Millennials outspend the general population on food away from home (5.5 percent vs. 5.1 percent average).
As go the Baby Boomer so go the restaurants that initially catered to them but are now seeking Millennial diners, according to a new Morgan Stanley report.
Over the next five years, Millennials, representing almost one-third (31 percent) of the adult population are forecast to be “the most significant non-economic driver of demand for restaurants” as they enter their peak spending years, the report states. Millennials outspend the general population on food away from home (5.5 percent vs. 5.1 percent average). The report further notes that the adult Millennial and post-Millennial generation (so-called Generation Z) will continue to for at least the next decade.
Chipotle, Starbucks and Buffalo Wild Wings are the top companies forecast by Morgan Stanley to benefit from the emergence of Millennials.
Where does this leave restaurants that cast their lot with Baby Boomers during their peak spending years? Casual dining restaurants such as Olive Garden, Red Lobster and Outback enjoyed boom years until the early 2000s, but this aging generation, the report states, “is now having the opposite effect on the brands that are most relevant to them,” leaving this industry segment struggling to attract a younger demographic, rather than “early-bird” diners.
Some, including the Cheesecake Factory, Chili’s and Red Robin, have been successful in this regard.
Casual dining is giving way to fast casual restaurants, which offer higher quality food and quick service at a price between fast-food and higher end restaurants.
Restaurants are seeking to incorporate mobile technology and social media initiatives to attract Millennials, a tech-savvy generation most likely to use their smartphones for mobile ordering or to make mobile payments.
Overall, the report projects 5 percent to 5.5 percent nominal annual restaurant demand growth through 2020, which is slower than then 5.7 percent growth in the decade leading up to the economic collapse but a pickup from the last three years, when restaurant spending grew by 3.9 percent.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.