This new year is a perfect time to begin shaping a long-term vision and identifying opportunities for growing your restaurant or food services business over the next ten years.
Marketing trends, mobile data insights show that Gen Z has a considerable appetite for restaurants, clean eating, fast-casual, and exciting twists on healthy dining options. And wow, does this young generation have some incredible spending power! According to a December 2019 report by commercial real estate giant CBRE using data from eMarketer, Generation Z’s spending is now at approximately $143 billion per year, with an additional influence over $450.5 billion in spending by others. That’s great news for bricks and mortar locations such as malls, which are transforming into a different kind of mixed-use developments incorporating a curated mix of dining, entertainment, and experiential businesses. A strong digital presence is a must to engage with these powerful young consumers to keep them coming back for more.
The sheer market size of Gen Z and their discretionary spending dollars should make restaurants and food services businesses sit up and take notice. Born between 1995-2012, they range from seven to 24 years of age. While they’re still relatively young, they represent an enormous number of potential and current customers for restaurants and other food services businesses. According to the National Retail Federation’s Consumer Fall Review 2019, parents interviewed about the influence of their Gen Z children reported they have substantial influence over household purchases. Eighty-eight percent said their Gen Z children influenced household food and drink purchases, and 87 percent influenced choice when dining out, whether with their parents or spending their own money. Here’s the kicker: Gen Z will make up 40 percent of all consumers by the end of 2020.
Now let’s take a deeper look at Gen Z behavior and how can your establishment best target this generation. As a mom and self-proclaimed foodie, I cook a lot, so I know that any successful recipe begins with quality ingredients. As a marketing professional, I know that consumer data should always be the primary ingredient. Insights are the seasoning. Mix these with authentic branded engagement and you have the basic recipe for Gen Z marketing. Here’s a twist though –– campaigns will need to be flavored just right for these customers. They’re our largest and first-ever native digital generation, and they have some very specific tastes and as previously noted, incredible influence and spending power. They learn, live, and socialize in this digital world, and they have strong feelings about brands and what they expect from them.
These brand expectations mean that reaching and marketing effectively to Gen Z is different from older prospects. Insights from Gen Z data and behavior show that marketing opportunities for this group are far more influencer-driven than Millennials. Overwhelmingly, both generations prefer to consume their media as small bites of video and mouth-watering pics, which makes paying attention to social media channels and careful message curation more important to restaurant brands than ever before. Here’s why that matters: the CBRE report I referenced earlier showed that Gen Z spends a great deal of time online making purchasing decisions, however, 81 percent of them prefer to go to physical store locations. And hungry teens love to eat.
As our first digital natives, rapid technology advances have been always been the Gen Z norm. They’re naturally eager adopters of emerging communication platforms. They’ll equally rapidly shift and change their preferences based on what they hear, see, and share in social media on established and emerging mobile-based platforms. Currently, their preferred channels include Instagram, SnapChat, YouTube, and TikTok. This generation is carving its own identity and beliefs, and they’re savvy consumers, so marketers need to go well past outside of the box and the iconic Taco Bell slogan, "Think outside of the bun."
Food-related brands are some of the most competitive and innovative social media accounts vying for Gen Z attention and their fast food dollars, and of course, they’re dominated by big brands that offer value at lower price points. They also provide a lot of entertaining and engaging content, especially when poking fun at their rivals. Wendy’s and Burger King are two masters in the genre, sparking lots of interest and engagement that’s helping to drive fast-food growth. However, McDonald’s still reigns number one among teens aged 13-17, while Chick-Fil-A is favored by 18-24-year-olds.
Research also shows that nine in ten young consumers prefer healthier options than just burgers. In response to healthier eating trends among Millennials and Gen Z, as well as environmental concerns, big burger chains tested options like new plant-based ‘beef burgers’ in some very successful 2019 trial runs. Premium, Instagrammable offerings are also popular with young consumers –– just check any Gen Z profile. Wendy’s used consumer data to partner with music platform Pandora to create and curate personalized playlists in its locations. Taking a step further into the digital world, convenient, app-based ordering puts brands directly on the phones and into the hands of their consumers. This means more data. More opportunities.
