The number of people visiting restaurants has continued to decline and sales are flat at best. Some blame it on a saturated market, which has likely played a role; the U.S. now has a million restaurants, and 10,000 more are being added each year. Restaurants are also finding it harder than ever to fill positions, leaving many understaffed.
But perhaps more than anything, the biggest challenge these days is from home delivery apps. The question facing restaurants: Why should I eat out when Uber Eats, DoorDash and GrubHub will deliver straight to my door? Restaurant-to-consumer deliveries are projected to increase 33 percent by 2023, while platform-to-consumer deliveries (think Postmates and Seamless, which also deliver food) will increase by 50 percent. On top of that, “ghost kitchens” are being set up solely to fulfill deliveries for digital platforms.
Restaurants have always been good at dishing up great meals, but to recapture the momentum they had just a few years ago they need to serve a flawless experience to a generation that has more choices than ever. The results of this recent survey of more than 1,500 diners across fast food, casual, coffee houses, and fine dining shed light on the challenges and opportunities during this tumultuous time. Here are some key findings, along with lessons to help restaurant managers understand what multiple generations are looking for in their dining experience.
Do better on cleanliness and service
First the good news: 70 percent of consumers said restaurants provide a great experience overall and 62% think restaurants know what they’re looking for in a dining experience. But there’s room for improvement. One in four consumers still want restaurants to improve their cleanliness or their service. Cleanliness is especially critical because it ensures repeat customers: Our respondents said clean tables and eating areas were the most important factors in getting them to return for another meal.
While it’s no mystery that cleanliness and service are important, take note of just how much a bad experience will keep diners away: 60 percent of respondents said they read reviews before eating out, and a whopping three-quarters will avoid a restaurant with negative reviews about cleanliness. It only takes one diner and one bad experience to create a bad review, which can take a huge bite out of your foot traffic and profits. So do all you can to ensure every customer has a flawless experience.
Focus on millennials—but know that the stakes are high
We found that millennials (those aged 25-39) eat out more than any other age group. This should perk up your ears because millennials pump $600 billion into the U.S. economy each year and allocate the highest percentage of their income to food and beverage. And for better or worse, half of millennials spend more on restaurants than they save for retirement. It’s also the play you need to make for the future: in 10 years, millennials will replace Boomers and Gen X as the biggest spenders on food.
So what do millennials look for in a restaurant experience? Other research shows they want “unique” experiences that go beyond dining, like an Instagram-friendly decor, live entertainment or even painting classes. Take inspiration from non-food brand ideas: At Lululemon’s Fuel restaurant in Chicago, shoppers can shop, work out and eat all in the same location. MasterCard promises “immersive, multi-sensory experiences” at its Priceless restaurant in NYC, which tries to mimic some of the world’s best dining experiences. Millennials also care more about organic food, plant-based foods and other healthy alternatives, so be sure your menu has these options.
Our research also found that millennials are most likely to post on social media and tell friends when they have a bad experience in a restaurant. The bottom line: failing to meet their expectations could lead to harmful word-of-mouth. Restaurant owners need to be sure they attract and keep millennial diners happy if they want a successful future.
But don’t forget your most valuable customers
Millennials still have a bit of growing up to do. In the meantime, Boomers (55-75) are still the wealthiest cohort in the U.S., and although millennials eat out more, Gen Xers (35+) spend the most on restaurants and takeout. While these older generations don’t have the same expectations about unique experiences, they do have higher expectations in general. Our research shows that 83 percent of diners 40 and older are more likely to dine at a competitor if they have a bad experience — only 68 percent of Gen Z and millennials said the same. Similarly, 84 percent of the 40-plus crowd are less likely to return to a restaurant after a bad experience, compared to 76 percent of Gen Z and Millennials.
So the older crowd is the less forgiving crowd, but once again, providing a good experience is the underlying tenet. Get it right each time or risk losing the cohort with the deepest pockets.
Despite the challenges, restaurants can thrive if they understand what each generation is looking for and nail the experience. The basics still matter regardless of age, meaning restaurants need to balance sterling service and cleanliness with creative approaches to dining. Find the right balance on this tightrope and you’ll ensure a healthy future for your brand.
Tom Buiocchi joined ServiceChannel as Executive Director and CEO in 2014. He has more than 30 years of experience leading growth companies in both technology and energy services, including Jeda Networks (interim CEO), Drobo (CEO), Mohr Davidow Ventures (Executive in Residence), Brocade Communications (CMO), and Hewlett-Packard. Tom has a bachelor of science degree in electrical engineering from Union College and an MBA from Northwestern’s Kellogg School of Management.
The five times weekly e-newsletter that keeps you up-to-date on the latest industry news and additions to this website.