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Why millennials are the "foodie generation"

Young people spur the restaurant industry's taste for apps and authenticity

Kirk Fronckiewicz //February 27, 2017//

Why millennials are the "foodie generation"

Young people spur the restaurant industry's taste for apps and authenticity

Kirk Fronckiewicz //February 27, 2017//

As millennials have grown up, so have their tastes. And now that they’re entering their 30s, the restaurant industry is rising to meet them. The 75 million Americans that make up the millennial generation are bringing new perspectives, preferences and expectations to their decisions about which restaurants to visit.

According to the Colorado Restaurant Association, there are approximately 11,250 eating and drinking locations in the state with 275,000 food service industry workers, who account for 10 percent of the state’s labor force. Last year, total restaurant sales in Colorado exceeded $11.6 billion and are expected to exceed $12 billion this year.

The millennial generation’s sophisticated palate marks an enormous opportunity for America’s restaurant industry. Although baby boomers spend more money on restaurants, millennials spend more as a percentage of their overall credit card bills. Clearly, in keeping with their focus on experiences over possessions, this younger generation is primed for restaurants that truly understand what they want. And the industry is racing to meet this demand, with a surge in well-funded, concept-driven startups in the past five years. Private equity is behind much of this early-stage investment in smaller, less established restaurant brands aiming to be different, even disruptive.  

Within this new, hyper-competitive landscape, we’ve identified three major trends that will define the winners in the years ahead.

1. A Seamless Experience Online

Like everything else in their digital-dominated lives, millennials want their restaurant experiences to be fast, seamless and on-demand. One example of technology that helps consumers achieve that experience is Ziosk, which enables diners to order their meal and pay right at the table. Products like Apple Pay, Google Wallet, Samsung Pay and Venmo all enable users to pay restaurants (or their friends who foot the bill) without having to visit an ATM or even carry a credit or debit card.

Millennials are also much more inclined to use mobile apps to make restaurant reservations (e.g., OpenTable), pay for meals and pay for delivery (e.g., Seamless, Olo and Grubhub). Companies have answered in recent years with mobile-optimized websites, which make ordering easy and delivery or pick-up fast and hassle free. Many customers are almost exclusively ordering online and no longer need a brick and mortar experience.

Technology has enabled another key innovation, with companies appealing to and deepening their relationships with customers through mobile-enabled loyalty programs. So on one level, technology is expensive and can represent a significant upfront investment for restaurant companies. But the upside can also be significant, so can that initial investment be offset with greater sales or lower labor costs down the line.

Market research reflects mobile commerce transactions were expected to top $140 billion in 2016, according to a report from Forrester Research. In fact, recent data suggests that those consumers who place orders online are more loyal to the brand. Consumers who have placed an order online visit the restaurant 67 percent more frequently than those who haven’t. Mobile ordering also has a direct impact to the restaurant’s bottom line. Taco Bell's app orders are 20 percent higher on average compared with in-store because consumers are more likely to add toppings to their orders or send in group orders via the app.

2. Food That Stands for Something

Much has been said about the cause-consciousness of today’s millennial consumer, and that instinct extends to their choice of restaurants. From Starbucks’ focus on responsibly grown and ethically traded coffee beans to Sweetgreen’s message of inspiring healthier communities, the millennial consumer will give their business to restaurants that share their values. For example, Panera Bread Company, introduced Panera Cares Community Cafes, where patrons have the option to pay or not pay according to their circumstances.

Millennials tend also to focus on a restaurant’s commitment to environmental sustainability, ethical treatment of the animals that the food comes from, and fair treatment of farmers and others in the supply chain. Along similar lines, vegetarian and vegan diets are more popular among millennials than prior generations, prompting restaurants to offer more of such menu options.

Giving back to the community, whether through charitable contributions and having overall broader “purpose” driven concepts is driving this latest trend. 

3. Quality over Quantity

The millennial generation values healthy living and puts a greater emphasis than other generations on “eating right” as a basic requirement for maintaining good health. Health-and value-conscious millennials are speaking, and restaurant companies are listening. As a result, big portions are often out and quality ingredients are in. That is not to say that millennials do not indulge, they do; but when they do it must be the best quality and value indulgence.

For companies this has meant a different approach to their supply chains, as organic ingredients, such as antibiotic-free chicken and cage-free eggs, are sourced in a cost-effective manner. For truly ambitious chains, locally grown and seasonal ingredients offer an even more nuanced way to connect to their customers and local suppliers. Ultimately the question for owners is this — customers are embracing quality ingredients, but how much are they prepared to pay for them?

A Critical Time Ahead

There is the feeling among restaurant industry watchers that this is a critical time for companies to reach millennials and truly cement their loyalty. Millennials’ spending on restaurants is reflective of social trends we’re seeing within this generation in other areas, as they get married, buy houses and have children much later in life than previous generations. 

As a generation that entered the workforce during a crippling economic downturn, their mindset has been focused by the need for more affordable luxury. Value is an important watchword for millennials, as is authenticity. Perhaps also because of this formative experience in their young working years, they want to buy well-made good from honest companies that are also community-minded.

The challenge for restaurant operators is to adapt and create the kind of dining experience that draws millennials in the door and wins their loyalty. It is a challenge that already is being met by forward-looking food service enterprises. For restaurant companies that can connect with this generation with a business model and a creative concept that resonates, the table has been set for even more growth in the years ahead.


Kirk Fronckiewicz, Senior Vice President/Senior Client Manager in Business Banking at Bank of America Merrill Lynch, specializes in the food and beverage industry in Denver; Cristin O’Hara is Managing Director and Group Head of Bank of America Merrill Lynch’s Restaurant Group.