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Opinion: Marius Zürcher on restaurants and Gen Z

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With a huge buying power – worth $44 billion in the US alone – Gen Z's influence and spending decisions cannot be ignored, says Marius Zürcher

Depending on whom you ask, Gen Z are those born after the year 1996 or the year 2000 (I personally tend towards the latter). Whichever definition you prefer, the first takeaway should be that we are talking about a huge group of people here. In fact, in 2020, Gen Z overtook Millennials (the generation before Gen Z) as the largest generation in the world, though Millennials for now remain the largest generation in many highly developed markets.

They are also one of the (and maybe even the) most important consumer groups in the world. As of 2018, the buying power of Gen Z in the United States alone was worth $44 billion. When accounting for the influence Gen Z’ers had on the spending decisions of their parents, the amount totaled $600 billion. All this is to say that restaurants need to reevaluate and, if necessary, reconfigure their services, based on the wants and needs of Gen Z, or risk getting left behind.

In this month’s column, I will therefore highlight some things to keep in mind about Gen Z customers in the context of the hospitality industry.

Flexing strength

Even in pre-pandemic times, Gen Z’ers were notoriously health conscious. Recent events have only enforced their beliefs in the importance of healthy and fresh food. In addition, many Gen Z’ers are flexitarians, if not vegetarians. This means that the availability of attractive vegetarian options as well an increased focus on high-quality, well-prepared vegetables are increasingly important.

Crucially, when coming up with vegetarian offers, it is important to not fall back on outdated dishes that have no comprehensible connection to the rest of the menu. Whenever possible, restaurants should make use of organic, sustainable, cruelty-free, locally sourced and fresh ingredients. Similarly, restaurants should do their best to become active participants in the fight against man made climate change [1], if only because it is on the top of Gen Z’s agenda. If restaurants follow these recommendations, they should not be shy about communicating it. Although buzzword-based marketing is tricky – especially when it comes to marketing to the extremely savvy Gen Z – in this case it usually works.

Speaking of marketing: Gen Z’ers aren’t a fan of it. More accurately, they aren’t susceptible to traditional, one-way marketing. Gen Z’ers instead respond to word-of-mouth marketing, i.e. recommendations coming from both their peers, as well as the occasional influencer. They are furthermore interested in establishing personal-ish connections to businesses they frequent. Restaurants should retool their marketing activities accordingly, for example by encouraging guests to tell their friends and by creating loyalty programs. Notably, frantic digitization of both the restaurant’s marketing as well as its services, although frequently adviced, is often not necessary, as Gen Z is often incorrectly stereotyped in this regard. They do still like, even prefer, more analogue experiences.

Experiment; be authentic

Gen Z’ers are adventurous eaters. This means that restaurants should not be afraid to experiment with their menus. Similarly, Gen Z is a diverse, multiculturalist generation and Gen Z’ers consequently have a big interest in authentic ‘ethnic cuisine’, meaning the pressure on restaurants labelled as ‘ethnic to serve ‘compromised’ versions of their respective cuisines will continuously lessen.

Conversely, the pressure to be ‘authentic’ is growing more and more. For those interested in reading about the concept of authenticity in restaurants and the opportunities as well as problems associated with it, I recommend my essay [2] as well as my FCSI article on the subject [3]. Notably, according to F&B analyst Darren Seifer, “It looks like Gen Z is putting a little twist on what authenticity might mean. For them, the definition might be a little bit broader.” [4]

Gen Z’s focus on diversity and multiculturalism, as well as inclusivity and gender equality, extends beyond the dishes that are being served. The people preparing and serving the food, and the way in which those people are being treated, matters. It is, for example, important for the restaurant industry to deal with the deeply entrenched racism [5] and sexism [6] plaguing the industry. More than any previous generation, Gen Z is not willing to compromise on these issues. The clock is therefore ticking.

Many of the characteristics above also, to varying extents, apply to Millennials. One characteristic that more precisely differentiates Gen Z from Millennials (as well as the now financially settled Baby Boomers and Gen X’ers) is price consciousness. Whereas many Millennials, shaped by the post 9/11 breakdown of the traditional order, reject the notions of financial and professional stability in favor of experiences, Gen Z’ers, shaped by a seemingly never-ending succession of recessions, are often more conservative in that regard.

One of the ways in which this outs itself is an increased importance of value for money. It is important to note that Gen Z’ers are nevertheless not willing to compromise on quality. Some readers might think that this simultaneous focus on quality (as well as the above-mentioned focus on organic, sustainable and fresh products) and price make things more difficult for restaurants. They have a point. This is especially the case in markets in which restaurants are already too cheap to begin with, like Germany. Nevertheless, restaurants will have to find a way.

Marius Zürcher

About the author:

The co-owner & founder of start-up 1520 in Apeldoorn, Netherlands, Marius Zürcher was a participant at FCSI’s ‘Millennials’ focused roundtable at INTERGASTRA 2018.

 

[1] https://www.fcsi.org/foodservice-consultant/worldwide/opinion-marius-zurcher-climate-change/

[2] https://fifteentwenty.eu/1520blog/authenticity-in-restaurants

[3] https://www.fcsi.org/foodservice-consultant/eame/opinion-authenticity-restaurants-now-post-pandemic/

[4] https://www.qsrmagazine.com/reports/how-win-gen-z-restaurant-business

[5] https://www.fcsi.org/foodservice-consultant/worldwide/opinion-ending-racism-hospitality-industry/

[6] https://www.fcsi.org/foodservice-consultant/worldwide/opinion-ending-sexism-hospitality-industry/