Who are Millennials?
Discussed frequently, but rarely understood? Let’s start at the beginning: they
were born between the 1980s and early 2000s and came of age during the
smartphone era. The native understanding of the choice at their fingertips is
what sets Millennials apart. Most importantly, they love eating, with a dining expenditure
already worth £27bn annually – 30% of total spend.
The instinctive use of technology means that 85% of millennials in the UK are now ordering food online. Consequently, the value of the delivery channel is estimated to reach £5.3bn by the end of 2020, a growth of nearly 50%. Given these game-changing figures, we’ve looked into the BrandVue Eating Out tracker, Morar HPI’s daily survey of the top 150 UK eating out brands with 100,000 interviews each year, to delve further into Millennials and their habits and attitudes towards delivery.
Millennials favour the speedy service of fast casuals over the less affordable sit-down casual dining chains. They're more likely to use mobile apps to order ahead and will not tolerate being forced to wait. Even breakfast cereal is being ditched because mixing in milk is less convenient than grabbing a yogurt or fast-food breakfast sandwich on the go. As the eagle-eyed among us might have spotted, they are particularly higher spenders in the morning (40%), but much lower at lunchtime. They also tend to eat at less traditional times – mid-morning and afternoon being prime examples.
Think clothing retail in 2005, that is where we are now with food. Delivery is augmenting where millennials eat with a growth 10 times faster than that of the core dining-in market. Technology has blurred the boundaries between dining out and eating in and the main players are gaining traction: Deliveroo saw a 650% growth in 2016 and now operates in 12 markets; Just Eat recently reported sales up 45% to £546 million - in the UK they have 10.5 million active customers who purchased £1.9bn worth of food from 28,400 restaurant partners. 65% of Londoners aged 16-35 have ordered via Just Eat the last 12 months.
There are still obstacles to the delivery sector’s growth. A consumer’s delivery usage drops as their age increases, and the clear upward trends we can see have yet to be fully established outside of London. Just Eat is the only delivery brand that isn’t London-centric, with a usage difference of only 5% between London and the rest of the UK. The company’s openness to independents and local restaurants has allowed them to establish themselves nationwide and not just in urban areas.
Profit margins are not necessarily larger either – average delivery spend sits at £11.22 vs. £16.10 for meals in-situ, dropping even further for delivery brands who offer less branded casual dining. However, annual delivery frequency is higher at 4.5 times a year vs. 2.6. This suits Millennials comfortably who prefer not to fork out for drinks and starters, going straight for a main course at home. This trend, of Millennials removing the perceived superfluous aspects of a meal, is a further reason behind such large growth in the food delivery sector.
It is clear that changing demands are affecting the dining sector, but they are also affecting the work-life balance. 30% of Millennials order food from Deliveroo on weekend evenings, proving that delivery is not only perceived as easy, but also as a treat, a way of making the best of being at home with friends and family. Unsurprisingly pizza appears to be the favourite delivery dish – similarly, 60% of the online food delivery market in the US is pizza. This reminds us that food delivery isn’t completely new – in the past it was only associated with traditional types of food, such as pizza. Now, it has extended to encapsulate almost all regional and contemporary cuisine.
So, in terms of the delivery brands, who is leading the pack? Just Eat dominates delivery frequency at 7+ times a year compared to other brands such as Pizza Hut, Deliveroo and Hungry House. To put into a wider category context, only QSR and coffee shops have an average frequency of order 4+ times a year.
Having said this, Millennials are not very likely to recommend delivery brands, so widespread use is not a proxy for something to shout about: the variety on offer and ease of purchase are what matters to this cohort.
To adapt, operators need to figure out how they can meet millennials' demands. Delivery may not be right for all brands, especially those who focus on the experiential. But remember the start point: Millennials are well connected, well informed and immersed in choice. If you don’t provide a solution, they will head to somewhere that can.