Younger Consumers Are Abandoning Casual Chains. Here’s What Restaurants Are Doing to Fix It
They're adopting new tech, menu items and more to court millennials
Casual restaurants are at a critical breaking point. Consumers—hello, millennials and Gen Z—are increasingly fleeing legacy chains, from Applebee’s to Olive Garden, in favor of trendier, tech-savvy, more health-conscious options. Applebee’s announced plans to close between 60 and 80 eateries in 2018, citing a millennial-driven decline in foot traffic as a major factor. Sister brand IHOP announced plans to shutter 30 to 40 locations this year, too.
As a result, chains from TGI Fridays to Buffalo Wild Wings are moving away from their old, stale images and adopting an atmosphere that’s more fitting to younger consumers—craft cocktails, an Instagrammable atmosphere with picturesque menu items and broader to-go and mobile ordering services.
“Standing still is the detriment to casual restaurant chains who don’t evolve with their consumers,” explained Sara Bamossy, president and CSO, Pitch. That’s why, day in and day out, legacy brands cook up new plans to court younger guests. Olive Garden recently launched an Insta-worthy Meatball Pizza Bowl, followed by Red Lobster’s lobster and waffle combo; TGI Fridays became the first national chain to put the meatless Beyond Meat burger on its menu; and IHOP and others are perfecting mobile apps, optimizing for delivery and takeout.
IHOP didn’t rush its transformation, instead taking time to perfect the delivery and to-go process. In the words of the brand’s marketing chief Brad Haley, being first when it comes to innovation and evolution isn’t always the right strategy. It’s about doing it best. “We wanted to make sure we could deliver the food in a way we knew our guests would want it. We spent a lot of time working on our packaging,” Haley explained. For any guests who order a pancake combo from IHOP, it comes in a two-part package, with eggs, hash browns and bacon in one compartment and pancakes in a separate vented space. “That was one of those offline things we needed to do to make sure the technology would work as well as it possibly could,” he said.
Other brands are finding new ways to incorporate technology and innovation into the dining experience, citing tech as a vital tool to court millennials.
TGI Fridays is currently piloting an AI-driven virtual bartender program in its Texas restaurants. It’s a move the brand’s CIO, vp of strategy and brand initiatives, Sherif Mityas, said could appeal to both millennials and boomers. Guests answer a series of questions about their mood, likes and dislikes on an iPad and the virtual bartender uses that information to concoct a personalized cocktail for the guest that a real-life bartender then mixes.
“The buzz quality of that process is pretty high,” Mityas said. TGI Fridays is using troves of data to innovate in thoughtful ways. “To us, the differentiating point is taking technology and making it useful even when our guests are inside the four walls as well,” he added.
The question, though, is whether implementing some updated features here and there will really be enough to save some of these sinking establishments. “So many of these brands are going to have a really hard time because the core of what they stand for is going to be hard to redefine,” Ted Nelson, CEO of Mechanica, said. “Reinvention is the key.”
Some brands find changing their tone and the way they speak to millennials and Gen Z is an important step. IHOP’s marketing chief noted that the company hired agency Droga5 to help create a new, younger voice for the brand. The work, which features two pilots who can’t talk about anything other than pancakes as they prepare for departure, “is much more likable, engaging and relatable in terms of personality and tone for the brand,” Haley said.
Experts say it’s crucial that no matter what changes brands in the space make that they do their best to not alienate existing customers. “That’s what Fridays did pretty well, but you sort of have to really blow up the current model to a certain degree. The challenge there obviously is you then risk losing boomer customers,” Nelson added.
If casual restaurant chains can pull this all off, experts believe they may have a fighting chance to stand up against the Shake Shacks and Sweetgreens of the world.
