America Has Had Enough

No more burgers: American consumers are changing their diets while brands such as Coca-Cola and Kellogg’s face crises.

It is easy to recognize who the biggest employer in Battle Creek is. The city hall of the small city in Michigan is called Kellogg Auditorium, the local bank Kellogg Credit Union. There is the Kellogg Arena, the Kellogg Community College, and the Kellogg Foundation. The center of the city is dominated by a structure that looks like an oversized stack of brick-colored boxes. That’s the headquarters of the cornflakes producer. “There’s hardly anyone here in Battle Creek who hasn’t worked directly or indirectly for Kellogg’s or doesn’t have a relative who works there,” says Sharleen Phillips, who helps out at the local tourism office, where Kellogg’s bowls, puzzles and posters are piled up.

When one speaks with the people of Battle Creek, one quickly senses an anxiety, almost as pervasive as the scent of hot molasses and grain mash that wafts from the cornflakes factory into every corner of the city. Kellogg’s cereal brands, whose boxes include a crowing rooster and Frosties Tony the Tiger have been a part of every child’s memories for generations, have had a tough time lately. The sales figures for breakfast cereals have dropped consistently. In the last two business years alone, Kellogg’s most important division has lost 10 percent, some brands have even forfeited over 20 percent, according to the market research group Consumer Edge Research in 2014. Even in the early years of the recession after the financial crisis, the business was better, says John Adam, a union member who represents Kellogg’s workers in Battle Creek. His real name has been withheld at his request so as to not strain his relationship with the major employer. The Kellogg’s employees fear for their jobs: Management has begun a multi-year savings program called Project K that will cut thousands of jobs. Kellogg’s has already closed a plant in Canada. The company has denied requests for interviews by Die Zeit.

For the First Time, McDonald’s Has Closed More Restaurants than It Has Opened

Kellogg’s, founded in 1906, is not the only traditional American brand that is fighting decline. Coca-Cola has recently raised prices to compensate for sinking demand. Heinz ketchup has been taken over by the business magnate Warren Buffett and the Brazilian corporate raiders, 3G Capital, and was forced to merge with the likewise ailing Kraft Foods – the producer of Philadelphia cream cheese and Oscar Mayer sausages – earlier this year. The new owners threw out the old management and wanted to reduce the workforce by 10 percent. Even fast food giant McDonald’s has closed more restaurants this year than it has opened – the first time in its almost 70 year history.

For decades, the large food companies have profited from the lifestyles of mainstream Americans and their diets. They bought ready-made products, which were little more than different combinations of fat, carbohydrates, sugar, and salt. The products were driven by major marketing efforts. But what was once modern and efficient, is now considered unhealthy and uncool by the coveted millennial consumers. At a time in which almost every small town between Minnesota and Mississippi sports a farmer’s market with local fruits and vegetables, and news channels have to compete with cooking shows for viewers, producers of standardized grocery commodities have lost their appeal.

This change of opinion is being driven by an extensive economic and societal transformation in the U.S.: It is changing the working world, income distribution, the everyday lives of people and their habits. In a digital economy that is turning more and more employees into contractors with flexible schedules based on the demands of the company, less and less time is available for cooking and enjoyment. Simultaneously, more demands have been heaped upon food stuffs; they should not only be healthy for the consumer but also good for the environment. With the filling of their shopping carts, consumers express their preferences and convictions. The old brands, with their optimistic belief in technological advancement, a holdover from the industrial era, neither fulfill the desire for a better world nor fit the more hectic lifestyle of the modern economic system.

The crisis of the big brands can be observed not only in the case of Kellogg’s but also McDonald’s. The stalwart ad slogan “I’m lovin’ it” has not helped the company from faltering. In New York, McDonald’s found itself in the headlines a few months ago, because one of its restaurant managers had the police evict a group of elderly Koreans, whom she believed had been loitering for too long. Her restaurant is ultimately not a senior center, argued the McDonald’s franchisee, when it eventually came to protests. An outlier case that nevertheless throws the spotlight on a problem with the company: It’s stuck with the image of being outrun by change.