That’s all just the tip of a very big iceberg. Watch the trends, and adapt accordingly. Your first step should be to partner with a good marketing agency with a strong digital team. It’s more cost-effective for many companies than hiring, training, and deploying a fully-staffed internal marketing and digital department. In 2020, meet Gen Z where they live. Develop an authentic brand flavor that stands out in their social media stream. Remember, the right ingredients combined with a solid data-driven digital marketing plan can help make your restaurant or food services business irresistible to the Gen Z digital mindset. And teens will always be hungry.
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For more than a decade, restaurants and small businesses have tailored their marketing to focus on millennials. Now, with the oldest members of that generation about to hit 40, it’s time to wise up to the fact that your go-to marketing tools may not work with the next (and biggest) generation that is currently flooding into your restaurants en masse.
In 2018, Gen Z placed 552 million food service delivery orders. They are here in the marketplace, going to restaurants and ordering takeout, with the ability to spend up to $143 billion in the U.S. alone. In late 2019, we conducted a survey of nearly 500 Gen Zers and found that restaurants may need to rethink their approach to customer engagement because their tried-and-true millennial marketing tactics won’t work on Gen Z—and may even deter them.
According to our survey, three-quarters of those in the 15-24 age group have never written a review on Yelp. That doesn’t mean the platform is irrelevant; 67% said that, upon visiting a restaurant for the first time, they check its Yelp reviews. It’s part of their own research online and helps to inform them, but certainly is not their only source. But these numbers do indicate that Gen Z may be significantly less influenced by Yelp and online reviews than their predecessors.
When asked about how they search for full-service or fast-casual restaurants (which our study revealed to be the types of restaurants they prefer), nearly 40% of respondents said they are either "not at all likely" or "slightly likely" to use Yelp as a resource. For restaurants and small business owners whose livelihoods depend on online reviews, this may be a game-changer.
The biggest takeaway is that Gen Z doesn’t trust anything that smells even faintly inauthentic, which could account for why a staggering 64% of them say they would not post a Yelp review if offered a free item. At best, they’re deeply skeptical of corporate influence; at worst, they consider that form of marketing manipulative. They don’t want to be cajoled or bribed into putting up an inauthentic review just for a free dessert.
Our findings go back to the core of what I’ve been saying about Gen Z for years. They’re not so cynical that they can’t be reached at all through marketing; they absolutely can, and winning their trust is key to turning them into tireless brand advocates. But they are repulsed by inauthenticity. They don’t like to be tricked. They don’t want to be manipulated. They don’t want to engage around content that they view to be overly corporate.
The first step in creating a Gen Z-focused outreach plan requires an honest appraisal of your own establishment. Is your restaurant the type of place Gen Z would align themselves with? If you don’t know the answer to that question, the first thing you can do is conduct your own research. Are you providing the experience Gen Z wants? Are you aligned with their values for healthy, sustainable and local foods?
Assuming you’ve answered yes to those two questions, the next step is to convey your shared values through tried-and-true marketing tactics to attract them, such as targeted social advertising, local marketing, events and more. If Gen Zers are sufficiently convinced to take action and visit your restaurant, then the onus is on you to follow through and deliver an experience that is authentically aligned with your values. Because as we’ve established, it’s not that Gen Z dislikes marketing; it’s that they dislike inauthentic marketing.
If you find that maybe your restaurant isn’t particularly aligned with Gen Z, you are left with a choice. You can make sweeping changes to your business model, revamp your menu and retool your marketing messages to better convey your value proposition in order to authentically become a place the next generation will embrace, or you can choose to focus your marketing efforts on different age groups. However, our survey strongly indicates that you can’t have both. It’s one thing to not be aligned with Gen Z and their values, it’s entirely another to act like you are when you aren’t.
Most importantly, remember that Gen Z is a different type of consumer. Just because they are digital natives does not mean they engage in the same ways with businesses and brands as millennials do. Consumer behavior in day-to-day venues like restaurants is beginning to reveal the true generational divide between Gen Y and Gen Z.
