What do Chipotle Mexican Grill and Panda Express have in common? Their cuisines may be drastically different, but both restaurants are favorites among Gen-Y consumers, according to a recent research study by L.E.K. Consulting that surveyed 1,300 U.S. consumers about their QSR preferences.
“So what?” you might say. “Our typical customer skews older anyway.” That may be, but our study indicates that Gen Y punches far above its weight when it comes to engagement with favorite brands. Consider these statistics:
- Gen-Y consumers, considered here to be 16 to 24 years old, are a crucial spending force in the fast-food industry.
- Nearly 20% of millennials purchase from a QSR almost every other day. By comparison, less than half as many baby boomers visit QSRs as frequently.
- Gen Y-ers have a stronger connection to their favorite brand. In L.E.K.’s Choice Conversion Score, a ranking that measures the strength of a brand’s connections with what consumers are seeking, Gen Y rated its preferred brands on average 12% higher than other generations.
Now think about your operation. This data is pretty compelling proof that you should be catering to Gen Y. Add to this the fact that Gen Y’s purchasing power and foodservice spend will only grow with age, and your marching orders should be clear: How can you start cultivating Gen Y’s loyalty now?
Based on our research in the QSR segment, we found a few key ingredients for becoming a Gen Y favorite.
Word of Mouse
When it comes to restaurant selection, Gen Y values friends’ opinions more than any other form of media. In the “olden days” (i.e., about five years ago), it was very hard to scale “word-of-mouth” marketing. Now, QSR marketers have social-media technology and tools at their disposal to propagate peer influence.
One of the reasons that Chipotle and Panda Express are favorites among this segment of consumers is because their loyal customers advocate for them. Chipotle has a wide, active group of independent fan pages and social-media advocates. Brands serious about attracting this demographic are smart about using social networks to enlist and connect with Gen-Y fans to spread their opinions and preferences to their peers.
The Coolness Factor
Gen Y’s QSR decision-making criteria differ notably from other generations when it comes to the “look and feel” of a location. It places greater value on a “pleasant experience” and ability to “socialize,” considers amenities such as Wi-Fi more important, and has a greater need to feel comfortable being seen in a given QSR. When it comes to the actual food, Gen Y wants tasty items just like everyone else, but with different priorities: Gen Y-ers view “high-quality ingredients” as less important than other factors.
This is where it gets tricky. No brand can authentically be all things to all people, but it’s no longer enough to rely on long-held connections to older consumers. If Gen Y-ers’ strong connections to favorite brands persist as they spend more, the performance difference between brands at the top and bottom of the preference spectrum is likely to widen and laggards will face a tough battle to improve their position.
Whether you need to take a sledgehammer or a scalpel to your current marketing strategy, here’s the bottom line: Operators need to focus now on ways to recalibrate their offerings and customer-engagement techniques to win over Gen Y and deliver the next generation of sales.
Jon Weber is vice president and head of L.E.K. Consulting’s restaurant practice. Additional insight from Alan Lewis, vice president of L.E.K. Consulting.
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