Are Millenials Killing The Restaurant Industry?
In a June 2017 report, data analytics firm TDn2K found that the restaurant industry suffered negative sales in 150 of 195 markets researched, with some restaurants reporting year-over-year deficits of up to 3% of customer traffic and revenue. While economic factors, including unemployment rates, are one of the biggest reasons for this decline, many industry experts are laying the struggles of the restaurants, most notably in the casual dining sector, on an oft-maligned but increasingly powerful part of our society: the millennials.
This group of consumers, classified as individuals born anytime between the early 1980’s and the late 1990’s, has been blamed for many societal changes and trends, especially those that have come about because of the proliferation of wireless technology. Simply put, they are the first generation to grow up with the internet being a regular and indispensable part of their lives, and their overall behaviors and consumption habits are greatly influenced by this.
As a baseline, the ingenuity of millennials is directly responsible for what we refer to as “the interruption model,” where they take common societal norms and turn them on their head by eliminating the so-called “middle man” and replacing them with technology. Case in point? Just look at the sharing economy, where companies like Uber and Lyft are destroying the taxi industry, or how Airbnb is has become one of the biggest rising looming threats in the hotel industry.
How does that apply to food? Take a look at the fast-casual industry, which is booming in comparison to the rest of the industry. At places like Panera, Chipotle Mexican Grill, or Shake Shack, you place an order, someone provides you a service (cooking your food), and you consume it. There’s no need to wait for a waiter to come talk to you about the specials, then ask you what you want to drink, and then discuss what you want to eat 10 to 15 minutes after you’ve been in the restaurant. Considering how job-focused many millennials tend to be, they also want a meal that’s served and consumed as fast as possible, which means they have neither the time nor the patience to wait for what they see as a frivolous service.
Similarly, millennials are also blamed for living life more through their phone, and eschewing real-life human interaction in many cases. This also applies to their food ordering preferences, as they’d rather place their order at the counter, pick up their (freshly cooked) order, and sit with a tightly-knit group of friends, if not by themselves alone with a smartphone, tablet, or laptop.
The casual dining and fast food restaurants themselves are not without their blame, either. For decades, they were perfectly content to take food that was pre-made at some factory-like facility, pay an employee a minimum-wage salary to reheat this pre-made food, and then serve it to a guest. The corporations that owned these restaurants enticed you in the door with the carefully created food art that they show in the commercials, only to serve you a product that doesn’t look anything close to what you saw on television.
That might have worked in the past, but just because something worked yesterday doesn’t mean it’ll work today.
For one, millennials love to take pictures of their food, and share it on social media. Nobody is going to want to share a photo of a fast food cheeseburger comprised of mystery meat and genetically engineered produce toppings, haphazardly assembled and looking like it was run over by a bus when served. In addition, with all the emphasis on diet, nutrition, and physical appearance, the massive entrees that come pre-packaged from the restaurant supplier, and contain more than 2,000 calories plus more than a day’s worth of sodium, simply doesn’t appeal to many consumers, regardless of the convenience or the price.
The fitness and social media factors are a big reason why millennials have spearheaded a renaissance of people cooking their meals at home, and led to the rise of meal-kit delivery services like Blue Apron, Hello Fresh, and Plated. They want to know what they’re eating is healthy, and they want to share the fact that they cooked their own healthy meal at home. This trend of cooking at home, and enjoying the convenience of receiving their groceries right at their doorstep, has been a one-two punch delivered squarely to the jaw of many restaurants.
In reality, millennials may simply be the scapegoat for some parts of the restaurant industry not being a viable business model in today’s world. The question for those restaurants now is whether they’ll be able to fully adapt to the current socio-economic marketplace they find themselves within, or risk extinction.
