Jeremy Julian

Restaurant Traffic Dying? Blame Millennials

March 19, 2020

It might sound counter-intuitive, but a decline in the popularity of dining out amongst millennials is now severely impacting restaurant traffic and profitability.

Figures produced by the leading industry research group, Technomic, suggest that the proportion of millennials visiting restaurants at least once a week has declined from 59% – 55% in the last year. In the same period, the percentage who say that they eat out once a month or less has increased from 6% to 8%.

Restaurant Traffic in Decline for Casual Dining Establishments

Considered as bare statistics, these might not seem like very startling figures, but they have profound implications – particularly for the casual dining sector of the industry.

Casual dining outlets typically offer full service, often with alcohol and perhaps sports TV; and as the name suggests, aim to generate a more relaxed atmosphere than traditional fine dining establishments. Familiar examples include chains like Olive Garden, TGI Friday and Outback, to name a few.

Not surprisingly, this sector has traditionally been very popular with millennials, so these kinds of outlets are likely to be disproportionately affected by any reduction in dining out amongst this demographic.

Squeezed Revenues and an Uncertain Outlook

And it’s not just a question of traffic: millennials are often that section of the population with relatively high disposable incomes, not yet burdened by kids and mortgages, and inclined to spend freely on their nights out. So a fall in the number of visits by these younger people may mean an even sharper fall in revenues.

Perhaps even more concerning is that in a time of low unemployment and rising wages, you might expect their favorite bars and restaurants to be doing a roaring trade. And if they’re not doing well now, you have to wonder how they’ll survive the next downturn.

Moreover, if millennials are not forming the dining out habit at this stage of their lives they’re probably unlikely to do so later on.  

The Restaurant of the Future? Some Innovative Business Models

But it’s not all doom and gloom.

There is some evidence, for example, that a significant number of millennials are not turning their back on restaurants altogether, but turning instead to the so-called fast-casual (limited menu) type outlets. Those that do prefer to eat at home are also not lost; as the delivery/pick up restaurant business model becomes ever more popular.

Around half of the millennials say that they would consider ordering restaurant food for delivery or pick up, and Applebees is just one well-known name known to be experimenting with both fast-casual and delivery models.

The hybrid type of outlet, which features both casual dining and fast-casual areas, as well as a pick-up option, may become increasingly common as a way of tackling falling traffic. And it’s fortunate that advances in restaurant technology, such as the latest POS systems, now make the management of these more complex outlets relatively straightforward.

Online orders, via website or app, are also becoming much simpler to handle.     

The Restaurant Technology Opportunity

The key point is that rapid technological changes, and perhaps particularly the rise of social media, have enabled a wider range of customer choices than ever before. Trends, fashions, and spending habits can and do change like the wind.

The businesses that survive and prosper will be those that see this as an opportunity rather than a threat, and which are able to adapt rapidly to changes in their customers’ preferences and behavior.

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