Millennials shunning restaurants — even the ones with jobs

It’s human nature for kids to make different choices than their parents. But when it comes to the influential Millennial crowd, the children of the Baby Boomers, companies would be wise to pay close attention.

This is particularly true in the restaurant business, where retail analysts from RBC Capital Markets have found that this group of 18-to-34 year-olds has “dramatically reduced” trips to restaurants – and it’s not just the ones without jobs.

The RBC report says Millennials have cut back on restaurants visits by 21 per cent over the last seven years in the U.S., and experts in Canada believe the trend is similar up here.

“While some of this is likely due to macro factors, much of the change seems to be due to the different values of the Millennial Generation,” says the report.

Those values include a search for food that is better quality, yet still comes quickly, and the restaurant has to have some entertainment value (think iPads on the tables and interactions through social media).

What’s perhaps most surprising is the drop off is greatest among higher income Millennials that make more than $60,000 a year. That means the decrease in restaurant visits isn’t just because that generation is having trouble landing steady work.

Not your father’s restaurant

Those that are going to restaurants are shunning the older chains their parents likely took them too as kids, in favour of gourmet tea and coffee shops like Starbucks and so-called “fast casual” chains such as Chipotle and Panera.

The report says traffic at major hamburger chains such as McDonald’s and Burger King have risen 4 per cent sine 2006, but dropped by 16 per cent among high-income Millennials and 5 per cent for those with less spare change.

For major casual dining chains, traffic rose 2 per cent overall, but fell 5 and 21 per cent among low- and high-income Millennials, respectively.

Millennials who make less than $35,000 annually are spending more money at gourmet coffee shops (13 per cent) and fast-casual restaurants (34 per cent). Among those who earn more than $60,000, visits to gourmet coffee chops are up 9 per cent and up 44 per cent for fast-casual spots.

“We believe declining restaurant traffic by both high- and low-income Millennials represents a major shift in consumer taste that could have lasting implications,” the report states.

David Ian Gray, a retail consultant and founder of Vancouver-based DIG360 Consulting Ltd., says the data shows Millennials are willing to pay more for what they believe is better quality food.

“Food choice matters more than other household commodities,” says Gray. “Millennials who can afford the option are choosing healthier dining options or even more ‘authentic’ options that align a restaurant's values with their values in a way that may not show up in their other shopping behaviours.”

TV wasteland

The RBC report also says chain restaurants trying to reach young people through TV advertisements could be wasting their money.

“Only 25% of TV viewing by Millennials is done live. Therefore, we wonder if TV commercials are getting through to this important buying group?” the report notes.

John Torella, senior partner with the retail-consulting firm J.C. Williams Group, says Millennials like eating out because they are very social (they post pictures of their food on social media, after all).

“They celebrate diversity so they’re always looking for new and unusual things,” he says.

Torella says restaurants that reach out to Millennials on social media will likely do better in earning their business over the long run.

“Any of the new technology, as it pops up as part of the casual-food experience, will be welcomed,” he says.

The RBC report points to Starbucks as leader in mobile and digital engagement and gives kudos to chains such as Buffalo Wild Wings that allows its guest to play sports trivia games while others watch sports on its TVs.

“We believe the eating decisions of the new generation are increasingly influenced by the voices of their peers (word of mouth or social media) in place of the more traditional advertising outlets. Large chains are finding that they can no longer rely solely on traditional media to reach these consumers.”

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