Toys may be story in kids meals' steady decline

Kids meals are losing steam.

Hit by the triple-whammy of the recession and the evolving tastes that kids have in the food they eat and toys they play with, orders for the $5.6 billion kids meal segment are down 9% over the past year ended in March, reports research firm NPD Group. Orders from 99-cent/$1.00 menus are up 13% over the same period.

It is the "nag" factor of kids meals — kids who nag their parents to take them to McDonald's mcd or Burger Kingbkc for the latest toy — that helped to propel fast food into a $120 billion industry. There were 1.3 billion domestic kids meal orders placed in 2008, says NPD — and billions of additional orders from siblings and parents who went along. So any decline in kids meal sales is serious.

For the fast-food industry, "There's been a long, steady march downward on kids meals for the last three or four years," says Russ Klein, marketing chief at Burger King. As a result, he says, Burger King is changing the marketing strategies of its kids business and focusing more on its lower-priced menu.

Executives from Wendy's wen and McDonald's declined to discuss kids meal sales at their chains. But the biggest problem may be the toys themselves — not the food or price. "You have 6-year-olds with cellphones who are not interested in kids meal toys," says Bonnie Riggs, restaurant industry analyst at NPD. "They want to be more grown up."

Why kids meal sales are off:

•Kids want cooler toys. In an era of age compression, young kids increasingly want techy toys that are too costly to be placed in a kids meal, Riggs says. "Kids meal toys are not where the action is for them," she says.

At the same time, some toymakers are increasingly reluctant to place their toys in kids meals. If they have a small toy that they think could be a hit, they're more likely to place it in a toy store for far more profit, says Jim Silver, editor of TimetoPlaymag.com, a consumer website on toys.

•Restaurant visits are off. Fewer kids are eating out as restaurant visits overall have slid during the recession. Restaurant traffic for families with kids declined 5% in the period from December 2008 through February 2009, NPD says.

•Food choices are changing. Many of those who do eat out are ordering from the lower-priced dollar menus to save money. Families can mix and match dollar menu items for considerably less than kids meals, which are priced at about $3 or more.

At the same time, some parents are steering kids to more nutritious offerings, including salads and grilled chicken. Burger King on Wednesday rolled out three more-nutritious kids meals, including a BK Burger Shots kids meal with two mini-burgers, Fresh Apple Fries and calcium-fortified apple juice.

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