The restaurant industry has an obsession with Millennials.
Chains looking to improve sales often focus on attracting that group of 18- to 33-year-olds who apparently text all the time, take lots of selfies and eat nothing but locally grown produce.
But that focus is misguided, according to a recent report from the Boston Consulting Group. Casual-dining concepts that want to evolve should instead focus on why customers eat at restaurants, rather than who the customers are. Do that and Millennials will come, because they have the same needs as everybody else.
“This conversation never happened at 5 p.m. at anyone’s house: ‘Do you want to go to a casual-dining restaurant or a fast-casual restaurant for dinner?’ The consumer has no idea what casual dining or fast casual is. It’s a restaurant,” said Dylan Bolden, a Dallas-based partner at Boston Consulting and co-author of the report, “Casual Dining: How Brands Can Pivot From Irrelevance to Growth.”
Simply targeting Millennials, or Hispanics, another growing group, “is a huge mistake,” according to Bolden.
“You hear lots of conversations around targeting Millennials or the growing Hispanic population,” he said. “In the end, you want Millennial consumers and Hispanics. But to target them, you have to target their needs. And as it turns out, their needs are similar to others’ needs. Target the ‘why’ they go to your restaurant.”
Casual-dining chains trying to improve sales and profitability should look at the market differently, Boston Consulting Group said. Its study suggested five steps casual-dining operators can take:
• Get to know the market and the needs that cut across consumer segments.
• Consider pivoting the brand toward more common need states. For instance, brands could use more tabletop tablets to improve speed of service. Or they could make kitchens visible to give a better impression of brand quality.
• Invest in research to understand physical cues that tell consumers they will find what they want at a restaurant. Translate these cues into menus, prices, communications, service and the restaurant’s design.
• Clearly articulate the brand’s vision to the management team and field staff. Don’t approach a brand transformation as simply a marketing function.
• Filter everything through the new brand position and focus on that position to evaluate ongoing investments.
Not all casual-dining brands are struggling, but the sector as a whole is. Casual dining is particularly struggling to attract Millennials, who go to restaurants about 12 percent more on average than non-Millennials, according to the study.
The study suggests the sector is having a difficult time keeping up with the changing needs of consumers. Diners are more focused on health and wellness, for instance, which are not traditional strengths of casual dining.
“The shift happening in food in general — forget about restaurants, but how people think about food in general — has changed more in the last 18 months than it has in the last 20 years,” Bolden said. “Consumer needs are changing rapidly. Casual dining needs to change, too.”
Changes don't have to be expensive
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In addition, the report noted that diners are eating breakfast more, and casual-dining chains usually don’t serve that daypart. Time-pressed consumers also yearn for speed — another sector weakness.
The study analyzed consumers’ restaurant choices based on 12 core need states, and noted that casual-dining chains are far behind other concepts in terms of the three biggest consumer needs — craving, speed and value.
These three need states account for about half of the total restaurant visits, but only about a third of visits at casual-dining chains. They’re far behind fast-casual restaurants on rapidly growing need states like quality of ingredients and health, Bolden said.
Bolden noted that casual-dining brands that are outperforming the sector do well in many of these need states. The report suggests, thus, that brands should shift to meet more of those needs.
For instance, brands can adopt tabletop tablets (as many like Chili’s and Applebee’s already have) to speed service, or they could get into mobile ordering. They can make subtle shifts in their menu to improve quality or sustainability. Or they can make their kitchens visible in a redesign to improve the perception of food quality.
The changes don’t have to be expensive, Bolden said, the efforts just need to be “holistic in nature,” meaning that the efforts should start with the CEO and filter through an entire organization.
“To do it requires management focus,” he said. “It requires investment. It’s not going to come naturally. While we don’t think the category is irrelevant, brands that don’t evolve to be more irrelevant and meet these needs are going to go away.”
Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze
