U.S. restaurant sector struggles to win Millennial loyalty

Restaurants and foodservice operators continue to look for ways to win favor with the diverse and huge demographic known as the Millennials who comprise about 27% of the U.S. population.

A recent report from the NPD Group found this huge cohort has two distinct life-stages — elders between 25 and 34 years old and the younger group between the ages of 18 and 24. The report found that both groups are spending less money at foodservice venues than they once did.

Companies like Springdale-based Tyson Foods are also watching the Millennial generation with respect to food preferences. Andy Callahan, vice president of retail operations at Tyson Foods, said Wednesday (March 18) that this segment of the population is also driving the snack craze, consuming up to 7 small meals a day, unlike other generations.

The market research company said that for U.S. restaurants and foods service outlets, Millennials represent about 14.5 billion visits and $96 billion in spending, which is 23% of total restaurant spend, but this cohort has reduced visits and spending in the past few years. Specifically, NPD found older Millennials more likely to have children have cut back the most on restaurant visits, making 50 fewer visits per person over the past several years. Younger Millennials, those who are 18 to 24, made 33 fewer visits per person.

Annual per capita restaurant spend for younger Millennials is $1,240, which is down $146 per person compared to their spending in 2007. Older Millennials’ annual per capita spend is $1,369, down $213 per person, according to the NDP report.

DEMOGRAPHIC TRENDS, DEMANDS
The research found several reasons why Millennials have reduced their restaurant visits, with the most frequent being money. The group with young children cite budget restraints which has them opting for less expensive at-home meals. Another trend noted in the research is that about half of Millennials enjoy cooking. They say cooking at home saves money, they can control tastes and make healthier meals.

“Even with their cutbacks Millennials still make a lot of visits to restaurants and to encourage more visits, restaurant operators need to offer them a ‘good deal,’ which to Millennials means reasonable and affordable items that are of good quality and the right quantity,” said Bonnie Riggs, NPD restaurant industry analyst. “In other words, they not only want to get their money’s worth, they want good food and service.”

Food industry experts like Chris Egan, president of Kansas City-based Service Management Group, said that regardless of price point, Millennials expect a great dining experience.

"Affordable fast-casual and fast food restaurants with locally sourced goods, exotic flavors, and service levels historically reserved for higher-quality restaurants will most likely garner a disproportionate share of Millennial dining spending."

MILLENNIAL FAVORITES COMING TO NWA
A separate report from YouGov Brand Index recently released its top list for restaurants that most resonate with Millennials based on repeat business. For Millennials who already patronize Jimmy John’s, 83% of them say they would consider eating there again the next time they are looking to dine out. The next highest scorers among their own current customers are Chipotle (82%), Chick-Fil-A (78%), and Whataburger (76%). Subway rounded out the top five with a 73% loyalty rate.

Two of those chains are investing in Northwest Arkansas, with Whataburger and Chipotle adding new locations in Fayetteville.
Whataburger is under construction at 1956 Martin Luther King Jr. Blvd. in Fayetteville. A second location has been approved at 4335 S. Pleasant Crossing Blvd. in Rogers.

Chipotle, which already has locations on Dickson Street in Fayetteville and South Walton Boulevard in Bentonville, is opening a new eatery at 3379 College Ave. in Fayetteville, according to permits on file with Arkansas Department of Health.

Other restaurants coming soon to Northwest Arkansas that have already found favor with the Millennial generation include:
• Pei Wei Fresh Kitchen at 4895 W. Pauline Whitaker Blvd., Rogers; 
• Smashburger at 500 S.E. Walton Blvd., Bentonville; and
• Uncle Maddios, make-it-your-way pizza at 2012 S. Promenade Blvd., Rogers.