The once iconic brands are now defending themselves against decline. McDonald’s is attempting to again find a connection with the current zeitgeist with newer products and strategies. The chain is now experimenting with pico de gallo, quinoa, and jalepeño slices, whereas up until now, pepper had been the most exotic spice on offer. Steve Easterbrook, named CEO in March, quickly announced several new features. Like the “Artisan Grilled Chicken,” with a patty that, according to McDonald’s, consists of “100% chicken breast.” It comes with “crisp leaf lettuce” and a “fresh tomato.”

Additionally Easterbrook, British by birth, wants to make mobile orders possible. In a pilot project in certain restaurants, customers can put together a burger on a touch screen according to their own tastes. After a test phase with the tech-happy Californians, the feature is now available in New York. With this feature, the fast food company hopes to connect to a younger generation, the very generation that has avoided the big golden M for the most part. Easterbrook’s most successful innovation up until now is actually simpler: all-day breakfast.

Whether the now always available Egg McMuffin is enough to make McDonald’s once again a “progressive burger company” – Easterbrook’s declared goal – is doubtful. In spite of McDonald’s troubles, fast food has in fact not gone out of fashion. Shake Shack, a burger joint founded by the New York restaurateur Danny Meyer, has recently celebrated a successful IPO; in just the first three quarters, the chain was able to increase its sales from the previous period by 70 percent.

Particularly annoying for McDonald’s must be the success of Chipotle, as McDonald’s had been its largest investor until 2006. Since their exit, Chipotle’s revenues have climbed about 30 percent to a billion dollars and it is now considered a star of the fastest growing gastronomy category, fast casual dining – self-service restaurants with style that claim to offer quality. One of its factors for success has been the promise to deliver “food with integrity.” Recently, the company announced that it will be denying the use of genetically modified foods in its restaurants, the first to do so.

The example shows most of all that the surface images of the new brands are more important than the contents of their products: According to a random test taken by the New York Times, a typical burrito contains up to a thousand calories, while a McDonald’s Big Mac contains only a little more than half as much (with a large side of fries it too amounts to about a thousand calories all together). The burger, one of the more expensive McDonald’s products, costs just under $5.00 on average in the U.S., while Chipotle demands $6.50 or more for its burrito. But Chipotle’s marketing resounds. Even presidential candidate Hillary Clinton stopped by a restaurant on her campaign tour. Her husband Bill, on the other hand, could still be found eating at McDonald’s during his candidacy in the ‘90s.

The current crisis of the established brands can be explained by major success in the past. Just as they today are on the losing side, they were once the big winners of a similarly radical upheaval – and just like Chipotle today, McDonald’s was once considered a pioneer. Industrialization changed people’s eating habits at the beginning of the 20th century. Workers and employees had only a half hour lunch, too little time to go home for lunch. The solution was the quick lunch restaurant, which served simple, cheap and fast meals. Then cars became affordable for the masses. It is no coincidence that the success of the McDonald brothers came at this time. Their first restaurant served hamburgers directly into the car. But the concept was above all to produce meals on a conveyor belt, which would be as revolutionary for gastronomy as it was for Ford’s Model T in Detroit.

Similar to McDonald’s, Kellogg’s was also once a pioneer. If one is on the hunt for breakfast cereal today, one encounters endless shelves of colorfully printed cardboard boxes. It’s hard to believe that the Pops and Puffs – meanwhile decried by nutritionists and parents due to their low nutritional value and high sugar content – were once invented by a health enthusiast. John Harvey Kellogg was an ambitious young doctor. In 1876, he took over an Adventist sanatorium in Battle Creek. The Adventists not only rejected alcohol and tobacco, but also preached abstinence from meat. Kellogg additionally adopted a regimen involving fresh air and movement therapies. Among his innovations was a fitness machine that resembled a camel and vibrated to induce digestion. Soon the sanatorium, whose Neo-Renaissance towers still tower over Battle Creek, was a meeting place for the rich and famous. Among Kellogg’s patients were automobile magnate Henry Ford, inventor Thomas Edison, and First Lady Eleanor Roosevelt.

