of money. Whereas smartphones can cost upwards of $600, according to NYU law student Andrew Nellis, his flip phone was “basically free,” and he avoided paying for a pricey data plan. (Read more after the jump)

Nellis then rattles off a list of compelling, if not enviable, “dumb” phone perks. While an hour of intense texting can drain an iPhone’s battery life from full to the precarious “20% left” zone, Nellis says he only has to “charge it overnight every couple days or so.” And unlike smartphone users who tend to create bizarre, superficial brand rivalries after staunchly aligning themselves with team Apple/Samsung/Android, “I’m not even sure what brand mine is,” Nellis says. “It says Verizon? But does Verizon even makes phones?”

Rather, dumb phone users are all connected in “a funny kind of solidarity thing,” Hertz explains, of bonding over weird, shared, stock photography background images. Or bemoaning poor photo taking abilities — which was the main complaint of every flip phone user I spoke with, even more than not having a mapping function.

“I print out directions before I go anywhere and then it’s only a minor crisis if we change directions en route,” says Cullen, admitting that she sometimes has to call friends and ask for step-by-step directions. “I still get invited to things, which is mind-blowing.”

Another old-school phone user I talked to used to carry a Garmin navigation system, traditionally used for driving, in her purse. (She asked to remain anonymous to avoid judgement in her new job at a top law firm — which is also the reason why she had to trade up to an e-mail accessible smartphone.)

Those who abstain from smartphones don’t eschew all emerging technologies. According to a 2014 Forrester report, 30% of 18-24 year old non-smartphone users and 34% of 25-34 year old non-smartphone users have tablets. “I actually use an iPod Touch, which might be a cop-out,” says Nellis. “But I only have one app on it — the dictionary.”

Do You Have a Flip Phone Retirement Plan?

Cullen, Nellis and Hertz all say that they aren’t making moral statements by owning flip phones, but rather these are simply what they have for right now. They’ll switch over when it becomes necessary for a job or another compelling reason. Hertz admits, however, that since he builds software, is in grad school for developing music technology and is often on the road for a performance art company (which sometimes asks audience members to use their smartphones to scan image detection software temporarily tattooed on actors’ bodies), “a smartphone could be very useful to me, but there’s a new iPhone every six months. When technology is getting better and better, sitting on the edge of things makes it difficult to know when I should jump in.”

Of course, some dumb phone loyalists are making statements about society. Andrew Lipstein, a 26-year-old who runs a digital bookstore called 0s&1s out of Florida, hates when people are glued to phones at dinner, emailing at inappropriate times or cataloguing rather than experiencing events. And so he categorically refuses to switch over to a smartphone. Ever. Even if it means he doesn’t get a job. It’s more than a little weird for him that his parents are “fluent in smartphones,” while his Pantech would “cut out all the time, turn off all of a sudden, and butt dial people three times a day.” (The Pantech died over the course of writing this article, so Lipstein “upgraded to a vertical flip with a ‘Pill Reminder.'”)

Is This Trendy? Is This Normcore?

Sarah Edwards, 23, says that while she “knew a lot of people [from home] in North Carolina who had flip phones — a lot,” when she moved to Brooklyn, it suddenly became a glaring commodity. “I think some people saw it as more of a hipster thing.”

But are people projecting an image onto dumb phone users, or is a flip phone actually fashionable? Is a flip phone normcore? (Deliberately wearing “normal” clothing like dad jeans to blend in with the masses).

Not really. A person with a flip phone tends to stick out rather than blend in. Edwards says that pulling out her flip phone at a bar is an automatic conversation starter. Sometimes by people with relatively good, albeit often misguided, intentions. “They will mock it in a friendly way,” she says, “Or more often get nostalgic about how they recently gave up a flip phone. ‘Oh when?’ ‘A year and a half ago.’ And that doesn’t make me feel great.” Other times, flip phones function as a duck call for guys with bad pickup lines. “The smarmy question I get from guys at bars is, ‘Oh does it have snake?’ and I’m like, ‘No I wish it did,'” says my high school friend, Baker.

Still, Fiona Duncan, who wrote New York’s quintessential expose on normcore, emailed that fashion may be found in flip phones. “Isn’t stating against disconnected culture sorta fashionable?” she asks. “I could see that as a trend, an idea that spread through mimesis. It’s not a bad one. Nor is not wanting to support Apple. I do looooove and miss the motion of a flip phone.”

For another opinion, I reached out to a different high school classmate turned fashion guru — and “funemployed and FABULUXE” Rich Kids of Beverly Hills reality star — Dorothy Wang.

“I definitely had the Motorola Razr in high school, and I kept it there, exactly where it should have been kept!” Wang says. “My limited edition, matte black Razr did not move on with me to college or any other extension of my life… Being outdated is never on trend. I guess it is a different story if your throwback flip phone is your second phone, and your other phone can be a testament that you are a functioning part of our current society. Having two phones is very on trend.”

