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Thinking out of the box: Kellogg's bid to make breakfast cereal hip again

Source: Kellogg’s

For many Americans, eating a bowl of cereal for breakfast was once a daily ritual.

Nowadays, those habits have changed: Some eaters are choosing healthier options, while others prefer a hot breakfast over a cold one. Some just want something fast without the mess.

Even cereal fanatic Jerry Seinfeld has slowed down his consumption, telling fans in a recent online question and answer session (Q&A) that he's eating more oatmeal these days because it's good for his cholesterol.

Whatever the reasons, cereal companies are feeling the pain. For the last 15 years, sales of cereal in the U.S. have dropped from $12.8 billion in 2001 to $9.3 billion in 2015 according to market research firm Euromonitor International.

While sales are down, cereal is still in the majority of American homes. Now, one major brand is trying to give the breakfast food a decidedly hip veneer.

"90 percent of people still have cereal in their households—they just don't eat it as often as they used to," Kellogg's associate marketing director Andrew Shripka told CNBC's "On the Money" in an interview. "They're so many more options than there used to be."

Outside the box

For folks who are eating cereal, 30 percent consume it outside of breakfast and more than half believe cereals are a great snack, according to research done by Kellogg. To build on that trend, and to bring some excitement back to the bowl, Kellogg's opened its first ever café in New York's Times Square in July.

Yes, a restaurant dedicated just to cereal.

"This is us just trying to evolve and really get people to think of cereal as more than just in a bowl with milk and you go—its to add a little flair and a little fun to it," Shripka said.

Customers can order one of their signature bowls, with prices starting at $6.50. The recipes were created by Chef Christina Tosi, the founder of Milk Bar and judge on "MasterChef."

One of their most popular bowls called "Life in Color" is Fruit Loops topped with marshmallows, passion fruit jam, and lime zest. If you want to add ice cream or yogurt instead of milk, it'll cost an extra $2.

"I think what we're just trying to show that no matter what you might be looking for at breakfast or throughout the day – cereal's a great base that you can sort of customize," explained Shripka.

What's been the reaction from customers? "Surprise," Shripka joked.

"It's pretty simple, it's familiar because it's still in a bowl, it's still Fruit Loops, but surprised that a few little additions can make it so different," he added.

Source: Kellogg’s

On the Money airs on CNBC Saturdays at 5:30 am ET, or check listings for air times in local markets.