Cornflakes owe their existence to an accident. As part of their search for healthy food stuff, Kellogg and his younger brother Will were about to mix a test batch, tells Betty Scherencel, who leads tours through the sanatorium. But the brothers were interrupted in the process. When they returned to the kitchen later, they discovered a stale mass. Always thinking about their budget, the Kellogg’s decided to roll out and bake the dough anyways. The result was toasted flakes, which immediately found praise among patients. But Will wanted to make big business of this new discovery – and added sugar to the recipe, to make the flakes more palatable. His health-oriented brother never forgave him for that – they remained enemies to their deaths.

Energy Bars Instead of Breakfast Flakes

Kellogg found many imitators. Around the turn of the century there were 106 breakfast cereal producers, a real cereal boom, which was eternalized by the American author T.C. Boyle in his adventure novel turned film in 1994, Road to Wellville. The breakfast flakes were among the first processed foods, whose success was based on chic marketing. “When ‘Made in Battle Creek’ was on the box, the people bought it, because it was considered healthy,” says Don Scherencel of the Kellogg Discovery Center in Battle Creek. Kellogg’s fulfilled mothers’ wishes of serving their children something healthy while also saving the time demanded by a modern lifestyle.

But while industrialization transformed working hours into rigid shifts on the conveyor belt, digitalization is making them more flexible today. Fewer and fewer employees work eight-hour days in factories or offices. Instead, their typical workday consists of tasks and projects. Completely checking out for evenings or weekends will be a relic of the industrial era. The new brands have recognized this: They know how to sell a product in a time when the average day has become more fragmented and hectic for many Americans. The success of the coffeehouse chain Starbucks is no coincidence. Founder Howard Schultz inspired a wave of similar cafes that function today as de-facto offices of the newly self-employed. They order a latte and then whip out their laptops or do business meetings there.

Americans today also want to live healthier, exactly as in Kellogg’s time. Only there are other brands now that convey that feeling. “We buy glossy cookbooks and watch master chefs on television, but our eating habits are still moving in the snack direction,” says food author Abigail Carroll, who wrote a book about the development of American eating habits. Food is eaten at a desk, at the wheel, or on the bus. And once again the food industry has reacted. Instead of breakfast cereals, which have to be poured into a bowl with milk in order to be eaten, there is health-to-go: Energy bars called Kind, which promise to be “healthy and tasty,” or snacks from Raw Living, guaranteed to contain only raw ingredients.

Among the big winners in the healthy snack food trend is Chobani’s Greek yogurt. The brand’s story of origin rivals Kellogg’s. In 2005, founder Hamdi Ulukaya, son of a Turkish dairy operator, discovered a small ad for a former milk factory run by Kraft Foods. His first reaction was to throw the newspaper in the trashcan, but then quickly became interested. Today, Ulukaya is a billionaire, and according to financial news service Bloomberg, the yogurt king controls over 20 percent of the quickly growing market.

The old brands are increasingly the preference only for those whom the change has left behind. Earlier it was the broad middle class who bought these products – but this stomach is shrinking, exactly like their demand for supersized foods consisting of fat, sugar, salt, and carbohydrates. In the ‘70s, 4000 people worked at the Kellogg’s factory in Battle Creek; today there are only 400 remaining. At least union member John Adam, whose family has worked at Kellogg’s for four generations, stands by his trusty cornflakes. Each morning he eats the cereal for breakfast with his three kids. “It is cheaper and healthier than so much other stuff,” he asserts.