Millennial madness: Retailers, restaurants take aim at Generation Y
The average age of Wienerschnitzel’s most loyal customer is 47. And that’s a big problem for fast-food executive J.R. Galardi, whose chief task is mining the company’s next generation of customers: millennials.
The generation of 77 million, ages 18 to 36, represents 24 percent of the population, on par with baby boomers. They are trendsetters, savvy shoppers, adventurous eaters and social media maniacs. And, despite having less money than their boomer parents, members of the so-called “Generation Me” are not shy about spoiling themselves to the tune of spending roughly $1.3 trillion a year.
“That’s a lot of money. I just need to allocate a portion of that to Wienerschnitzel,” said Galardi, whose father founded the chain 53 years ago.
He is not alone.
The quest to pin down millennials is reaching an all-time high, especially among brands that are much older than the audience they’re targeting. Department stores, aging restaurant chains and malls are changing storefronts, reinventing menus and – mostly importantly – altering attitudes in their quest to woo Gen Y.
“Everyone in the whole world is trying to figure them out and deal with them,” said Kerry Kramp, chief executive of Mission Viejo-based Sizzler.
The Social Generation
Brands playing catch-up with millennials are going where this generation lives: on digital playgrounds dominated by Instagram, Twitter and YouTube.
“The way we need to speak to them is where they are more comfortable – and that’s social media platforms,” said Thien Ho, spokeswoman for Rosemead-based Panda Express.
Millennials want a deeper connection with brands – something the 31-year-old Panda Express hasn’t addressed, she said. In the fall, the 1,700-unit chain launched two digital initiatives to reverse that trend.
In September, Panda rolled out a mobile app that enables consumers to skip lines by ordering ahead. So far, the app appears to be resonating with Gen Y. Roughly 30 percent of those downloading the app on an Android device are ages 18 to 34, Panda said. Nearly 57 percent of users in the same age bracket have downloaded the app on iOS devices.
Danny Chiang, 32, of Anaheim said mobile food apps play into a millennial’s have-it-your-way sweet spot.
“You can customize your order to your heart’s content without worrying about someone entering your order wrong,” he said.
Panda is also going after Gen Y’s desire for freebies. On Nov. 19, the chain launched a one-day Twitter contest, asking followers to share moments of joy in honor of the upcoming holiday. The “joy spotting” event awarded 888 fans $20 gift cards at random on Twitter. (The number 8 is lucky in Chinese culture.)
The event generated 6.4 million impressions, the company said.
At Sizzler, a social media makeover rolled out this month.
The company launched corporate-run Facebook and Instagram sites. Until recently, the sites had been inactive – or in the case of Facebook, split among individual restaurant profiles. The digital platforms will help Sizzler deliver consistent messages, said Kristina Van Bruggen, tapped in October to be Sizzler’s vice president of marketing.
“We have not been engaging in that social conversation,” she said. “We’re going full-court press to make sure we are wowing customers.”
Myth: Gen Y shoppers are crazy spenders.
Reality: Millennials are surgical shoppers who seek value.
Macy’s is tapping in to those exacting fashion demands with Image Search.
The retailer’s new in-house app helps shoppers find trendy ensembles without needing to walk into a store, said Patti Whisler, a Macy’s regional planning manager. It also helps hone in on Gen Y’s need to research and plan ahead, Macy’s and IBIS World said.
Image Search lets you snap photos of an outfit that catches your eye – a cardigan spotted on a fashion blog, or a trendy ensemble worn by a Fashion Island shopper. Once scanned, the app processes the look and displays similar pieces available at Macy’s, which can be purchased through the app.
Macy’s also tempts with deals. The department store has partnered with Shopkick, an app that notifies shoppers about in-store promotions and discounts. IBIS World analyst Will McKitterick said retailers like Macy’s are smart to lure millennials, who love to comparison shop.
“Millennials, once thought to be self-indulgent spendthrifts, have a surprising new reputation for frugality and financial savviness,” McKitterick said.
Los Angeles fashion blogger Rachel Nguyen, 24, used to be into fast fashion such as Forever 21. She now spends more time researching products before making an investment.
“I think long term – whether it’s a button-up shirt or a memory card for my camera,” said Nguyen, who grew up in Irvine.
Older brands wanna be cool, too
But, when it comes to dining out, Gen Y doesn’t mind paying more for a buzzworthy meal.
“Young millennials may not have the most discretionary income, but they are willing to spend a little more for a quality dining experience,” according to a 2014 report by market research firm Mintel.
That’s why hipster concepts such as food trucks, better burger bars and premium fast-casual restaurants appeal to a younger generation’s desire for adventurous and customized meals.
No one knows that more than food truck owner Daniel Shemtob, 26, who runs The Lime Truck and TLT Food. The latter, which opened in late November in Irvine, is a brick-and-mortar version of The Lime Truck’s sophisticated street food menu.
Shemtob calls his Gen Y peers “fickle” eaters.
“They are looking for the next big thing,” he said. “If you have a really high-quality product at a good value, you’re going to win.”
