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TODAY'S CONSUMER
Talking About Our Generations: Millennials

Members of a generation share life experiences – things like pop culture, economic conditions, world events, politics, and technologies – that shape them collectively. As a result, they tend to develop and retain similar values, attitudes, and characteristics. While generations aren’t homogeneous – there are spectrums of ages and life stages – those within them do share meaningful similarities. Looking at consumers through a generational lens can be valuable in this competitive climate where understanding current and potential customers is key. “The restaurant industry is only going to grow 4% over the next ten years,” predicts Bonnie Riggs, restaurant industry analyst, The NPD Group. “To help find opportunities for growth, it will be important to reexamine generational differences.”

TREND Born between 1977 and 1992, Millennials are a large generation, numbering more than 68 million. They are, in 2013, roughly 20-35 years old.* Generally considered to be among the hardest hit by the current recession, The Wall Street Journal reports that the official unemployment rate for those under age 25 is 16.2%, more than double the rate for the population as a whole; Pew Research found that the gap in employment between the young and all working-age adults – roughly 15 percentage points – is the widest in recorded history. Adding to the challenges of elevated unemployment, they also tend to carry high student loan debt, which contributes to 30% of Millennials having lived at home in recent years. Due largely to these circumstances beyond their control, those in this generation are not spending as freely as they once did, including in restaurants. In a recent Technomic study about their foodservice habits, 40% of all Millennials (and 45% of younger Millennials, aged 20-27) report cutting back on eating out for financial reasons over the last two years. This is significant – according to The NPD Group, on average, Millennials (especially younger Millennials) ate out about one fewer meal per week in 2012 than in 2007. The NPD Group’s chief industry analyst Harry Balzer sounded an alarm to the industry when their report on the Millennial generation was issued in late 2012, saying the potential impact of this dip in dining out frequency among Millennials could be of “biblical proportions for the restaurant industry” because of their historically high use of restaurants. Yet according to the same study, 41% of Millennials report purchasing food away from home at least twice a week (more than Gen Xers at 38% and Baby Boomers at 37%); a larger proportion of Millennials than older generations do so in or from fullservice restaurants. Technomic’s Generational Trend Report found that a greater percentage of Millennials than Gen X and Boomers visit fullservice restaurants on a monthly basis – upscale casual- and fine-dining concepts in particular. Also of note is their preference for “locally-owned, sit-down independent restaurants”, which 67% of Millennials visit monthly vs. 58% of Gen X and 59% of Boomers. National Restaurant Association research found that among the top attributes Millennials cite for choosing a fullservice restaurant is food they haven’t tried before, important to 62% (followed most closely by only 46% of younger Boomers).

OPPORTUNITY Not surprisingly, this generation is the most likely to be drawn to deals, with 43% telling Technomic that they are influenced by coupons and discounts when choosing where to eat. Another way to their hearts may be through alcoholic beverages. Nearly all in this generation are of legal drinking age and the National Restaurant Association reports that over half consume an alcoholic beverage every time they visit a casual dining restaurant; almost 75% do so in fine dining restaurants, and even more in bars. Technomic data also shows that an alcoholic beverage program played a highly important role in the most recent choice of a restaurant for about half of drinking-age Millennials (compared to one-third of other adults). As many restaurants have discovered, they are prime candidates for happy hour deals that give them a taste of the restaurant experience they like without a tab they can’t afford. And NRA data also shows that more than 75% of Millennials reported ordering food with adult beverages. This is a generation that is ahead of the curve – delving into wine, spirits, and craft beer earlier and more frequently than other generations – so a distinctive beverage program can set a restaurant apart in their eyes. Another avenue of appeal may be enhanced off-premise options. According to Technomic’s Generational Trend report, over a third of Millennials say they’d like to prepare meals at home but don’t have the time; this emphasis on convenience leads them to order food for delivery more often than older consumers. To be competitive, restaurateurs should ensure good taste, accuracy, and speed of service, which Millennials indicate is integral for both takeout and delivery.

In terms of marketing to Millennials, this is a generation that grew up on the Internet – they are most likely to utilize all forms of technology for researching and connecting with restaurants. Technomic finds that while most Millennials look up restaurant menus online, younger Millennials are more likely to interact with restaurants through a variety of online resources – notably Facebook, Twitter YouTube, Goggle+ and other social media channels – than older Millennials (aged 28-35), who more often turn to websites.

CAUTION Size matters, and this is a massive generation. According to Technomic, more Millennials (42%) than Gen Xers (34%) and Boomers (35%) highly value the ability to visit restaurants whenever they want, which would indicate an enduring interest and future potential. While they are financially challenged now, experts agree that staying on top of Millennials’ changing economic circumstances and needs as they progress through their life stages will be rewarded. “This generation has learned to make adjustments – to be more frugal, to do without restaurants,” says Bonnie Riggs, restaurant industry analyst, The NPD Group. “It will take a lot to bring them back into restaurants more frequently, but this is a key customer group. It’s important to appeal to them now and to build their loyalty for the future.” Hopefully the future isn’t that far off. Technomic data indicates that about half of Millennials think their financial situations will improve in the next year.

*There is no consensus on the age range and populations of American generations. Those here are from Technomic, Inc., based on their extensive research of these definitions.

Click here to read about Gen X consumers. Click here to read about Boomer consumers.

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