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More brands are shifting their menu and marketing strategies to appeal to Gen Z consumers as they gain tremendous spending power.

Restaurants’ New Year’s resolution: Finding Gen Z’s sweet spot

Virtual brands are tapping into the Gen Z-driven creator economy, while legacy brands are also trying to attract younger consumers with growing spending power.

Just how important has the Gen Z consumer become to restaurant operators?

During a recent panel, Raj Patel, president of multi-brand franchisee The Hari Group, said one of the reasons his company added Dave’s Hot Chicken to its portfolio was because it is attractive to that demographic. He added that Dunkin’ – another one of his brands – has made several changes in the past two years to attract Gen Z, such as launching a new app and Refreshers iced beverage line.

“They have done a good job on platforms like Instagram. Dave’s is built on Instagram, on social media. Gen Z is the hardest segment for brands to attract right now and figuring out that piece is huge,” he said. “The brands that are hot and making noise right now have figured out how to cater to Gen Z.”

No doubt social media is a big part of that puzzle. A recent Morning Consult survey found that 54% of Gen Z consumers spend at least four hours a day on social media. Research from N.C. State’s Poole College of Management’s Consumer Behavior Lab finds that 90% of younger consumers use Instagram daily and 68% use TikTok in addition to Instagram. TikTok has become the world’s most downloaded app for those ages 18 to 24.

Socializing – physically and digitally – is why eatertainment concepts like Puttshack and Punch Bowl Social are prioritizing their environments alongside activations like private karaoke rooms or tech-infused, beer pong-themed putting courses.

“The (eatertainment) sector has evolved in multiple ways. The games and activities often have universal appeal across all age groups rather than being focused on kids. We’ve also seen much more emphasis on the design and experience aesthetics and the quality of the food and beverage offering. Concepts are investing heavily in design to attract affluent young adults and those craving Instagram-worthy content,” said Puttshack CMO Susan Walmesley. “The world of Instagram and Tik Tok has shown us what we could be missing out on every day.”

Social media has also played a major part in powering the “creator economy,” allowing creators and influencers to earn money from their content on platforms like YouTube, Twitch and TikTok. A SmartBrief survey found that 64% of younger American consumers “really enjoy and feel loyal to” these creators, while 61% report they regularly buy products used by creators. As such, the creator economy has grown by nearly 120% in the last two years, according to a study from Adobe, and that growth has impacted the restaurant industry directly.

Consider MrBeast as an example. He has over 114 million YouTube subscribers and has also opened nearly 1,800 virtual MrBeast Burger locations. Further, his new brick-and-mortar location opened to a crowd of 10,000 people. He’s hardly alone – YouTube creators from LankyBox’s Justin Kroma and Adam McArthur to David Dobrik to Matt Stonie have all jumped into the restaurant space. Virtual kitchen company C3 has created an entire division focused on creating virtual brands with digital creators, in fact, with an objective of reaching Gen Z consumers. The company has said it expects the division to reach about $1 billion in revenue by 2025.

Notably, shiny new virtual brands or youth-filled eatertainment concepts aren’t the only restaurant companies trying to woo Gen Z. Plenty of legacy brands are jockeying for top-of-mind awareness for this consumer as well.

McDonald’s has been a strong benchmark here. The company has tapped into its massive marketing war chest to communicate explicitly to this demographic, including through collaborations with Cactus Plant Flea Market and Travis Scott (the most popular celebrity among Gen Z consumers, according to YouGov). The chain even launched a new anthem on TikTok celebrating its popular Sprite offering.

Yum Brands’ Taco Bell, Pizza Hut and KFC are also shifting gears to please Gen Z consumers. During the company’s investor day earlier this month, Taco Bell CEO Mark King said the brand is exploring new menu and marketing priorities with this goal in mind.

“Chicken is a big opportunity for us. A large percentage of our business is beef, and the Gen Z consumer wants chicken,” he said.

Pizza Hut CEO Aaron Powell added that his brand is also striving to get younger.

“It’s no secret that Pizza Hut is more popular with older people. To make the brand younger, we’re doing a lot of things to resonate with younger consumers,” he said. One of those things is expanding beyond a family night business of Friday, Saturday and Sunday occasions and into more occasions, like lunch. The chain recently launched Melts as part of this objective.

“What we’ve seen with Melts is more new customers that are younger and more frequency with current customers. I’m encouraged by our start,” he said.

Why has this demographic swiftly become such a priority? A Bloomberg report from last year noted this generation has $360 billion in disposable income. That said, once you get these consumers’ attention it’s important not to rest on any laurels. As Datassential points out, Gen Alpha – those born between 2010 and 2024 – are just starting to gain a significant amount of influence. In fact, the generation is expected to have the greatest spending power in history, and restaurants are wise to take notice sooner than later.

They already impact what their family buys, while a generation of kid influencers are having wider impacts,” Datassential notes. “This generation was largely raised by their Millennial parents, will be more diverse than ever, and have used technology since they were babies.”

Contact Alicia Kelso at [email protected]


TAGS: Marketing
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