The best way to welcome those millions of hungry 20-somethings into your restaurant is to be real with them. Put your marketing shenanigans on the shelf, and be your truest self.
What are the digital marketing trends for the food industry? The Food and Beverage sector is a huge and diverse industry, ranging from large brands to restaurant chains, from producers and distributors, both at the local and national level; it’s an industry that deals with essential goods, for everyone.
If we go deeper, we then have to look at the material “goods” themselves, but also more abstract aspects that are experience based, that concern, in short, more pleasure than necessity. It’s enough to look at the screens of our smartphones and among the posts of our friends on Facebook or Instagram to realize a fact: Food and Beverage in all its forms, is a huge hit in the digital world.
A recent survey by Accenture, commissioned by Instagram, found that Food & Beverage is the most interesting topic for users (in this case, the sample was made up of British users – source).
To put it briefly: Digital Transformation has revolutionized the industry, in all its complex sectors and across its supply chain. The change has been disruptive. We have already mentioned social networks, but think of the portals dedicated to reviews (such as TripAdvisor), those specialized in bookings (both online and in app), or delivery services. Upstream, digital has impacted the very mechanisms of production and distribution.
Digital marketing for the food industry: 5 trendsIn this post we want to move our gaze to the horizon and focus on the trends that will impact marketing within this sector.
1. New keywords: sustainability and healthFor several years now, the keywords associated with food have changed. In short, public sentiment has changed. This has impacted brand strategy when it comes to production and marketing. In the midst of this, two trends seem to be very solid and constantly expanding.
First of all, there is new attention on the theme of environmental sustainability; it is no longer a niche awareness, but something that is becoming increasingly mainstream, especially among the younger members of the population. In this case, it is not only about the food and drink itself, but also about the packaging. Dozens of leading companies are part of the Ellen MacArthur Foundation, which is committed to removing plastic from their products, replacing it with bio-sustainable materials.
Ipso CEO Nicola Neri emphasised how companies are focusing on packaging, citing the increased awareness of consumers when it comes to pollution and waste and how it is impacting the choices that companies must make.
In addition, we can’t forget about another important keyword: Health. There is an increasing focus on the impact of food on our lives, where topics such as organic, food intolerances, slow food, and fitness are also getting more attention.
Again, we are surrounded by examples. Just think of the change in the identities of some brands, changing national regulations, TV commercials themselves and trends on social media, spontaneously, or through the decisive push of influencers and micro-influencers (we will return to this point later).
2. SEO is essentialSEO (Search Engine Optimization) is the set of strategies and practices used to optimize positioning in the organic results of a website on search engines.
Understanding SEO will be more and more fundamental in the digital marketing of this very competitive sector where appearing among the top Google results matters. For some products and services, not being visible on Google means almost not existing for consumers. In the food industry, this is relevant for both producers as well as retail outlets and restaurants.
It is no coincidence that, according to Finances Online, taking care of SEO is the top marketing strategy, since as much as 56% of the traffic on Food Industry sites comes from organic search (source).
3. Social networks at the centerFood is “the king of social.” To understand the extent of this fact, let’s look at some data.
Referring back to the Instagram research, Food & Beverage is the most interesting topic for users of social networks. And what are the dimensions of this social universe? Huge.
In 2019, 3.48 billion users are active on social networks worldwide: an increase of 9% year-on-year. More specifically: 3.26 billion are accessing social networks from mobile devices at an annual increase of 10%. From this we can see the importance of strategies being mobile-first.
Finally, what is the social network with the most impressive growth? Undoubtedly Instagram, an ecosystem based on images and videos, the type of media that is significantly more effective for storytelling in the Food Industry (source). Talking about storytelling on social media: the “holy grail” is UGC, User Generated Content,content that is ”spontaneously” generated by users. It is precisely these that inspire the greatest confidence in the public: they are perceived as more sincere and authentic.
