We are at an interesting crossroads when it comes to understanding the commercial foodservice consumer in Canada. For years, the Millennials have dominated much of the conversation and the Boomers have dominated much of the spending; however, as we begin this new decade, it’s becoming clear that a major generational shift is upon us.
Enter Gen Z. This is the demographic cohort succeeding the Millennials (or Gen Y). There is some debate around when this generation actually began, but demographers and researchers typically use the mid-to-late-1990s as the starting birth years of this generation.
What’s not up for debate is the impact that this generation is having on our culture, our society, and our economy. When it comes to commercial foodservice, Gen Z has driven the majority of the traffic growth within the industry over the last year. And of course, with the growth in traffic comes growth in spending as well. As the Gen Z cohort moves into adulthood, bringing with it new income, they quickly turn to the foodservice industry as an outlet for their spending. It’s important to note that the Millennials, who represent 27 per cent of consumer spend, have also experienced growth in consumer spend over this time period; however, their growth has been slowing. This softening of growth in spend could signal the shift of Millennials into the next life stage – parenthood.
While it’s abundantly clear that Gen Z will continue to have a substantial impact on the foodservice industry for years to come, the question becomes how can you alter your operations to meet the demands of this important consumer segment?
Dealing and Discounting
Undoubtedly, one of the best ways to attract Gen Z is to offer them a financial incentive. Dealing and discounting are significant motivators for this demographic. In particular, the older Gen Z cohort (those born between 1997 and 2005) has the highest instance of dealing among the generational cohorts at 32.1 per cent (followed closely by Younger Millennials who are born between 1990 and 1996).
Health and Wellness
It is a common misconception that this demographic is inherently attracted to unhealthy food options. While it’s true that many of the top items for Gen Z are littered with unhealthy options, items like French Fries, CSDs, and Pizza have become less important to the cohort versus a year ago. Increasingly, fresh, local and clean labels resonate with the Gen Z cohort, which points to a growing awareness of what they are consuming and the effects it has on the environment. They also skew heavily towards organic foods, meat sourced from cage free animals, and operators offering plant-based meat substitute options.
Experience and Convenience
Experience is also increasing in its importance to the Gen Z cohort. While offering good food at a good price is essential, Gen Z also demands a unique, relevant, sharable experience. This is driven by the generation’s strong presence on social media, which means that every outing, good or bad, can be shared instantly with their vast social networks.
Finally, convenience is a significant factor in how Gen Z consumes food. Remember, this is the first generation of digital natives, who are accustomed to having what they want, when they want it. While digital ordering is being adopted by every cohort, the Gen Z generation holds the largest relative share of transactions.
Interestingly, the only other generational cohort to post traffic growth in 2019 was Gen X. At least one study that I’ve read suggests that the best way to understand the future spending habits of the Gen Z, is to follow their parents, the Gen Xers. As the Boomers age out of the foodservice industry, maybe the forgotten middle generation will finally get the attention we, I mean they, deserve.