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Millennials keep food and beverage retailers on their toes

Millennials taking selfies with their coffees are a familiar sight at Starbucks, but the retailer is not alone: appealing to millennials is a big priority for food and drink retailers.

July 22, 2015
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Whether it’s down to Starbucks’ free wi-fi, its highly regarded social media strategy that encourages sharing and engagement or its ambiance, it’s successfully wooing the millennial generation. And it’s not alone – appealing to millennials is a big priority for food and drink retailers.

Millennials, aged between 18 and 34, hold enormous power in the food and beverage industry. They have the ability to set trends and influence their older counterparts. They also have an increasing spending power.

According to a JLL research, millennials accounts for approximately 23 percent of annual restaurant spending in U.S. and about 46 billion visits annually. Their spending power is estimated at approximately $600 billion in a year and by 2018, it is expected to eclipse all other age groups. This makes the millennial generation a preferred consumer segment in America.

The draw of a good atmosphere and fresh ingredients

The attitude and preferences of millennials are bringing a whole new way of thinking to the sector. They want to enjoy a wholesome experience with a relaxed atmosphere enouraging them to linger with their friends and and good value food made with fresh ingredients rather than the processed meals in an eat-and-go environment.

Aaron Ahlburn, JLL’s Director of Research in Americas, says: “The reason fast-casual restaurants appeal to millennials is that many offer customizable, health-conscious options in a hip environment.” This has forced quick service restaurants (QSRs) to innovate. “To keep up with their fast-casual peers, QSRs need to focus on three areas: strategic renovations, technology enhancements and facility branding,” Ahlburn adds.

The rebranding of QSRs requires creating the right type of atmosphere to draw in millennials consumers and then make them want to stay. Wendy, for instance, went through a brand transformation recently to enhance its customer’s experience. They have added fireplaces, new seating options with lounge chairs and booths, Wi-fi, flat-screen televisions and digital menu boards to compete with its fast-casuals peers.

“The traditional QSR dining experience encourages customers to get their food, eat and leave. At Wendy’s, we’re changing that standard by making the environment in our dining rooms more inviting and comfortable,” says Bruce Allendorfer, Regional Director of Construction for Wendy’s. “Customers stay longer and can make an event out of their visit.”

QSRs have also started to introduce healthy and creative options in their menus. They are experimenting by introducing fresh gourmet options. Since millennials are seeking new taste experiences, many restaurants have started to offer unique flavors as well as they compete to stand out in an increasingly crowded and competitive marketplace.

Going green is another way to woo the millennials. They are a socially conscious generation with desire to make a positive impact and this is reflected in their food choices. Their focus is on the freshness and integrity of ingredients for a healthier and sustainable food experience.

Embracing tech

Technology is also key to offer a personalized consumer experience. For instance, Pizza Hut is testing an eye tracking technology that can predict what you want to order. Applebee have installed tablet at its tables that lets consumers order, pay and play games while their food arrives whereas many other restaurants like Taco Bell offer their own apps which lets consumer order ahead of time.

GPS and beacon technology also have the potential to offer new digital experiences to consumers. But social media remains the easiest and the most popular tool to win the millennials with. McDonalds used it effectively last year as part of its transparency campaign by answering questions of millennials on various social sites regarding its products and food preparation.

Keeping things interesting with new choices

The key is to offer millennials with lots of choices to keep the experience fresh and interesting while also being affordable and providing value for money. Food trucks have proved to be a huge hit with their small size and mobile element appealing to consumers’ sense of novelty, particularly millennials who continually crave new edgy experiences. As such, JLL predicts their revenue will increase by 76 percent in the next five years. Meanwhile Starbucks has launched its evening concept that offers more food options and alcoholic beverages.

The millennials’ love of new experiences has led other retailers to expand into the food & beverage industry as well. “Many department stores and apparel retailers have realized that they can increase their revenue by offering a gastronomical experience to millennials. Tommy Bahama, for instance, earns twice the revenue per square foot from its restaurant-retail stores compared to its stores without restaurants,” says Keisha McDonnough, JLL’s Senior Research Analyst, Americas.

With millennials driving so much change within the food and beverage, it makes for an exciting time for both retailers looking to create and market the next big trend and consumers looking to enjoy an ever wider array of new experiences.

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