McDonald’s, rivals see diminishing appeal for kids meals

April 19, 2012

Purchases of children’s fast-food meals falling off as dollar menus undercut pricing, accompanying toys tank

By Emily Bryson York, Chicago Tribune reporter, 8:29 PM CDT, April 10, 2012

Julie Oelling’s 6-year-old daughter Zoe started asking to go to McDonald’s for Happy Meal toys when she started preschool two years ago.

“When she was 4, it was kind of a big thing to do, but when she turned 5, it tapered off,” Oelling said, adding that it’s been about six months since her daughter’s last request. “I’d even say she’s starting to outgrow it now depending on what the toy is.”

Long portrayed as a key contributor to childhood obesity, fast-food kids meals may be losing their appeal to youngsters — and, more importantly, their parents. The emergence of dollar menus among restaurants have given price-conscious parents a powerful incentive to choose an a la carte burger or fries rather than ponying up nearly $4 for a kids meal.

Industry observers also say the toys served up with every meal aren’t capturing older kids’ attention, while others add that children are simply aging out of the meals earlier as they’re becoming more technologically savvy.

According to the NPD Group, visits to fast-food restaurants in which kids meals were purchased have declined every year since 2007, falling 5 percent in 2011 from the prior year.

“I don’t know if there’s a silver bullet here, or a smoking gun that would indicate” why it’s happening, said a McDonald’s franchisee. “I think there’s a combination of factors at play.”

“It’s something we’d love to reverse,” he said.

Fast-food kids meals have been subject to intense scrutiny in recent years. Activist groups have zeroed in on the products and accompanying toy, saying they introduce children to a lifetime of unhealthy eating. San Francisco and a number of other cities have enacted regulations for nutritional content of fast-food kids meals when toys accompany them. Regulations vary by city.

While McDonald’s is the largest player in fast food by far, most major chains, including Wendy’s, Burger King and Subway, offer kids meals. Burger King declined to comment for this story, and Wendy’s did not respond to requests for comment.

In a statement, McDonald’s spokeswoman Danya Proud said the chain is “seeing behavior shift slightly among what is being ordered” for children, “because families are eating differently than they used to when they go out.”

“Kids are curious and may share items with their parents, or they still stick to their favorite Happy Meal,” she said, adding that “Family visits to McDonald’s remain strong and slightly higher than the rest of the industry.”

Darren Tristano, executive vice president of Technomic, a Chicago-based food industry consulting firm, estimated that McDonald’s has the biggest share of kids meal sales in the fast-food industry, as much as 25 percent of the total. He doubts McDonald’s Happy Meal sales have been declining.

“I would put it flat at worst,” he said. But with the rest of the chain’s business soaring, a major product line stuck in a holding pattern would be struggling by comparison.

The Oak Brook-based burger giant is riding nearly nine years of global same-store sales gains. During 2011, McDonald’s total U.S. sales increased 5 percent to $8.5 billion. By comparison, total quick-service industry sales rose 2 percent in 2011 to $240 billion, according to NPD.

Happy Meal sales account for about 10 percent of McDonald’s U.S. sales, the company said, but the meal, and toys in particular, have been an important vehicle to get kids and their parents to eat at the Golden Arches. Higher incidence of family meals at fast-food restaurants tends to boost the average check, an important metric of success in the restaurant industry.

“They’re very important if you think about the roots of what (McDonald’s Corp. founder) Ray Kroc was trying to do: Create an environment where families could have a meal at an appropriate price,” Tristano said.

One executive familiar with McDonald’s business said that Happy Meals have been losing older children for at least a decade.

“First it was around 11 or 12, then it went from 10 to 11, then 9 and now anytime after 8 years old, kids aren’t satisfied with the Happy Meal offering,” the executive said, adding that was a reason the company introduced the “Mighty Kids” Happy Meal, with larger entrees like double cheeseburgers and six-piece chicken nuggets, in 2001.

Toys have been a big problem in retaining older children, the executive said, adding that they expect more, thanks to increased exposure to technology.

Others, like former McDonald’s franchisee Irwin Kruger, said the shift is “probably more correlated with education and income, or people who have a stronger sense of the importance of a balanced meal. But you have to throw in the cost of cheaper food on the dollar menu.”

Bonnie Riggs, NPD restaurant industry analyst, agreed, noting that mothers have “probably switched to the value menu because it was cheaper than the kids meal.”

Parents who order a sandwich, fries and a drink from the dollar menu would likely have paid $3 until the end of March, compared with $3.39 to $4.49 for a Happy Meal at a downtown McDonald’s. Prices may vary by region.

Recent changes at the fast-food giant, which created an “Extra Value Menu,” have made such pairings more expensive. A four-piece order of chicken nuggets, small fries and chocolate milk cost $3.78 in downtown Chicago, compared with $3.89 for the most similar kids meal combination.

“I think there’s a lot to the idea of ‘Let’s buy a big hamburger and cut it in half to share’ because of the economic situation,” said Barry Klein, a former McDonald’s advertising executive who now works as a marketing consultant. He added that the 20-piece order of chicken nuggets, now offered on the Extra Value Menu for less than $5, would be ideal for a family to share.

Some parents move away from kids meals just to get more food.

Vandana Sharma, mother to sons Varun, 11, and Aayush, 8, said she stopped buying Happy Meals two years ago in favor of a la carte burgers and fries. A small fry is 2.5 ounces, compared with a 1-ounce portion in a kids meal, which also comes with a small side of apple slices.

“Before, they were only interested in the toy,” she said, adding that the meal went straight into the trash. “Now at least they’re eating.”

Freelance writer Cheryl V. Jackson contributed.

Twitter @emilyyork

Copyright © 2012, Chicago Tribune

Restaurants Cutting Calories for Kids

March 13, 2012

Restaurants Cutting

Restaurants Cutting Calories for Kids

ATLANTA — In moves that could signal a growing demand for healthier food in convenient formats, many fast food and casual dining restaurants have updated their menus with healthy options or have announced plans to design new items with less calories, sodium and fat.

Due to the influence of First Lady Michelle Obama’s “Let’s Move!” initiative and the medical community’s growing concern about the rise of childhood obesity, kids’ meals have often been a focus for overhaul.

Last week, Chick-fil-A here became the latest major chain to announce a revamped, healthier kids’ meal. The new meal now includes grilled chicken nuggets and a squeezable fruit pouch, and the kid’s meal beverage options will now be limited to 1% milk, apple juice, lemonade or water.

With four grilled nuggets, a fruit cup and low fat milk, the new meal contains 210 calories and 3 grams of fat, an 86% decrease in fat and a 56% decrease in calories from previous offerings, according to Chick-fil-A.

The chain will continue offering higher calorie entrees and sides as children’s menu options. For instance, a kids’ meal that includes six breaded nuggets, fries and low-fat chocolate milk is 660 calories and 27 grams of fat, according to the company’s website.

Chick-fil-A spokesperson Jerry Johnston could not provide an exact time frame for how long Chick-fil-A has been developing the new menu, but the chain has been working on it for some time.

“We do market research, taste tests, focus groups, things of this nature and then this is the result of our research into this new offering,” said Johnston.

At this point Chick-fil-A is primarily getting the word out about the new kids’ meals through communication in-store, according to Johnston.

Chick-fil-A’s new kids menu follows McDonald’s commitment last summer to cut calories in Happy Meals by 20% and automatically include apples in each meal by the end of the first quarter in 2012.

Recent nutritional changes to menus have not been limited to kids’ meals. In the fall, Darden Restaurants, which owns Red Lobster, Olive Garden, LongHorn Steakhouse and Bahama Breeze, said it would reduce calories and sodium in menus by 10% within five years and 20% in 10, and that it would “closely look at reformulating, resizing and removing certain items, and introducing new calorie conscious, flavorful choices,” according to plans published by the company.

Darden Restaurants will also make 1% milk the default beverage for kids; offer fruits and vegetables as sides; and redevelop menus to meet specific nutrition standards.

These companies could be reacting to growing demand for convenient, healthier foods for both kids and parents, but it remains to be seen how these new menu items will be received in the market.

“It will only make an impact if people buy the products,” said Marion Nestle, Paulette Goddard professor of nutrition, food studies and public health at New York University. “The best thing that restaurant chains could do for health would be to offer smaller portions at a favorable price.”

