Twenty-four percent of Gen Z spending on food
Embracing and understanding this next generation of consumer, Gen Z, is important to restaurateurs and restaurant companies across the United States. After all, this is the generation that spends the most of their hard-earned dollars on food prepared outside the home. According to a Piper Jaffray study, cited in a report by the Food Institute, 24 percent of Gen Z spending is on food. This is the generation that is seeing its maturation occur in a rapidly changing world, due to “boundless access” to technology, according to Ernst & Young (EY). Its Rise of Gen Z: New Challenge for Retailers report offers up characteristics of this generation that need to be appreciated by marketers in order to better understand how to approach and engage them.
Just like Millennials, not all Gen Z consumers will be behave identically, but there are huge swaths of traits that can be observed so that marketers can develop a comprehensive strategy for engagement. For one thing, the report talks about Gen Z being the first, true generation of digital natives. They have known nothing else. This immediate access to data that they have known all their lives—to Google searches, to Uber and Lyft rides within 5 minutes—has led to a determined sense of wanting gratification quickly, while at the same time being willing to work for it. This is a self-taught generation, one of action.
“I want it and I want it now”—so says Payton Duncan, an intern at Paytronix, and moderator of a recent webinar on “Everything you need to know about Gen Z.”. As a loyalty technology company, Paytronix has been developing an understanding of this customer demographic and sharing those insights with its customers. These webinar insights, together with the EY report, one can begin to glean important clues about Gen Z for the purposes of marketing to them.
Understanding Gen Z
To understand Gen Z, one should start with the environment they grew up in. According to EY, this generation has grown in an era of violence and turbulence. Gen Z only knows a post 9/11 world and the war against terrorism. Add to this the advent of cyberbullying and school shooting violence, and their environment has been turned into a very shaky and uncertain predicament. EY cites a statistic that over half of of youth today report being cyberbullied. This type of upbringing has led to a need for Gen Z to be self-aware and self-reliant and for their parents to demand it from them.
In an era of turbulence, Gen Z expects to change this environment for the better. Whereas Millennials may have been considered self-centered, Gen Z has self awareness. Gen Z has turned Millennials’ idealism into realism, actively looking to be “agents of social change,” says Duncan. “She notes that according to Fast Company, 76 percent of Gen Z care about human impact on the planet and want to know how they can change agent.
Gen Z consumers will expect businesses to more transparent and to be better global citizens. Are they being eco-friendly, like Starbucks and other chains, who are ditching plastic straws? Are they treating employees well? Positive business attributes and identities will most likely lead to better engagement with Gen Z and a higher shopping intent.
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The broad access to technology has also made everything searchable and discoverable. There is more detail and nuance to the world that can be uncovered. Duncan says that Gen Z consumers, like herself, enjoy food from other parts of the world. They naturally consider themselves foodies, but they always want to know what is in the food. They place more value on food labeling and understanding ingredients.
According to Paytronix’s Duncan, more restaurants should be like fast-casual chains, offering innovative food at a quick pace. Embracing technology is key. “In the food industry, marketers need to understand that this generation grew up knowing that food is for much more than sustenance; food represents culture and therefore is an expression of who they are,” notes NPD, a Chicago-based research firm, in its 2018 Thought Leadership series.
EY’s Rise of Gen Z report states that these young consumers are more likely to start their own businesses. In fact more than six (6) in 10 plan to do so, in large part due to their self-reliance: “71 percent expect their first business venture to fail but view failure as a learning opportunity.” With this fierce self-reliance and determination, Gen Z consumers will be harder to engage, and harder to win over. They can be more practical and realistic—even pragmatic.
Key technology imperatives to attract Gen Z
Restaurant companies need to embrace technology to quicken the pace of the on-premise experience and to provide more, easily-accessible information about their menus, foods, allergens, ingredients, calories, and so forth. Restaurants should also be where this Gen Z customer is. Gone are the days of contemplating an online presence. Today, a total digital presence is what’s required—online, mobile and social channels are a must. Duncan says that responding to online reviews is a must, particularly as this can signal to diner that a restaurant company cares about its guests’ experiences and gives it ability to change the opinion of a guest.
Eighty-five percent of a person’s time is spent on their top five apps, leaving only 15 percent of the time for the others, notes Duncan. When rolling out mobile apps, restaurants should pay close attention to the features that are integrated within them and what value proposition they offer. Restaurant companies cannot afford to release apps just for the sake of releasing them. Mobile apps that offer unique features and perks are going to have a higher chance of engaging the user.
A total of 72 percent of Gen Z consumers share photos of their foods on apps, notes Duncan. And contrary to popular belief, Gen Z consumers have not abandoned Facebook, she says. It is critical for restaurants to be on social media and to post regularly in order to keep engagement with their fans. In its Thought Leadership series, NPD says, “Gen Z consumers think of themselves as having a personal brand with a story and values by which to live. They seek brands that support their story, and they are willing to use them regardless of a brand’s size.” In Gen Z, we are sure to see an almost functional use of social media, and we’ll learn to appreciate a group of consumers with rigid expectations about brand narratives because of this.
Rise of Gen Z suggests that traditional loyalty programs may not necessarily work on this demographic; so connecting and keeping this consumer’s attention is of utmost importance. Restaurant companies need to look at the totality of the offering and the value proposition the restaurant experience will go further. The report goes on to say, “The bottom line is that Gen Z expects retailers to get the product to them. This adds to the pressure to find new ways to grab and hold consumers’ attention. To do so, retailers and brands must authentically connect with Gen Z in their hearts and minds.”
Duncan recommends that restaurants customize and personalize the experience to win over Gen Z loyalty. Offering NFC mobile payment for table-service restaurants and pay at the table features, like those Paytronix recently implemented for a restaurant client, can quicken transactions and improve the experience for Gen Z consumers.
Use data retrieved from apps to engage with customers one-on-one, which is what these consumers are looking for. In mobile apps, make sure to offer promotions, including discounting, that can be tracked to gauge their success and roll out offers that can be customized for the individual app user. Within the digital realm, the more personalization and connection that is offered, the more success a restaurant is likely to have with its marketing efforts.
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