Consumer Trends: Changing population may effect sales, marketing

Understanding evolving demographics is essential for restaurant chains

To paraphrase science fiction author Isaac Asimov: It’s not wise to make decisions without taking people into account, not only as they are today, but also as they will be.

That sort of information can be found in “Changing Demographics: Get to Know the New Face of Your Market,” a recently released report from global market research firm The NPD Group. From the rapidly growing Hispanic and Asian populations to aging baby boomers and the ever-evolving Gen Y group, the report illustrates the major consumer demographic changes that will affect restaurateurs over the next decade.

“These are the things we all know are occurring ... the direction we all know the population is going,” said Arnie Schwartz, president of foodservice at Port Washington, N.Y.-based NPD. “[The question for operators is] how do we strategically communicate and provide products that are targeting these audiences?”

Growing in importance

Among the biggest demographic shifts affecting the industry is the growing Hispanic population. According to the 2010 U.S. Census, there are currently more than 50 million Hispanics in the United States — far more than projected a decade ago. Furthermore, the Bureau of Labor Statistics expects the group to account for 30 percent of the population by 2050, making Hispanics the fastest-growing segment of the population.

While Hispanic is a general term, this group is not homogenous. U.S. Hispanics hail from a variety of countries, including Mexico, Cuba, Puerto Rico, Columbia and El Salvador, according to NPD’s survey.

Hispanics tend to have more children and lower-than-average incomes compared to the average American household. The average Hispanic American household has 3.5 children and an average household income of $38,750, compared to the total U.S. averages of 2.6 children and a household income of $48,400.

The majority of U.S. Hispanics speak English, according to the survey. Thirty-nine percent of Hispanics say they speak English and Spanish well, and 22 percent say they speak English only. Another 39 percent say they speak Spanish and are less than proficient in English.

When it comes to their dining-out behavior, Hispanics tend to use restaurants more often for snacks than the average consumer, and less often than average for main meals, such as dinner, NPD found.

“This is an opportunity for operators to check out why they don’t go to restaurants for dinner,” said Schwartz.

Though not nearly as large as the Hispanic population, the U.S. Asian population is also fast growing and influential. Currently the U.S. Asian population numbers 15 million, according to the U.S. Census Bureau. 

Asians tend to have slightly more children and higher-than-average incomes than the average American household, at 3.0 children and $63,642 a year. Not only do Asians have larger incomes than the average American, their buying power is expected to increase 48 percent between 2008 and 2013, according to the Pew Research Center.

When it comes to language, most Asians speak their native tongue. According to NPD’s data, 77 percent of U.S. Asians speak a language other than English at home.

The remarkable growth of these ethnic groups will affect the industry in two ways, Schwartz said. First, in terms of the foods that are going to appeal to both groups, and second, how both groups will influence the rest of the U.S. population.

In short, Schwartz said, “We are going to see more authentic Hispanic and Asian foods.” 

Changing habits

Two other important demographic groups — baby boomers and Gen Y — aren’t getting any larger, but as they age they are changing their dining-out behaviors.

For instance, as the nearly 80 million baby boomers advance from ages 47 to 65 to ages 57 to 75, their dependence on foodservice will contract and shift, according to the new report. 

“Their concerns are going to change; [their] restaurant usage is anticipated to change,” said Schwartz. “That’s going to have a large impact on the industry.”

Over the next decade boomers will increase their visits to full-service establishments and their use of grocery take-home, shifting away from quick-service carryout and drive-thrus. NPD noted that baby boomers believe grocery stores offer more culinary options and healthful fare than quick-service restaurants. 

Boomers also are expected to reduce visits to hamburger outlets, convenience stores and pizza places, and increase visits to casual-dining Italian and family-style eateries. 

And given increased interest in health and wellness, boomers are expected to change their ordering habits, moving away from fried entrées, Mexican cuisine and pizza.

But no matter where they go, boomers want a memorable experience, NPD found.

“They’re not going to [restaurants] just to feed themselves,” said Schwartz. “[If a restaurant doesn’t offer an experience], they’re not going to come. They’ll go somewhere else.”

At the other end of the spectrum is Gen Y, or the Millennials, the more than 80 million adults currently aged 18 to 25. In the coming years, this group will be equally as important to restaurants as their boomer predecessors, if for no other reason than their sheer numbers, said Schwartz. 

NPD expects that over the next decade Gen Y will visit restaurants more often for breakfast, shifting toward quick-service and mid-scale morning meals and grocery take-home, and away from visits to quick-service outlets in the afternoon and evening and visits to casual-dining concepts for dinner.

The shift in their daypart visitation also will prompt a change in the restaurant categories they visit, NPD said. Gen Y is projected to shift visits toward doughnut, c-store and retail food stores, and away from the hamburger, quick-service sandwich and quick-service Mexican categories. 

The need to fill their stomachs at the morning meal will also drive them to alter their breakfast ordering behavior. They’ll shift orders to breakfast sandwiches, plated breakfasts, hot specialty coffee and breakfast treats, and away from French fries and Mexican entrées.

Reaching consumers

As the face and habits of American consumers change over the next decade, the most challenging task for restaurants may be how to effectively communicate with key groups. Below, several restaurant marketing leaders share their thoughts on the most effective ways to reach out — and touch — select demographics.

Spread the word. While there are many ways to reach the Hispanic market, word-of-mouth is among the most powerful. 

“We have a strong reliance on people who had that experience before us,” said Tommy Thompson, president of the Dallas-based, Latino-focused agency Inspire! “Word of mouth is key.” 

Thompson advises operators to start by hiring Hispanic staff and letting them be the voice in their communities. He also notes that unlike Americans who have been inundated with advertising their entire lives, Hispanic Americans have not been historically targeted by advertisers and actually welcome it as a way of learning new things. Radio and direct mail are among the most effective media, he added. 

Thompson said, “There are not a lot of marketers reaching out to Hispanic consumers. If you really want to be able to have a sustainable, profitable [Hispanic] client base, you have to invest in them.”

Speak in native tongues. While many of today’s ethnic populations speak English, experts say marketing to these consumers in their native language is key. 

“Even with people who are bilingual, the native tongue is the language of their heart,” said Kelly McDonald, president of Dallas-based McDonald Marketing and author of the book, “How to Market to People Not Like You.” 

When trying to connect with Asian consumers, McDonald suggests seeking out the local in-language media, such as TV, radio stations and ethnic newspapers. McDonald noted that most media operators would happily translate ads from English. 

“It’s a small thing to do, but it matters. It’s meaningful.”

Redefine aging. Baby boomers may be getting older, but don’t treat them like senior citizens, according to marketing professionals. 

“Restaurant marketers need to understand as boomers continue aging they will be on the lookout for ways to better themselves or improve the quality of their lives. They will have an impact on the health and wellness marketplace like no other group of consumers in history,” said Linda Duke, chief executive of San Rafael, Calif.-based Duke Marketing. “Their shifting and evolving behaviors and purchase decisions will continue to redefine and reshape the brands, products and services they are most willing to pay for and invest in. They will continue to challenge many of the traditional stereotypes on what it means to grow older.”