Nestle was skeptical about Chick-fil-A’s motivation, attributing the effort to market expansion “and looking like it is on the side of the angels.”

“The company must think it has an audience for the product and can sell it. Either that, or this is just PR,” Nestle said.

Darren Tristano, executive vice president for Technomic, a Chicago-based research and consulting firm, said that these changes make sense when they stay true to the broader, core restaurant brand. He gave the example of Chick-fil-A’s recent addition of grilled chicken nuggets that aren’t breaded or fried.

“It’s what the brand represents, and it sounds like a good, suitable alternative.”

View the full article on Supermarket News

McDonald’s Keeps the Happy in Happy Meals

January 11, 2012


McDonald’s keeps the happy in Happy Meals

Kai Ryssdal: And now, our Marketplace business word of the day: McSmarter.

Last year, San Francisco passed a law meant to give the Happy Meal a body blow. It bans fast food restaurants from including toys in kids’ meals that don’t meet certain nutritional guidelines. Free toys, I should say.

That is where the McSmarter comes in. The no-free-toys law takes effect tomorrow, the same day McDonald’s in San Francisco will start charging a dime to include a toy with those mini bags of fries and chicken nuggets. Marketplace’s Jennifer Collins reports.


Jennifer Collins: You could say McDonald’s found a loophole big enough to drive a burger-mobile through.

Sara Senatore is a restaurant analyst with Sanford Bernstein in New York, as you’ll hear.

Sara Senatore: McDonald’s is masterful at evolving with not only the customer demand, but also the operating environment.

Rajiv Bhatia is with the San Francisco Health Department. He’s looking at McDonald’s shrewd stepping of the law as a teachable moment.

Rajiv Bhatia: We need to learn from how industry reacts to it to revisit it and get it to achieve its purpose.

Bhatia says didn’t put a price tag on passing and implementing the law. Darren Tristano is with food industry consultant Technomic.

Darren Tristano: You know, it could have been tens of thousands in research just to try to understand the impact.

As for the impact on McDonald’s, there won’t be one — it’s donating the toy money to the Ronald McDonald House.

I’m Jennifer Collins for Marketplace.

View the full article on Marketplace Life

How ’bout them apples?

November 15, 2011

How ’bout them apples?

Parents who can’t get their kids to eat anything except fast food may be a little happier when they scream for the Golden Arches.

McDonald’s is rolling out a new Happy Meal that automatically includes apple slices — without caramel sauce — and downsized French fries along with the choice of Chicken McNuggets, a hamburger or cheeseburger.

The new Happy Meal hits New England on Friday under the chain’s initiative to help families make more nutrition-minded choices.

The changes are a “small step,” according to professor Marion Nestle of New York University’s department of nutrition, food studies and public health.

“Now if they would just make milk or juice the default instead of soda,” she said. McDonald’s instead will offer fat-free chocolate milk or 1 percent milk as “promoted options” with Happy Meals.

The new default Happy Meal has reduced calories, fat and sodium. The smaller, 1.1-ounce fries have less than half the calories, fat and sodium of the current 2.5-ounce fries included with the meals. And the elimination of the caramel cuts out 70 calories, 0.5 fat grams and 35 milligrams of salt.

“By offering the apple slices and smaller fries, we’re providing more balanced options for children and parents to feed their children,” said Nicole DiNoia, McDonald’s Boston-area spokeswoman. “Sometimes parents have trouble saying ‘no’ when it comes to French fries, and it’s troublesome to get kids to eat fruits and vegetables.”

The question is, will kids bite? Apple “dippers” with caramel sauce have been an optional Happy Meal replacement for fries since 2004, but McDonald’s says they were ordered only 11 percent of the time.

A recent report by Chicago restaurant consultancy Technomic found 70 percent of moms order off kids’ menus because their kids “want it,” while only 13 percent said “healthy options” were the reason.

“You can bring a horse to water, but you can’t make them drink,” said Darren Tristano, Technomic executive vice president. “It’s an obligation of the parents to have the child eating something healthier as well as the child to eat it.”

View the full article on Boston Herald