Brands looking to capture fussy hipster foodies include Sizzler, Pizza Hut and Oggi’s. All three have announced major changes to menus and service models.
San Clemente-based Oggi’s, a full-service pizza and sports bar chain, has developed a new build-your-own pizza concept, Oggi’s Pizza Express. Two locations have opened in San Diego, and a third is expected to debut in January in Orange.
Similar to Pieology and Blaze Pizza, the express concept offers a 10-inch pizza for $7.99 with unlimited toppings. The menu also features build-your-own salads and 20 craft beers on tap – including house-brewed Oggi’s classics.
Vice President Estella Ferrera said the concept is not replacing the company’s sit-down sports bars, frequented primarily by diners ages 25 to 54. The new division instead keeps costs down with less staff while casting a wider net that reaches a younger generation.
“That group of people really likes choice,” Ferrera said. “They need things quick, and they like to see things made in front of them.”
Kramp, Sizzler’s CEO, said the 150-unit chain is also going after customization by testing a salad toss station in restaurants in San Diego and Carson. The stations include an expanded selection of gourmet and good-for-you ingredients that are tossed in front of the customer.
Restaurants are also looking to add more craft beer and custom craft sandwiches to the menu. Kramp hopes to appeal to Gen Y’s bargain-hunting mentality. At Sizzler, which offers steak and seafood, the average per-person check is nearly $13 compared to $20 at Outback Steakhouse.
But can a 56-year-old brand be considered hip to a young generation?
“We’re not going to be the coolest place in the world,” Kramp said. “What we’re trying to do, without being uncool, is evolve Sizzler as relevant to millennials.”
The quest for quality
Of national food brands, Pizza Hut has made one of the most drastic changes to attract a new generation of Food Network-educated eaters.
In November, the world’s largest pizza chain introduced 10 new crust flavors, six sauces, four drizzles and five new premium toppings as part of a overhaul of the company’s fast-food reputation.
The company said they were going after adventurous eaters – a key characteristic of millennial diners.
“What we’re really responding to is customers who want to experiment more with their foods and want more control over their experience,” said Pizza Hut spokesman Doug Terfehr.
The quest for fine foods also extends to the bar, where its not uncommon for Gen Y to indulge on top-tier spirits.
“What I have been noticing lately – over the past five years or so – is that the younger generation is stepping up to the connoisseur level,” said spirits buyer Trayce Holliday at Hi-Time Wine Cellars in Costa Mesa.
He said that years ago, twentysomethings might just grab the cheapest bottle of vodka – but now they’re willing to drop $50 on a nice bottle of whiskey.
Chiang, who lives at home while attending grad school, said he saves, then splurges.
“My generation is extreme. We love going out and having the most expensive experience, but at the same time, we still look at the dollar menu,” said Chiang, who wants to be a teacher.
Creating a unique experience
Market research shows that millennials are interested in the “story” of products, desire authenticity in the goods and seek unique experiences when interacting with companies.
That leads to impulse purchases and a willingness to outspend older counterparts in their quest for “the latest and greatest products,” according to a 2014 Nielsen study. Millennials, the report shows, spend $54 per shopping trip versus $46 for boomers.
Malls, where the younger generations still gather, are taking advantage by hosting indie social events.
In October, the Simon-owned Brea Mall partnered with lifestyle website Refinery29 for an event called The Shopping Block. The event included a pop-up boutique, a disc jockey playing music, makeup artists and stations for selfies and temporary tattoos. Fashion bloggers live-blogged the event from a VIP section.
Outfits on displays incorporated pieces from retailers in the mall. The mixing and matching of clothes resembled a version of Polyvore, a Gen Y website that enables users to compile and share fashion looks using social media.
Anna Cotter, the mall’s marketing manager, said shoppers raved about the interactive experience and the ability to get to know artists like Kate Albrecht, owner of Mr. Kate, who applied metallic gold tattoos on shoppers.
Millennials or bust
For Irvine-based Wienerschnitzel, targeting a younger demographic is so important that the company has created an entire division dedicated to 18- to 34-year-olds.
It is headed by Galardi, who is 25.
Using modern-day marketing tactics, Galardi is taking to the streets to make Wienerschnitzel “top of mind” with younger generations. During the U.S. Open of Surfing in Huntington Beach, the chain gave away free hot dogs inside a VIP lounge sponsored by Tilly’s.
The company also finagled skateboarder Ryan Sheckler to greet beach-goers as The Delicious One, the chain’s hot dog mascot. In a video posted on the company’s YouTube channel, Sheckler unveiled his costume to a bikini-clad fan – triggering a barrage of selfies with Wienerschnitzel’s branding in the background.
In late November, Galardi’s Visionary Department launched a new Wienerschnitzel website, which highlights trending posts and encourages users to engage with the brand for a chance to win prizes. This week, the site and social media pages launched a #WienerCross giveaway featuring Joe Gibbs Racing tickets and merchandise.
Galardi said he wants to ensure his father’s legacy by gaining traction with a generation “who will be loyal (to us) for the next 20 years.”
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