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 Covid 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 Z 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’
An explanation may be that the youth of today lack ‘third spaces’. Spending most of their time either at home, at 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 research by the umbrella organisation for cafes and restaurants, KHN, largely thanks to young people 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, in order to achieve this goal, it’s worthwhile checking exactly where their food comes from. For instance, 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? 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. Cafes and restaurants should therefore improve their environmental contributions by checking the origins of the food and drinks they sell, rather than simply greenwashing their menus.
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 high 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 these 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.
Written by Jason Reed