During the time of year when individuals make financial shifts to accommodate holiday plans and spending, restaurants should be aware of a key group most likely to cut dining out from their budgets: teenagers. According to recent research from Piper Sandler, teens spending has dipped 6%, reports Nation’s Restaurant News (NRN).
“Gen Z’s spending power is expected to reach approximately $12.6 trillion by 2030, which would make these consumers the most economically influential generation in history,” writes Alicia Kelso. “Future proofing is necessary, but it’s also a tough task in this environment as younger consumers are among the most impacted by macroeconomic volatility and they’re pulling back their spending significantly.”
The Piper Sandler research shows that teen spending is “1% below the average spending levels from the past 10 years.” Similar studies from TD Cowen places these cautious teens alongside other low-spending categories, including low-income consumers, liberal consumers, and Hispanic consumers. “Their pullback is especially impacting the fast-casual segment, according to TD Cowen. The demographic overindexes with the fast-casual category, which is now experiencing a 28% decline in valuation versus its five-year average.”
Generally during the holidays, quick-serve restaurants see increased traffic from busy families, holiday shoppers, and travelers. However, this uptick in customers must be balanced with the suspected downturn in teen and low-income guests, who may have been seen as more frequent and regular spenders in the quick-serve sector.
Restaurant owners should not be alarmed by these patterns, rather make appropriate adjustments. This may come in the form of loyalty programs, focus on digital deals and marketing, and menu adjustments that benefit the budget-conscious. These customer-driven efforts will benefit all categories of customer, including those who may be prone to reduce their restaurant spending during the holidays.
Richard Weil, owner and principal of National Restaurant Consultants, subscribes to historical best practices. Now is the time to continue to promote and market. “Create points of differentiation to attract new customers within these demographics as well as creative call-to-action promotions.” Weil further states, “These offers need to be compelling but don’t create two issues within any operation relating to a higher cost and labor components. Take the time to look at your customer, even ask your employees what will create these points of differentiation and be nimble enough to get these offers out to generate incremental customer visits as well.”