Restaurant operators who are growing tired of catering to Millennials can rejoice: There’s a new, perhaps more important, generation taking a seat at the table: Generation Z.
Born after 1995 — just kids and teens right now — Gen Z are the biggest population swell since the Baby Boomers, and officials at market-research firm The NPD Group say Zs are already making a big impact on the restaurant industry.
“Gen Z are very important and only going to get bigger,” said NPD analyst Bonnie Riggs. “Now is the time to start building loyalty with them. They’re going to drive your business in the years to come.”
In the year ended February 2016, Gen Z accounted for $78 billion spent at restaurants, according to NPD. Additionally, the group makes up the second-largest share of restaurant visits — Boomers are the largest.
Although still very young, Zs are a group that is digitally and socially connected. A recent report from Sparks & Honey, a culturally focused ad agency, shows Zs have the ability to multitask across more screens then Millennials, including TV, cell phones, laptops, desktop computers and iPods/portable music players. They also use YouTube and other social media sites to conduct research for school assignments.
“[Operators] have to be on the leading edge with older Gen Zs,” Riggs said.
This group is also self-reliant, entrepreneurial and socially conscious, with 26 percent of teens ages 16 to 19 volunteering in 2013, according to Sparks & Honey’s Gen Z report.
Like Millennials and Gen X, Zs make the majority of their restaurant visits at quick-service chains, although older Zs — those between the ages of 11 and 19 — tend to visit fast-casual chains more, NPD found. In the year ended February 2016, 7 percent of the per capita visits made by older Gen Zs were to fast-casual chains, compared with 6 percent of per capita visits for Millennials and 5 percent for Gen X.
When visiting restaurants, these kids and teens tend to go out as a group and share their food. According to NPD, their average party size is 2.4, and they have a higher percentage of shared meals than any other generation.
Gen Zs are also eating better than Millennials were at their age. NPD’s new Generational Study: The Evolution of Eating Report, indicates a shift among Gen Z toward more healthful food choices and snack foods, while maintaining perennial favorites. For example, while hamburgers are among the top three foods Gen Zs eat at quick-service restaurants, they eat them less than Millennials, favoring chicken and pizza instead, NPD found.
Generation next
While many chains have been obsessed with marketing to Millennials, some forward-thinking brands are exploring how to reach the next generation. Executives from #getfried Fry Café and Gusto!, two young fast-casual concepts, share how they are, or are planning to, connect and build brand loyalty with Gen Zs.
#getfried Fry Café
With a hashtag in its name, Buffalo, N.Y.-based #getfried Fry Café has built its brand around social media and digital connection. This hyper-connected approach has been a boon to building the brand’s core customers — Millennials — but it’s also been successful in attracting Gen Z.
“Our target demographic in our mind was always Millennials,” said owner Chris Covelli, who also happens to be a Millennial. “[But] Gen Z has always been the most active on our social media campaigns.”
Covelli says the brand consciously and regularly makes Facebook and Instagram posts targeted to Gen Z, such as the Facebook post below featuring Dory from the new Disney movie Finding Dory.
The chain also runs contests, such as name-your-own-fry-basket, which Covelli says have been especially popular with teens. Last year, one contest led to the creation of the French Connection, a fry basket made with sweet potato fries, topped with vanilla ice cream, a drizzle of chocolate sauce and powered sugar. Although Covelli says many customers didn’t find the basket appealing, it has been such a hit with the younger set that it is still displayed on restaurant promo boards and is available to order.
“It really captures an important part of our brand,” Covelli said. “If we do capture [a basket] kids absolutely love, we’ll definitely add it to our menu full-time.”
Gusto!
Atlanta-based Gusto! is a build-your-own bowl or flatbread concept featuring a mix of global ingredients and flavors that customers can create in just three steps. The brand is well positioned to appeal to on-the-go, health-conscious and flavor-forward young people.
“We have a menu that is relatively progressive,” said Nate Hybl, Gusto! founder. “We found that the younger generation understands it quicker.”
Although the concept’s biggest customer is currently Gen X, Hybl says he’s already at work on ways to meet the demands of Gen Z. Among the tactics in his pipeline are online ordering and a build-your-own meal app with nutritional information.
With one location, another unit slated to open in July and several more restaurants planned for next year, Hybl said, “We will be working hard to gain Millennials and Gen Z.”