Late last year, Bank of America Merrill Lynch economists published a study on restaurant sales, in the wake of across-the-board struggles in the restaurant industry over the past few years. What they found was that while all demographics had shifted negatively, Millennial spending in particular was on a downtrend.
While the growth rate of restaurant spending by Millennials was at 9% in 2015, it had dwindled down to 1.6% in 2017. Considering how big Millennials are as a consumer demographic — now understood to be the largest generation in the United States — although still a positive growth number, this could be an issue for the restaurant industry. That said, there are ways to use this information on Millennial spending to drive smart decisions for your business.
Millennials (defined as being born between 1981 and 2000) are often framed differently when we talk about their trends as a demographic and Millennial spending as a whole. It’s a cliché at this point blaming the entire age group for downturns in nearly every industry. This is where we see articles about Millennials “ruining” everything from breakfast and beer to diamonds and home values.
But like any other demographic, Millennials and their spending habits are not a problem, but an opportunity. The savviest restaurant owners understand that changing the dining habits of a consumer groups means a chance to adjust your business tactics to accommodate evolving needs.
But if dining out isn’t driving increased consumer interest and Millennial spending, what’s getting in the way?
Working from home
In an economy with very low unemployment, but stagnant wage growth, more and more Millennials are being pushed into freelance work rather than a regular 9-5 office job. Even Millennials with full-time jobs are taking opportunities to work from home on a regular basis. This shift to telecommuting drastically changes eating habits … and Millennial spending habits. There’s way less incentive to dine out regularly when you’re already at home by the end of your work day. And while delivery is still used for lunches, making lunch at home or eating leftovers is more likely when you can take advantage of your fridge being right there.
It is very easy to think of Millennials as “the young people” with no responsibilities, but at this point, most Millennials are between 22 and 36 years old. These are the bulk of consumers having kids and raising families today, as Generation X ages out of child-rearing. It’s not just about keeping on budget and finding the time to go out to eat. It’s also about sticking to kid-friendly restaurants for any family meals outside the house, or opting to stay home as the frictionless choice.
Keeping it easy with meal kits
Especially popular among Millennials, meal kits are offering a lot of variety in cuisine for consumers who may feel stuck in a rut and want to learn how to cook something new. Many meal kits include ingredients they’ve never encountered before, with an emphasis on wider global cuisine that’s particularly attractive to a generation raised on the internet. And keep in mind, most meal kit systems are set up so that three or so meals come in each weekly package. So Millennials using meal kits regularly are already committing to cooking at least three meals at home per week.
Cutting down on meals out
Millennials aren’t cutting out dining at restaurants altogether. (In fact, some reports are showing the opposite, with grocery shopping also taking a dive among the Millennial generation.) For many, it just means that if they dine out for lunch, they might not be going out to eat for dinner — or vice versa. And when they do go out to eat, they’re being more careful about which restaurant they pick. After all, if they are keeping themselves to only two or three restaurant meals for the week, they want those meals to be ones they’ll really enjoy.
So, what can you do about it?
Host events and classes.
Part of the fun of meal kits is learning new cooking skills and trying new foods. You can tap into that appeal by hosting special foodie events and even offering small cooking classes. This can be a real moneymaker for you gets guests through the door to experience your food (and hopefully entice them to come back for a regular dining experience).
Promote delivery options.
Delivery continues to be crucial for targeting both work from home Millennials and Millennials with kids. Make sure that you’re marketing specifically to highlight your delivery options — and that your customer service is as compelling via delivery as it is at the table in your dining room. Consumers today expect the food they receive via delivery to perfectly match what they would get with a dine-in experience, and the same is true of customer service.
Be more available online.
If you can set up online ordering, that’s a really good idea, too. Why? Because more than any generation before it, the Millennial generation are far more invested in ordering food ahead of time and either picking it up or having it delivered. While surveys have found Millennials to be particularly fond of being waited on in restaurants, the truth of the matter is this: whatever method provides the least amount of roadblocks is what Millennial diners will choose.
A restaurant app, an easy-to-use online ordering interface, and a digital menu that can be clearly read on a mobile device are all ways to keep the dining process simple and clear of obstacles for the tech-savvy Millennial. But keep your menu up to date; there is nothing more disappointing for customer than to order something and learn that it’s no longer on the menu.
Incorporating small plates into your menu.
For those going out less each week, they don’t want to try out a new restaurant only for their one entree to ending up lackluster. By offering small plates, you give Millennials a chance to try lots of elements of your menu. If they don’t like one of their picks, they aren’t stuck eating a big plate of it. There’s less risk for them, and that kind of menu encourages them to order more.
Believe it or not, Millennials are typically more loyal to brands than any generation before them. But that loyalty can be easily squashed if not nurtured consistently. Respond to online reviews. Offer sincere apologies when an experience isn’t what your diner expected. Stay authentic and remind your customers that real people working hard to deliver a great meal are behind your brand. That’s the key to retaining the Millennial devotion and Millennial spending — now and for many years to come.
Ultimately, Millennials are really not any different than other generations in their consumer expectations; how they want exceptional service and quality food has just changed. Be online, be on time, offer options, and know you get one shot to impress, so take advantage of it.
Want to catch up on the latest trends? Download our free eBook “Restaurant Trends in 2018” today!