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This article was first published here.
The catering industry has had a tumultuous time over the past few years of trading. It has suffered under the weight of food inflation and the coronavirus lockdowns. Their younger customers are now turning out to be a lifeline, with new data showing that millennials spend more eating out in cafes and restaurants than their parents.
Young people open their wallets
In the Netherlands, customers spent around €22 billion eating and drinking out overall. According to data from the Food Service Institute Netherlands (FSIN), millennials and members of generation represent a growing part of this expenditure, with both spending more time and money eating out than older generations.
In 2018, millennials and generation Z accounted for around half of the hospitality industry’s income from eating out. But Food Shopper Monitor 2024 research shows that last year, in 2023, young people accounted for almost three quarters of all expenditure in cafes and restaurants, representing a big increase in just five years.
‘Third spaces’
The youth of today lack ‘third spaces’. Spending most of their time either at home or working or in education, young people often no longer have a ‘third space’, which is a sociological term for a place purely for socialisation and relaxation.
Past generations had greater access to third spaces such as community centres, churches, and libraries. The youth of today may be turning to cafes and restaurants as their only option to see their friends and relax. This could partly explain the trend.
Profit margins under the spotlight
The catering industry is increasing its prices. Revenues increased by 14 percent last year, according to KHN research, largely thanks to millennials spending money eating out. However, profit margins have been squeezed, according to KHN chairman Marijke Vuik. Cafes and restaurants therefore know it is important they retain their millennial customers.
What the youth are eating
When they eat out, millennials are more likely than older generations to opt for simple, healthy, organic meals such as smoothie bowls, poke bowls and rice bowls. Millennials enjoy hearty natural foods, especially when it is good for the planet.
Millennials are much more likely to be vegan than their parents, which is linked to their passion for stopping climate change. However, there are some situations where a plant-based diet can be counterproductive for saving the environment.
For instance, soya milk and yoghurt contribute to deforestation and other environmental problems. Meanwhile, other products popular with millennials such as avocado are linked to substantial carbon footprint, especially when imported from abroad.
Cui bono?
Millennials are already struggling with inflation, high housing costs, and limited salary growth. Why, then, are they spending more money on eating out, especially if their chosen products such as soy and avocado do more harm than good for the planet? The need for a ‘third space’ is part of the explanation. They want to eat out in the same venue as their friends.
However, it is also true that the biggest beneficiaries when young people spend more money on food are the people selling it to them – the chain cafes and restaurants, as well as food manufacturing companies. Therefore, there is a motive for companies to let young people believe the food they are buying, such as avocados and soy products, is good for the planet, even when this is not the case.
What next?
Unfortunately, the financial problems facing young people do not look likely to fade away any time soon. Facing issues from slow salary growth to the cost of living, it is little surprise that millennials feel poorer than their parents. Crucially, the lack of ‘third spaces’ issue will not be solved in the foreseeable future either.
For those reasons, it seems likely young people will continue to spend more than their parents eating out at cafes and restaurants. Given that they also spend less time and money drinking alcohol and partying than their parents’ generation did a few decades ago, they may simply have nowhere else to turn.
