Millennials: Taking Over

Millennials will soon inherit the Baby Boomers’ crown as the most important customer group for the foodservice industry. Roughly defined as those aged 18 to 34, the Millennial population is 80 million strong and expected to exceed Boomers in purchasing power by 2018.

Impressive numbers to be sure, but the following data are even more important to foodservice operators:

  • Currently accounting for 22 to 24 percent of restaurant spending, Millennials will represent 40 percent of restaurant purchases by 2020. (National Restaurant Association)
  • In the past seven years, Millennials have cut back annual restaurant visits by 21 percent. (RBC Capital Markets)

The first point is astounding and should be more than a little unsettling to operators. The second one is downright frightening, as the implications relating to the first one are dire.

So who are these people and what do they want from us?

First, this age group appreciates and enjoys food, and sees dining out as an opportunity to socialize with friends and family. 2013 Sterling Rice Group research found Millennials have other very specific attitudes when eating out:

  • They prefer whole foods over processed food.
  • 80 percent want to know more about how their food is grown.
  • Food is seen as an opportunity for exploration ‒ 40 percent order different things every time they visit a restaurant.
  • Customizing food options is seen as a need, not a luxury.
  • They feel that where they eat is a reflection of who they are.

Millennials are still value driven, but their definition of value includes factors other than just cost. They want to know they are getting a quality experience for their investment. According to a recent Nielsen study, Chipotle and Panera are the top two restaurant brands for Millennials. The upscale components, innovative menuing, and commitment to fresh ingredients and sustainability are hallmarks of fast casual operations and fit well with this group’s sense of identity. Items like Panera’s Power Breakfast Egg White Bowl With Roasted Turkey from the chain’s “hidden menu” has roasted all-natural, antibiotic-free turkey, egg whites, warm baby spinach, roasted peppers, and basil pesto, and are made for a Millennial’s sensibility.

Communal tables are also attractive, as are small plates, because they both encourage socializing and sharing. One independent that does it right is Rustico in Arlington, VA. The brunch menu includes small plates of Deep Fried Deviled Eggs; Buttermilk Biscuit Sliders of Italian sausage, eggs and Cheddar; and Sweet Potato Skins stuffed with goat cheese, bacon, eggs and scallions. All are priced by the piece to satisfy one diner or a throng of friends. And if that isn’t enough to get an impromptu party going, the Breakfast Poutine topped with eggs, bacon gravy and cheese curds is a fun way to share with friends or to get to know new ones.

But perhaps stronger than any other single trait is the attitude about the what/when/how of a meal occasion. Millennial meals are not tied to traditional meal times or foods, their preference being to eat whatever, whenever. Midscale operations have served that desire for decades, offering entire menus 24/7. But a growing number of QSR chains are joining in by adding late-night dining offering a blended menu of breakfast and dinner items. Daypart-bending programs like these appeal to this crowd:

  • “McDonald’s After Midnight” makes breakfast items available for 10+ hours each day.
  • Jack-in-the Box’s “Late Night” shareable multi-item meals include the egg-topped Brunch.
  • Steak ‘n Shake’s “Late Night Menu” includes the Steakburger™ Slinger Skillet topped with two fried eggs.

Keeping the day “clockless” can mean having breakfast at 10:00 p.m. or enjoying wake-up burgers. Burger King has added some of its lunch/dinner items to the breakfast menu and there are many examples of egg-topped burgers available throughout the day, including Steak ‘n Shake’s Royale Steakburger® and Red Robin’s Royal Red Robin Burger. There are also many independent operators recognizing an afternoon “breakfast burger’s” attraction to this set. And this doesn’t even begin to cover the restaurants offering eggs as all-day burger toppings, like Fuddrucker’s and Denny’s. All allow indulging a desire for breakfast at night or a burger in the morning ‒ the perfect solution for a hungry Millennial.

Bottom line, Millennial attitudes represent a significant change in the way operators should look at and serve guests. Their priorities of natural food raised in a sustainable way, untied from dayparts and offered in social-friendly settings are reflected in the newest crop of restaurateurs. Twenty-nine year old Jonathan Neman, a founder of Sweetgreen, a 27-unit chain on the mid-Atlantic seaboard says, “It’s a really fun industry in that you get to work with people and you get to work with food, two incredible things. I think you’re going to see more and more educated, young people coming into this industry.”