According to a study by Harvard Business Review, 70% of users prefer “authentic” content (but also “informative”) to traditional advertising from brands. It is in this groove that the importance of the so-called “influencers” is inserted. The new trend is about moving more and more towards micro-influencers in order to intercept their very specific and, again, “authentic” audiences.
4. Targeting and personalizationIn the previous point, we started to address the importance and centrality that digital entrusts to individuals. For brands, both large and small, it is essential to be able to understand the people that make up their audience, their target: who they are, where they live, their behaviours, their preferences, and their desires (even potential ones). With digital, all of this is increasingly possible, even for huge audiences. How? Thanks to data analysis, and, consequently, the dynamics of data-driven marketing.
Think about the analysis of “sentiment,” which allows producers to glimpse trends even before they jump into the limelight, with the enormous potential for competitive advantage. Or, think about the power of users to recommend restaurants to based on previous research, geolocation data, and preferences expressed on the most diverse channels. Also, think about opportunities for loyalty and increase the rate of loyalty (which in turn, of course, also boosts the “reputation” and image of a brand, a chain of restaurants, a delivery service, or even a single restaurant).
In short, a correct and functional analysis of Big Data leads to a better understanding of your audience, both the real audience and the potential one, in order to predict and influence their possible behaviors.
The first step, therefore, is to divide the target into portions, into increasingly specific segments with aligned and consistent characteristics. But that’s not all. The frontier is personalization, so going as far as the single person, to a dialog that is really one-to-one, interactive, and tailored. This is precisely what companies like Doxee, who specialize in personalized marketing, are dealing with.
5. A not so distant future: Voice Technology, Virtual Reality, Augmented RealityLooking ahead, we see three main trends for the future.
First of all vocal technologies such as Siri, Google Assistant, and Alexa. For example, McDonald’s recently announced that it has acquired a start-up specializing in voice technology for drive-through orders.
The second element is Virtual Reality, and the third is Augmented Reality. The application of these two technologies will be enormous in all sectors, but even more so in this sector: think of the unprecedented possibilities of storytelling, starting from the packaging itself (if we are talking about food and beverages), of Customer Service for stores and restaurants, and, ultimately, of expanding the consumer experience itself.
As we said at the beginning, what matters for the Food Industry is the universe that food and beverage creates around itself.
Customers will now be able to accumulate points for more than just coffee
Tim Hortons will focus in 2020 on remastering its basics: coffee, baked goods and breakfast, said Restaurant Brands International
Tim Hortons is overhauling its loyalty program after coffee and doughnut giveaways dragged down sales in 2019, compounding the coffee chain’s troubles in an already-difficult year.
Sales at Tims fell US$150 million last year, compared to the year previous. José Cil, chief executive at Tim’s parent company Restaurant Brands International, said the Tims Rewards program was partially to blame after it ballooned to 7.5 million members, all regularly redeeming a free coffee or baked good after every seventh purchase.
“We’ve attracted far more guests to our loyalty program far more quickly than we had planned,” Cil told investors on a conference call on Monday.
We’ve attracted far more guests to our loyalty program far more quickly than we had planned
RBI chief executive José Cil
Later this month, Tims Rewards will pivot to a points-based loyalty system. Customers will earn 10 points for every purchase, which they can eventually use to redeem free products.
The move is an attempt to extract more value from the program, which appears to be testing the patience of franchisees.
The Alliance of Canadian Franchisees, an independent group of Tims store owners, recently complained that the program hasn’t provided any benefits despite the massive number of giveaways. In a list of concerns circulated to members, and obtained by the Post, the alliance said the loyalty program was impacting food cost percentages
Cil noted on Monday that franchisee profitability is down, though he wouldn’t say by how much.
The new points-based format essentially preserves the previous one-in-eight giveaway structure, since 70 points is good for a free coffee, tea, premium doughnut or bagel. But customers can now accumulate more points to get larger menu items: for example, a premium breakfast sandwich is 220 points.
The point is to drive sales growth by enticing customers to try new products. Through the program, Tims will send targeted offers to members, in an attempt to convert a customer who buys only coffee into one who also buys breakfast sandwiches.
