Operators stand to lose £1bn due to a change in eating habits

06-Apr-2018 - Last updated on 06-Apr-2018 at 09:54 GMT

Changing demographic: operators need to tap into attracting an older generation to compensate Millennials eating out less

Foodservice operators, including pubs, stand to lose a significant amount of money due to Millennials eating out less, according to predictions from data specialists.

The NPD Group has said there will be a decrease in eating out or out-of-home visits by consumers aged between 25 and 34 between now and 2022.

Citing its new report, The Future of Foodservice: Great Britain 2022, NPD said out-of-home visits in Britain’s foodservice industry among this age group will fall from 20% to about 18% of the industry total of 11.5bn visits, a drop of 2 percentage points.

This is equivalent to 155m fewer visits annually and a potential loss in annual spend of up to £800m.

However operators can compensate by targeting the over-50 market as this demographic will account for more than 70% of the growth in the country’s population between now and 2022, according to the Office of National Statistics.

Operators need to bear this in mind as many over 50s are wealthier, more active and more experimental when eating out than previous generations, The NPD Group said.

Total out-of-home visits among people aged over 50 could rise by more than 4% by 2022 (130m visits), three times faster than the total out-of-home market.

NPD UK foodservice director Cyril Lavenant said: “Foodservice operators seeking growth in the next five years should be aware that business coming from the 25 to 34 age band, which includes many Millennials, is likely to drop."

Experience and inspiration

He added: “Visits from this age group have been dropping since 2007. One reason is that Millennials typically need new experiences and sources of inspiration the foodservice industry does not necessarily provide.

“The 25 to 34-year-olds are also facing higher living costs than ever, especially in housing and childcare, and this is prompting them to cut back on foodservice purchases.

“Operators and suppliers will have to work hard to determine what could bring the 25 to 34-year-olds back to the market.

“But now is also the right time to think more about the needs of the over 50s. There are huge differences in levels of fitness, mobility and prosperity as people move beyond 50 and into their 60s and 70s. But this is still a big opportunity for the foodservice industry.”

The research group added that not only will the over 50s account for more visits, they are already the biggest spenders when it comes to eating out.

The average bill for the 50 to 64 age group at a full-service restaurant is £13.41, higher than any of the other age bands, including 25 to 34-year-olds.

The over 65s have the second highest average spend at £13.10. Older customers will also sustain weekend business.

The NPD Group said the over 50s will drive more than half of expected 14% rise in weekend foodservice traffic by 2022 and eventually account for 29% of weekend visits.

Delivery option

Britain’s over 50s will strengthen the boom in delivery, where customers order food by phone, online or via apps.

This demographic currently accounts for 14% of all delivery visits and this will rise 3 percentage points by 2022 to 17%, The NPD Group revealed.

While over 50s currently only account for 8% of delivery via apps, The NPD Group said the industry can expand home delivery for the over 50s, especially if operators innovate with lighter food options.

Menus can offer more low GI foods such as including fruit and vegetables; beans; minimally processed grains; pasta; low-fat dairy foods; and nuts and they can do more to assist consumers who are diabetic or who are watching their cholesterol.

Operators also need to close the ‘frequency gap’ between young and old. Consumers aged between 35 and 49 will be visiting out of home foodservice operators more than 253 times a year by 2022, buying anything from an afternoon snack or a lunchtime sandwich at work to a sit down meal in the evening.

The NPD Group said this was a high frequency – more than 1.5 times the visit frequency of the 50 to 64 age group (166 yearly visits per capita in 2022). The foodservice industry can build business by narrowing that gap.

Lavenant added: “Balancing lower eat-out business among 25 to 34-year-olds in the next five years with more business from the over 50s will be a challenge.

“But Britain’s foodservice operators have the skills to address this. Brands and advertisers in many industries are beginning to make the over 50s more of a priority and the foodservice industry should do the same.”