It’s no secret that the restaurant industry is rapidly changing. From innovative food delivery platforms—such as UberEats, Postmates, and Seamless—to splashy, new restaurant chains targeting customers in innovative ways, the industry is adapting to a new wave of technology, innovation, and consumer expectations. We all know the industry is changing, but to keep up restaurants should understand who is impacting the industry, and what it means for the future.

These changes are in large part due to a new cohort of customers: Generation Z, or “Gen Z.” They are the 83 million Americans born between 1995 and 2010, with very different dining habits from their predecessors. An ethnically diverse and health-conscious group, this generation is forcing restaurants to re-think their business, marketing and digital strategies.

According to Bank of America Merrill Lynch, Gen Z is defined as a socially conscious demographic that is known for their adventurous palette. Compared with the more self-conscious millennial, Gen Z wants to contribute to society, and looks to the private sector to do so as well. Here are of some of the top trends that define Gen Z and their impact on the restaurant industry:

Digital Connection

Gen Z spends 6­–8 hours online each day, or otherwise “connected,” through various devices. Instead of traditional advertising methods, Gen Z responds to digital engagement and interaction. Interestingly, their recommendations for restaurants come from peers and through the digital word of mouth that apps and community platforms, such as Yelp, provide. Restaurants can show they’re listening by starting a dialogue with customers on social media platforms. It’s also important to note the group’s affinity for instant gratification. Mobile applications for food-delivery or general interaction are becoming an industry staple. Restaurants should apply key digital strategies to remain relevant and capture Gen Z in as many occasions as possible such as dining in, takeout and delivery. For example, Chipotle engages customers through in-app games to earn food prizes and offers text-message promotions—a great way to target an audience that is attached to their devices.

Fiscal Conservatism

The Gen Z demographic is more careful with their money. Growing up in the wake of the Great Recession, and watching their families and communities struggle financially, Gen Z is conditioned to be more financially cautious. Lincoln Financial Groupnotes Gen Z’s top three priorities are getting a job, finishing college and safeguarding their money. Restaurants can adapt to this by offering low-cost additions to the menu, which may entice younger customers to a restaurant.

Generation Grazing

Quick-service restaurants are more popular than ever, but modern consumers expect more convenient ways of ordering, and instant gratification. To attract Gen Z, it’s important to offer smaller portions and snack options, in addition to regularly portioned meals, for grazing throughout the day. While Gen Z may not sit down for lunch, they will grab food whenever it’s convenient, and to accommodate their schedules.

Healthy Options

In addition to smaller portions, Gen Z is also cognizant of what goes into the food they eat, and where it comes from. According to a Tufts Nutrition report, 41 percent of Gen Z say they would pay more for foods they perceive as healthier, compared to only 32 percent of millennials. Gen Z also look for sustainably sourced ingredients, and are tapped into “healthy” foods, such as those that are GMO-free and organic. Restaurants can adapt to these preferences by posting where produce comes from, and including nutrition information online and in stores.

As Gen Z matures and becomes a stronger consumer force, it makes sense for restauranteurs to understand Gen Z and prioritize digital engagement to stay relevant. Taking steps such as evaluating the menu, establishing social platforms and developing creative apps can help your business capture the attention of this critical audience.

Cristin O’Hara is a Managing Director and Group Head of Bank of America Merrill Lynch’s Restaurant Group (which includes BAML’s McDonald’s franchisee business) which is located in both Boston as well as Atlanta, with bankers also in Houston, Charlotte, and South Carolina. Cristin has been with Bank of America Merrill Lynch and its predecessor banks (the “Bank”) for over 20 years. During that time she has served as a senior structurer in debt capital markets forapproximately 10 years, as a Senior Credit Products Officer as well as a Senior Corporate Banker within the Global Corporate and Investment Bank for the Consumer and Retail Group. In 2012, Cristin and most of her clients, joined the Global Commercial Bank, as she accepted the role of Group Head for the Restaurant Group. Prior to joining the Bank, Cristin was a well ranked financial analyst in investment banking for Kidder Peabody & Co., Inc.
Consumer Trends, Outside Insights, Story