Gen Z

One of restaurants’ toughest tests? Attracting Gen Z diners

Capturing diners across all demographics has always been part of the challenge for restaurants. Attracting Gen Z is a unique test, particularly in the current economic and social climate.

Gen Z have less disposable money and more competition for how to spend that money than perhaps any other generation in recent history. Throw in the factor of spending two formative years of their youth in a state of near- or actual lockdown, and visiting restaurants simply doesn’t appear to be high on their list of social priorities.

New data from the NPD Group has found that Gen Z’s annual restaurant visitation comes in at around 218 visits per year. That is 26 fewer visits than Millennials were making at the same age, who in turn ate out 40 fewer times annually than Gen X did as young adults, according to NPD’s Winning Gen Z Consumers.

The report adds that while the oldest Gen Z people are 18 to 24 years old, which is historically the age group that is entering the heaviest restaurant usage stage, history may not repeat itself with this generation.

While the lingering effects of the pandemic are having their say, financial constraints and increased choice are also key factors.

The NPD Group found that clothing, footwear, beauty, and technology are among the most popular categories on which young adult Gen Zs spend their money. The report notes that many brands in these categories have tapped into Gen Z values like diversity and empowerment and, as a result, gained a larger share of their spending.    

“Many of these categories are what we call committed consumption,” David Portalatin, NPD food industry adviser, told FSR. “Where you have a regular monthly amount that’s due for things like streaming services or other technology-related things.”

Meanwhile, financially and inflationary pressures have heightened Gen Z’s price sensitivity. Record high inflation is outpacing wage growth, effectively cutting pay for most hourly workers, and half of the Gen Zs surveyed by NPD said higher menu prices have impacted their restaurant visits.

Price is the most important attribute among current 18- to 24-year-olds when choosing a restaurant, but the dollar value alone is not the only consideration. The research says Gen Z cares about the total perception of value, including things like the quality of the food and the ethics of its sourcing.

Indeed, the report found that 18 per cent of Gen Z consumers care about organic products, compared to 12 per cent of people over 25. Gen Z are also more interested in and cognizant of sustainable sourcing and plant-based options, than their older counterparts.

“They’ve had exposure to more kinds of cuisine, global flavours, things from all over the world,” Portalatin added. “They are a very diverse generation to begin with. They are also more in tune with issues around sustainability or various food attributes, like if you’re following clean eating standards or things of that nature.”

As a result, Portalatin emphasized that restaurant operators and their partners must adapt to how Gen Z consumers think and feel. That begins with recognizing that the generation operates with a smartphone first — most Gen Z consumers prefer to access restaurants via delivery channels or takeout, and their interest is a driving factor in restaurants’ expansion into the gamified metaverse — but it goes beyond that entry portal.

“An understanding of which menu items to emphasize, the food attributes they seek, menu innovations that appeal to them, and their preferred advertising platforms will help you win the favour of this valuable generation.”

This is particularly important because, even though they are frequenting restaurants at a lower rate than previous generations were at this age, Gen Z consumers are still the ones who will go to restaurants most often in the coming years.

“They are at a point in their life stage where they are going to eat more meals from restaurants next year than they did this year and that’s going to continue over the next few years,” Portalatin added.