Chain restaurants are opening new, more casual dining places to step away from the Baby Boomers and bring in more millennials.
An FKD Feature exclusive

Chain restaurants know that if they want to survive, they’re going to have to change. Applebee’s tried to implement this idea by adding new menu items, but the idea crashed — instead of bringing in millennials as they’d hoped, they manage to alienate both millennials and their core demographic, the  Baby Boomers. Restaurants are scrambling to try many different tactics to bring in coveted millennial spending.

Chain restaurants adapting

Back in August, Applebee’s announced that it plans to close more than 130 locations by 2018. It had tried to lure in new diners with new dishes, such as chicken wonton tacos and barbecue shrimp in sriracha lime sauce, but this was ineffective. Not only did the new dishes fail to resonate with millennials, but the changes also alienated the chain’s regular crowd — sales dropped more than 6 percent from the previous year. This dip seemed to put the nail in the coffin for Applebee’s strategy to court millennials, but they aren’t giving up yet: they’re now offering dollar margaritas for October.

Applebee’s isn’t the only chain restaurant struggling. Chili’s, TGI Fridays and Ruby Tuesday have seen a decline as well. High-priced, similarly decorated chain restaurants just don’t hold the same appeal for millennials as they did for previous generations. Trying to stay with the times, they’re now trying to redecorate to get away from flair and antiques commemorating the past to “blond wood, clean lines, and bright but soft lighting.” Even fast-food chains are getting in on the redesign fever — McDonald’s has ditched its cafeteria look for a more “intimate” look.

Besides redecorating existing locations, some establishments are taking the route of opening new fast-casual restaurants with differing names from parents companies. Chains such as  Tony Roma’s, Denny’s, and Cracker Barrel are opening TR Fire Grill, The Den, and Holler & Dash. Casual dining restaurant’s core audience is Baby Boomers, according to a 2014 report by Morgan Stanley. Instead of distancing this crowd by changing the establishments that Baby Boomers enjoy, these chains opened new locations to entice millennials.

What’s going wrong

Companies have a hard time marketing to millennials. What do millennials crave? Authenticity. The problem is that brands are having a hard time defining the buzzword when it comes time to build an ad campaign around “authenticity.” With the difficulty around cultivating authenticity, companies turn more and more to influencers to help them sell their products. Authenticity’s problem is that it can fail to resonate — no one goes to McDonald’s because of its authenticity; they go because it’s cheap.

Even though millennials are now the largest generation in the U.S., they’ve grown up during a time of economic uncertainty. Millennials are more frugal than previous generations when spending. Thirty years ago, 18-to-34-year-olds spent 10.5 percent of their income on entertainment and eating out; today they spend 8.6 percent. While that’s a small drop, they’re spending the rest of their income on increased costs of health care, Social Security, housing, and education.

Between their increased spending and the fact that their average student loan debt is more than $37,000, it’s no wonder millennials are having a hard time eating out. Millennials may be the most-educated generation, but they’re not getting jobs like they should be: their underemployment is double the national average. It’s not surprising to see millennials spending less than other generations.

Takeaway: Put authenticity on hold, millennials crave lower prices

Brands are spending heavily to research and rebrand to connect with the millennial audience and ensure their survival. It may be important to connect with millennials to bring them into the store, but once they realize they’re priced out, they won’t be sticking around long enough to buy anything. A new look can help, but high prices will keep millennials away.

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Header image: Adobe Stock

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Posted 10.19.2017 - 11:00 am EDT