A finance startup is giving away avocado toast to lure millennials—but it’s really the oldest trick in the banking book

Ya gotta have a gimmick.
Ya gotta have a gimmick.
Image: Reuters/Carlo Allegri
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In a bid to attract millennials, US online finance company SoFi is giving away avocado toast to customers who open a mortgage in July.

The marketing gimmick is a reference to Tim Gurner, an Australian real estate developer, who caused an uproar with his claim that young people couldn’t afford to buy homes because they were frittering away their income on luxuries like fancy breakfasts. (You can read why his analysis is so wrongheaded here.)

SoFi, founded in 2011 as a student-loan refinancer, thought they might have some fun at Gurner’s expense, while garnering some free publicity (and it worked!) But despite their fresh spin, SoFi’s stunt is one of the oldest tricks in bank marketing.

Several decades ago, when my grandmother would open a checking account at her neighborhood bank, she would get a gift like a free toaster. Back then, interest rates were regulated, and banks had limited options for how they could compete. Luring customers with free stuff was ungainly, but effective. Financially it was a no-brainer: Give away a $10 toaster, earn back 100 times that in fees over the customer’s lifetime.

The competitive landscape for SoFi is different, but the challenge is the same. How can it differentiate itself in a sea of banks offering essentially the same product: 30-year mortgages at interest rates dictated by the Federal Reserve? SoFi has gone to great lengths to sell itself as a different sort of bank—they offer customers help finding jobs and host singles mixers—so avocado toast isn’t much a stretch.

And in truth, they’re not even giving away breakfast, just a loaf of bread and some avocados you have to mash yourself. Given the average US home buyer today will pay about $440,000 in interest over the life of a 30-year mortgage, SoFi customers might think about holding out for a toaster.