Both front and back of house, Millennials are the future of your business.

Creativity Makes Economic Sense

The recession that was declared officially over in June of 2009 continues to make its effects known. According to the U.S. Bureau of Labor Statistics, in May of 2014 the unemployment rate stood at 6.3 percent ‒ a far cry from the high of 10 percent in October 2009, but still much higher than the 4.7 percent rate of November 2007.

The point is the American consumer has had a long, hard go of it for nearly seven years and that has caused changes in behavior and lifestyle. Some habits will fall off our collective shoulders effortlessly, but some may be more firmly rooted.

One habit causing echo tremors for the foodservice operator is consumer devotion to value menus, meal deals and other discounts. Per Mintel, 40 percent of consumers say that price point is the biggest factor in choosing a breakfast restaurant, with 45 percent choosing restaurants due to their value menus. Compounding that is the 23 percent who say they often use coupons or loyalty cards for breakfast. Even as the economy strengthens and more people find employment, the expectation remains that a breakfast sandwich should cost a dollar.

This attitude is not merely driven by habit. Many people are finding the job market doesn’t offer the same opportunities it once did. Some challenges are age-related and some workers have been out of their field for too long. Some are underemployed, while others are trying to start a business or freelancing their skills. Many have had to cobble together a living from two or more part-time jobs.

And that directly affects the profitability of breakfast at restaurants.

The reason is not as simple as it might appear. Breakfast is the most habitual meal of the day. Many people who went through a drive-thru every morning while working have been weaned of the habit. Those working from home or working multiple jobs probably aren’t on the road during the hours breakfast is served.

The numbers show that breakfast traffic is doing well, especially compared to other times of the day. But those are sales numbers, not profitability. Two-dollar value meals do not allow for much menu creativity, so consumers may just as well grab a frozen microwavable breakfast sandwich at home.

The good news is that things are getting better slowly, and there are strategies that will help turn this market into a more profitable one for morning restaurateurs:

  1. Since 51 percent of people are more likely to visit restaurants that offer coupons or special price promotions, offering “extreme LTOs” may be a good option. Very limited times (e.g., “Between 10 & 11 tomorrow…”) are easy to offer via Twitter to increase traffic during slow times and quickly measure what brings the best response.
  2. Technomic found 48 percent of people enjoy eating breakfast foods at non-traditional times. If all-day breakfast isn’t feasible, late night or brunch specials may attract more traffic.
  3. The allure of non-menu benefits should not be discounted. Mobile ordering and loyalty programs count, as do socially responsible positions and actions.

But the idea with the most immediate payback is customization. A huge factor in consumers’ choice of restaurants is the ability to customize their food. According to Mintel, this is true for over 80 percent of all consumers, and 85 percent of Millennials. That feeling of control comes with a certain satisfaction and makes the item less price-sensitive.

Call it the pizza model: a $5 medium, 1-topping pizza sounds like a great deal. The first topping is free, but after the onions, mushrooms and extra cheese are added at only $1.75 each, there’s a $10.25 pizza going out the door. In the same way, a build-it-yourself omelet can be offered for only $4 (deal!) with only 95¢ for each extra. With feta, onion, tomatoes, peppers and sour cream, this is now an $8.75 omelet, being eaten by someone who is happy because she got exactly what she wanted.

Breakfast sandwiches handed through a drive-thru window are already customized. If guests can order an egg/cheese/sausage biscuit or an egg/cheese/bacon biscuit, why can’t they have an egg/cheese/sausage and bacon biscuit for an extra charge? Or why not add pickles or a squirt of Sriracha? Maybe a vegetarian would like a double egg and cheese?

The power of customization has worked well for Subway over the years and is one of the keys to Chipotle’s popularity. Go ahead ‒ everybody needs a power breakfast from time to time.

Daypart-Blurring Proteins

Virtually every operation serving breakfast sandwiches has an egg, cheese and bacon (or sausage) sandwich on its menu. The items are distinguished by being served on a biscuit, croissant and/or bagel. In other words, they’re very similar.