But at the end of the day, Baker notes, echoing the sentiment of many modern flip phone users, “It’s not like a fashion statement on my part or a statement about society, it’s just my f**king phone.”

 

TIME Media

HBO ‘Seriously Considering’ Standalone HBO GO Service

It's a cord-cutter's dream

To the delight of parents subsidizing their millennial children’s TV habits everywhere, the CEO of HBO’s parent company has hinted that a stand-alone plan for HBO GO, its streaming site for subscribers, might be on its way.

That’s right, twentysomethings still using their parents’ account info to watch Veep and Girls! You may soon be able to pay for online access to your favorite shows yourselves, instead of buying (or having someone else buy) a more expensive cable package with HBO included in order to gain access.

“The broadband opportunity is getting quite a bit bigger, and the ability of the plant to deliver something robust is getting stronger,” Time Warner CEO Jeff Bewkes said at a recent investment conference in response to an analyst’s question about whether the company would offer a $15-20 monthly broadband option, Quartz reports. (In 2011, the average American cable subscriber paid $128 per month for all services, such as cable TV, Internet and phone service.)

“What we’re trying to do is basically make sure that we’ve done everything we can with our distributors to take advantage and have them take advantage of what customers they could have,” he continued. “And we’ve got to keep looking actively. We’re seriously considering what is the best way to deal with online distribution, but I don’t have anything to announce about it today.”

That’s quite the departure from around this time last year, when Bewkes said such an offering “won’t be attractive for most people” during an earnings call.

[Quartz]

MONEY Fast Food

Two New Ways McDonald’s Is Trying to Win Over Millennials

Build the Burgers of Your Dreams
McDonald's is testing a program in which customers can personalize burger orders using a tablet. courtesy of McDonald's

Marketers know that millennials love technology, personalization, and brunch. What might McDonald's do with this information?

McDonald’s has a millennial problem. Globally, same-story sales fell 3.7% in August, the largest monthly dip in a decade. While McDonald’s struggles are widespread, the fast food giant is having a particularly difficult time wooing millennials, the all-important offspring of Baby Boomers who will soon be replacing that generation as the largest consumer demographic. Fortune recently cited data indicating that since 2011, the number of U.S. consumers ages 19 to 21 that ate at McDonald’s at least once a month was down 13%. In a study about millennials’ favorite fast food brands published earlier this year, McDonald’s was ranked fifth, after Taco Bell, Subway, Panera, and Chipotle.

What millennials will and will not buy has been the subject of much market research, and the consensus holds that Gen Y prefers fast casual options like Panera Bread and Chipotle over McDonald’s basically because orders are always easily customizable, and the food is deemed to be healthier, fresher, and higher quality. Millennials aren’t content with cookie-cutter anything; they like being able to personalize everything from burritos to greeting cards so that what they get feels special rather than generic. Millennials have also shown a willingness to spend a little extra to get exactly what they want, especially when it comes to restaurants and food in general.

Add in the undeniable fact that the generation that came of age with the iPhone demands that companies use technology to make their lives easier and more comfortable, and it’s not hard to see how McDonald’s came up with a new “Build Your Burger” program now being tested in southern California. Last week, the concept expanded to a couple of San Diego-area McDonald’s. As the San Diego Union-Tribune explained, customers place orders using a tablet (technology!), and they personalize exactly what they want, including a choice of buns (artisan or brioche) and toppings (spicy mayo, classic ketchup, cheeses, guacamole, jalapenos, bacon, etc.). The customer then retreats to a table, and when the made-to-order meal is ready, a McDonald’s worker delivers it on a shiny metal basket rather than a scuzzy old plastic tray.

The food and the overall experience are meant to come off as fresher, personalized, high-tech, and higher-end. (The price is higher-end too: $5.49 per burger, plus 80¢ extra if you want bacon. In some test markets, prices are even higher, starting at $5.79. Add fries and a drink and you’re close to $10.) It’s easy to see how the concept would appeal to many diners, but especially to millennials, given what we know of their preferences.

That’s not the only way McDonald’s is trying to get millennials more on board with the Golden Arches. Millennials are renowned for being obsessed with brunch, and wouldn’t you know it? Word spread this week that back in July, McDonald’s quietly trademarked the term “McBrunch.” BurgerBusiness.com, the blog that broke the McBrunch news, speculated that a McDonald’s brunch could feature many menu items that are already available in different parts of the world, including the Tsukimi Burger from Japan (egg and burger patties topped with bacon and creamy tomato sauce) and the McMorning that’s sold in Croatia (pork, bacon, potatoes, and cheese on a torpedo roll). Let the attempts to cure your hangover begin!

“Their declining sales show they have to do something,” BurgerBusiness editor Scott Hume told USA Today, regarding McDonald’s possible foray into brunch. To clarify, McDonald’s has not yet launched a brunch (or McBrunch) menu option, and the Build Your Burger program remains only a test in limited markets. If either or both of these concepts resonate with millennials, though, they’ll surely be hitting a McDonald’s near you.

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