But to send those offers, Tims needs plan members to register online. Only 25 per cent of the current 7.5 million members have done that. In April, members who haven’t registered will be bumped to a worse program and only receive a reward after 12 purchases instead of seven.
In Tim Hortons’ fourth quarter, comparable sales — a common gauge for success in retail — fell by 4.3 per cent across the chain. Comparable sales were worse in Canada, down 4.6 per cent, primarily because of the loyalty program. RBI said the program contributed negative three percentage points to the comparable sales figure.
“You would come to Tim Hortons (eight times) and you would buy eight coffees,” said Duncan Fulton, RBI’s chief corporate officer. “Now you come to Tim Hortons eight times and you buy seven coffees. Extrapolate that math out over the entirety of the quarter. We always knew that in the short term it was going to be an investment and an associated sales drag.”
You would come to Tim Hortons eight times and buy eight coffees. Now you come to Tim Hortons eight times and buy seven coffees. Extrapolate that math over the quarter
Duncan Fulton, chief corporate officer, RBI
The roll-out of the new program pushed back Tims’ signature promotion, Roll Up the Rim, which would normally be underway at this time of year.
“Just wondering why you’re late,” asked BMO analyst Peter Sklar, noting that McDonald’s has already launched its $1 coffee offer that is often seen as a duelling promotion with Roll Up.
“The concern would be that you’re going to lose some momentum this quarter because you are late with the program.”
Last year, Tims signalled it was revamping the promotion after it failed to provide the same sales boost as in years past. But Tims has yet to reveal what the promotion will look like or when it will start.
RBI chief operating officer Joshua Kobza said the chain wants to give customers time to understand the changes to the loyalty program before announcing the new Roll Up format.
This month’s update to the loyalty program is part of RBI’s renewed push to rehabilitate Tim Hortons, which has become its most underperforming brand.
Signage is displayed outside a Popeyes Louisiana Kitchen Inc. fast food restaurant
several months talking to franchisees and management, trying to figure out how to boost flagging sales at the coffee chain.
“I’ve made Tim Hortons in Canada my top priority,” he told investors. “We have not performed to expectations and have not properly put the strength of the Tim Hortons brand to work.”
For all of 2019, RBI saw company-wide sales grow by 8.3 per cent, buoyed by stronger performances at its other two restaurant chains, Burger King and Popeyes Louisiana Kitchen. At Tim Hortons, however, sales fell to US$6.72 billion, from US$6.87 billion in 2018. In its fourth quarter, ended Dec. 31, Tims system-wide sales were US$1.68 billion compared with US$1.73 billion in 2018.
After months of focusing on the chain, Cil’s strategy involves returning Tim Hortons to its roots. As the Financial Post reported last month, the plan will see Tims back away from rapid-fire menu experiments, including the failed Beyond Meat Burger, that were aimed at winning market share at lunchtime.
The constant menu additions complicated operations in the kitchen, slowed down service times and confused customers. On Monday, Cil said the chain lacked focus.
“We tried to do too many different things,” he said in an interview. “You end up being distracted from what’s important because you’re necessarily scattering your resources to tackle a bunch of different things.”
Instead Tims is focusing on getting better at its basics: coffee, breakfast and baked goods. One upcoming improvement to coffee includes offering skim milk and dairy alternatives.
“Up to this point, we have not offered these options to our guests and have lagged behind competitors,” Cil told investors.
In the breakfast category, Tims is looking for bacon and bread for its bacon breakfast sandwiches.
“These adjustments may seem basic, but that’s the point: being the absolute best at the basics,” Cil said.
UBS analyst Dennis Geiger conducts checks with franchisees. He said they’ve been calling for a back-to-basics strategy for the past year or two. They’ve reported the loyalty program was having a negative impact on profitability.
“At the end of the day, it’s going to be a ‘show me’ story,” Geiger said. “But this plan feels pretty compelling.”
Correction: A previous version of this story misstated the launch date of the new Tims Rewards format. The points-based system will roll out on Feb. 26. As of April 22, members who aren’t registered online will be bumped to a lower-tier rewards program.
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