Understanding the Buying Power of Canada’s Millennial Generation

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Canada’s population pyramid is turning on its head — and restaurant operators who aren’t reacting with a reflectively gymnastic posture will lose out. As boomers age, they’re putting their wallets in their pockets and surfacing as the next big thing are the millennials, the much-studied generational cohort that’s actually the only source of growth within foodservice today. “They’ve finished university, are starting their careers and have the money and time to go out for dinner or to a cocktail bar,” says Samantha Scholfield, research and program manager at the Vancouver-based British Columbia Restaurant and Foodservices Association. “In your twenties, that’s what you do.”

The numbers confirm it. A full 30 per cent of total restaurant traffic is currently attributable to millennials. So says Toronto-based NPD Group, which reports traffic was actually flat last year with the exception of this 24-to-38-year-old crew.

According to Restaurants Canada’s Discerning Diner survey, 49 per cent of millennials eat at a quick-service restaurant and 29 per cent at a table-service restaurant at least once a week (compared to 42 per cent and 25 per cent of 35 to 49-year olds and 27 per cent of those 50+, respectively).

That makes millennials pretty valuable to restaurateurs. Capitalizing on that value, says Geoff Wilson, principal at fsStrategy, a Toronto niche-consulting firm focusing on the hospitality and foodservice industry, means acknowledging their tastes and values. Think whitewashed dayparts, food plates meant for sharing, an appreciation for integrity-packed restaurant management and a generally unconventional use of restaurants.

MILLENNIAL MANNERISMS
Right off the bat, restaurants have a natural advantage with this group. For one, home cooking hasn’t historically been a big deal with millennials and they don’t spend a lot of time engaged in it. New York-based analyst firm Bernstein found even though millennials work less than older generations — including those who’ve retired — they spend the least amount of time on meal prep. In a 2015 report by London-based Mintel, millennials even declared cereal too cumbersome for the dirty bowl it leaves behind.

And restaurants are social — like millennials. They enjoy being out, being seen and alerting the world to their whereabouts. That attribute is hard-wired into their DNA and it’s on restaurants to exploit or be destroyed by it.

Operators hoping for the former must bear in mind millennials are fans of a story, says Darren Clay, executive culinary chef instructor at the Pacific Institute of Culinary Arts in Vancouver. They like tales that are both believable and personal and will reward businesses that are kind to their staff, authentic and in line with their values. That means steering clear of any whiff of sexism — including different dress codes for male and female staffers — and being true to claims such as being sustainable and organic. They like local menus and dietary-restriction-friendly food. They also like restaurants that have adapted to the times, which means a lot more plant-based offerings that are interesting, tasty and look good. And if they look good enough, this cohort will spread the word through social media.

THE TECHNOLOGY PIECE
Technology offers one easy route to millennials’ sweet spot. The so-called “Digital Door” — refers to using a digital device to access restaurants in multiple ways, including ordering ahead for pickup, arranging delivery, accessing websites and interacting during and after the meal — is “front and centre for millennials,” says NPD’s executive director of foodservice, Robert Carter.

According to Restaurants Canada, millennials engage technology at every turn in their restaurant experience. Forty-two per cent of them use their smartphones to order takeout or delivery and they visit restaurant websites more than anyone else (85 per cent, compared to 74 per cent of 35 to 49 year olds and 65 per cent of people 50+).

A&W recently demonstrated its appreciation for this home truth with a Snapchat push to promote a campaign. The custom geofilter that lets users enhance their photos with raining burgers was the Canadian burger chain’s first experiment with eschewing traditional media in favour of a digital-first approach. Approximately 158 million people a day use Snapchat and spend between 25 and 30 minutes on it, according to Snap Inc.’s IPO prospectus. And the platform, says comScore’s 2017 US Mobile App Report, ranks third in younger millennials’ top apps, behind Facebook and ahead of Instagram.

Its invitation to shoot and share food pictures has upped the game for chefs on the presentation front. But the share-worthy shots get posted for more than their aesthetics. Restaurants, says Jean-Pierre Lacroix, president of Toronto branding and design agency Shikatani Lacroix, attract the most buzz when they sweeten the pot with digital details. He encourages clients to invest in digital in-restaurant video that expounds colourfully on their ingredients. “Millennials are content-hungry multi-taskers. Their social cement is often what’s on the screen.” It’s why, he says, Swiss Chalet’s dining rooms are adding more screens.

Technology also works to eliminate the two main friction points in a restaurant experience: ordering and paying. Some restaurants — such as those in Terminal One of Toronto’s Pearson International Airport — now allow consumers to use iPads or smartphones to order and settle up at the table.

Going forward, Carter says restaurants need to continue rolling out digital platforms. The Digital Door represents about $1.8 billion in revenue annually and the use of digital devices is the fastest-growing area of the restaurant market. “So if you’re a restaurateur in today’s environment and you don’t have a strategy for that, you’re missing out with this millennial cohort.”

But be subtle. “You’ve got to only send them what they want and not send things too often,” cautions Thomas McNaughtan, vice-president of South St. Burgers. If consumers log into its system, the restaurant sends them electronic coupons. “We’re trying to connect with them, but not overly preach and market to them. It’s kind of a dance. You don’t want to be too much in their face. They don’t want that.”

MILLENNIAL MEALS
Millennials like to do everything in groups, including eat. Restaurants that create environments where these diners can hang with their kind, facilitated by communal tables, Wi-Fi and shareable food options, rise to the top. Earl’s and Cactus Club, whose menus spill over with Italian-style Focaccia, Jamaican jerk wings and Szechuan chicken lettuce wrap shareables, are good at this, says Carter.

A range of different physical settings is also appealing to this group, says Lacroix. In this way, the friend group of four one night can visit the same restaurant with a friend group of 12 the next. “The great operators have created different zones,” says Lacroix. He points to Boston Pizza, which puts a lot of emphasis on its bar area to cater to boomer customers, but has also created large eating areas where big gatherings of millennials can congregate without disrupting the entire restaurant.

FLEXIBILITY RULES
Millennials are customizers — eating the meal they want at the time they want that’s prepared according to their tastes alone. “They may ruin the culinary integrity of a dish, but they don’t care,” says Wilson. And they’ve thrown traditional dayparts into the air. “Having breakfast at two in the afternoon is probably not something a baby boomer would do.”

Carter lauds Starbucks and Tim Hortons particularly for hearing the knell here and singles out Starbucks for its beverage innovation that aligns with afternoon-snacking dayparts. “That’s another example of really resonating with the millennials.”

Indeed, agrees Mark Murphy, COO of B. Good Canada, a casual quick-service restaurant with five locations in the GTA. “This group’s eating habits are different from other demographics and you have to respond to that. They like snacking and lighter meals more often.” B. Good looks to cater to these proclivities with a diverse all-day menu featuring kale and grain bowls, seasonal salads and burgers.

“You can’t use me-too menu-ing,” says Wilson. “Maybe you sell pasta like the guy down the street, but yours has feta cheese, shallots and pine nuts in it. You’ve got to create a different experience, something they will end up talking about.”

Committing to a more nimble menu approach means spending money on R&D, says Lacroix. “Every restaurant needs to figure out how to change so they’re more millennial-friendly. Doing the same thing over and over doesn’t appeal to millennials in the long term.”

At the end of the day, this group is keen for a unique experience — equal parts challenge and opportunity for operators. “You’d better go after the people who apparently are the next group of spenders,” says Wilson. “And you’d better stay up with them and offer what they want because, otherwise, your revenue’s going to decline. If restaurateurs are not excited by millennials right now, they should be.”

Written by Laura Pratt 

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