Why You Should Care Where Millennials Spend Big Bucks

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If 75 million customers agree that Starbucks (SBUX) is the best place to go for coffee, would that make you consider investing in Starbucks stock?

That's not a rhetorical question. A survey by Level Money, a financial services company that describes itself as "built with millennials in mind," has just declared Starbucks the most popular coffeehouse in the country. And it has additional insight into the places where millennials do their shopping -- data that you might want to consider in your investing decisions.

For example, among coffeehouse chains:
  • Starbucks is far and away the leading brand for millennials, ringing the register with more than 45 cents out of every $1 these consumers spend on coffee.
  • Dunkin' Brands (DNKN), owner of the Dunkin' Donuts brand, comes in a distant second with about 13 cents out of every $1 spent on coffee. (In between, with 38 percent, are "other" coffeehouses.)
  • Privately held Peet's Coffee and The Coffee Bean are unavailable for investment for most of us -- but that's OK, since they only capture about a penny's worth of sales out of each dollar millennials spent on coffee.
  • Tim Hortons (THI), which also captures a penny out of each coffee-dollar, is based in Ontario, Canada and is listed for investment on the NYSE.
Level Money has the 411 on fast-food joints that millennials prefer:
  • McDonald's (MCD) is top of the heap for quick eats, commanding about 12 percent market share among millennials' fast-food purchases. (Know that 39 percent of this market goes to "other" joints beyond the 22 tracked.)
  • Chipotle Mexican Grill (CMG) and privately held Subway are nearly tied for second place, with about 6 percent share.
  • And they're followed by Yum! Brands' (YUM) Taco Bell, Wendy's (WEN), and privately held Chick-Fil-A, which all score a hair above 4 percent.
Why is this important? Because the millennial generation is huge.

All Together Now: How Big Is Big?

How big the millennial generation is depends on how you measure it. Does it include kids born 1981 and later? 1977 and post? 1985 et later? What is clear, though, is that by many of the yardsticks used to measure it, millennials make up an even bigger demographic than baby boomers.

Barron's magazine loosely defines the millennials as Americans who have reached adulthood since 2000 and puts their population in excess of 86 million.

So when Level Money asserts that "millennials, a demographic of nearly 75 million people, wield powerful purchasing power," and that their "unique financial behaviors and motivations, and their brand interactions" are important, it's probably understating the case -- and understating how important knowing these brands could be for your stock portfolio.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill, McDonald's and Starbucks. The Motley Fool owns shares of Chipotle Mexican Grill and Starbucks. Try any of our newsletter services free for 30 days.
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