So to be clear, there are six basic sandwiches sold at thousands upon thousands of locations in the U.S. every day. Far from creating consumer fatigue, more and more of these nearly interchangeable products keep flying out of drive-thru windows, year after year. The secret of their success? Being the perfect comfort food. And who gets tired of comfort?

One way to capitalize on this winning equation while displaying menu individuality is to follow the pattern while filling in the blanks with unexpected ingredients. Consider these very different sandwiches and note their adherence to the meat/egg/cheese equation:

  • The Wake Up Call (C&M Café, Los Angeles) makes a sandwich with pastrami, egg, Swiss cheese and chili aioli.
  • Open-Faced Breakfast Burger (Grange Hall Burger Bar, Chicago) layers both Canadian and applewood bacon, sharp cheddar and maple syrup, topped with a sunny-side-up egg on cinnamon-raisin French toast.
  • The Fried Egg Sandwich (Max’s Wine Dive, Texas-based) places three pan-fried eggs, applewood-smoked bacon, Gruyère, Bibb lettuce, tomatoes and black truffle aioli on artisan sourdough.

Another way to entice consumer taste buds is to make savvy use of on-trend ethnic flavors and sauces like chipotle and sofrito to brighten and intensify dishes. Bruegger’s Bagels makes good use of Sriracha in its simple but popular Sriracha Egg Sandwich, adding sausage, cheddar and fresh red peppers to the egg and Sriracha.

Other issues add complexity and a certain amount of urgency to the need for menu creativity. As the only daypart currently growing, breakfast is a hotly contested battleground. Operators already in the daypart do not want to lose ground, and those entering it intend to grab share from others. The stakes are high.

Another factor to consider is Millennials’ habit of eating whatever/whenever, which continues to erode daypart boundaries. This has led to more operators offering daypart-blurring items throughout the day. Consider the migration of roasted turkey and chicken to the morning menu and the proliferation of egg-topped burgers, salads and vegetable dishes.

At the same time those forces have been at work, protein has become a topic of great interest to consumers and researchers alike. Well-respected, peer-reviewed studies have been published showing that beginning a day with high-quality protein like eggs and meats offers many benefits over high-carb breakfasts. Mintel reports that consumers have been showing more interest in having high-protein items like eggs, meats and Greek yogurt during their breakfast meals.

The combination of all these influences has led to yet another response to the need for competitive advantage. Many eateries have expanded their repertoire from bacon, sausage and ham, to non-traditional breakfast proteins like shellfish, poultry and all types of beef and pork products. Per Datassential, use of pulled pork on the breakfast menu is up 300 percent, prosciutto has increased by 159 percent and lobster, 72 percent. These proteins, among other formerly lunch/dinner ones, are finding a home on more morning menus and helping to differentiate restaurants. Some interesting examples of new breakfast protein dishes:

  • BBQ Pulled Pork Benedict ‒ two poached eggs over pulled pork and pickled onions on English muffin topped with hollandaise and scallions (Inspiration Kitchens, Chicago)
  • Bella! Bella! Benny ‒ thin slices of prosciutto, Taleggio cheese, and poached eggs on toasted ciabatta, topped with cream cheese hollandaise, balsamic glaze and arugula (Snooze, Denver)
  • Lobster Cake Benedict ‒ with corn salsa and tarragon hollandaise (Four Seasons, Boston)
  • Roasted Duck Hash ‒ with roasted potatoes, shallots, spinach, & sunny-side up eggs (Huckleberry, Los Angeles)
  • Brisket Breakfast ‒ 14-hour slow-roasted Angus beef, shredded in spicy tomato broth, with 2 poached eggs and toasted baguette (Ria’s Bluebird, Atlanta)
  • Slim’s Spicy Caribbean Omelette ‒ made with grilled, jerk-spiced shrimp, fresh avocado, green onion, sweet onion and cilantro, topped with mango salsa (m.henry, Chicago)
  • Carpaccio Benedict ‒ local beef tenderloin topped with eggs, hollandaise, capers, horseradish, red onion and olive oil on toast (Kismet, Montpelier, Vermont)

The blending of favorite breakfast and traditional lunch/dinner foods creates new and exciting meals, and is well-suited to today’s lifestyles. No one will argue with the concept of having what they want to eat whenever they want to eat it.

The same can be said for offering more hours each day for traditional breakfast. Giving customers what they want is seldom a bad business decision.


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