Millennials Are Becoming McDonald's Biggest Threat

People in their 20's and 30's are favoring fast-casual joints like Chipotle, Five Guys, and Panera Bread, writes Julie Jargon at The Wall Street Journal.

"Increasingly, younger diners are seeking out fresher, healthier food and chains that offer customizable menu options for little more than the price of a combo meal," Jargon writes.

This could cast a shadow on McDonald's future business, which has already been declining or flat this year. The company recently announced that it was replacing its top U.S. executive for the second time in two years.

The number of 19 to 21-year-olds visiting McDonald's monthly has fallen by 13% since 2011, WSJ writes, citing Technomic.

Meanwhile, the number of 22 to 37-year-olds visiting the chain has been flat.

Attempts by McDonald's to connect with this age group have largely flopped.

The chain spent two years innovating the McWrap, a chicken concoction with fresh vegetables that was supposed to challenge Subway.

But McWrap sales have reportedly been disappointing.

McDonald's has also begun testing technology that would allow customers to customize burgers, similar to Five Guys or Smashburger.

McDonald's isn't the only U.S. brand challenged by millennial values.

Iconic brands like Tide, Levi's, Coca-Cola, Ralph Lauren, Gap, and more "are going to suffer a precipitous decline in relevance, in sales, and share of market; or drop dead, at the very least," retail expert Robin Lewis writes on his blog.

Fatigued by constant marketing and advertisements, young people are drawn to the simpler marketplace enjoyed by their grandparents, Lewis explains.

In order to succeed with the younger generation, McDonald's will have to convince millennials it has quality food.

McDonald's CEO Don Thompson acknowledged this problem in a call with investors and said the company was revamping marketing.

"We are strengthening our creative messages by placing greater emphasis on the quality of our food and again re-establishing the emotional connection that our customers associate with the McDonald's experience," Thompson said.