Edit

Marketing to Hispanics

Hispanics are still the hot demographic all right—but as families grow more diverse marketing to them can get a little tricky.

Over the next few months, Beaner’s Coffee will spend at least $1 million on a complete rebranding. After 12 years building the East Lansing, Michigan-based brand and growing to 77 units in the South and Midwest, come January 31 the entire company will change its name to Biggby Coffee. Why? Because Beaner’s executives and franchisees learned that the name they’d intended as a reference to their product, the humble coffee bean, is also a derogatory term for Mexican-Americans. “We can’t keep growing with a name that is potentially offensive to a large group of people,” says Beaner’s founder and CEO Bob Fish.

And that group is getting larger. Hispanics are the biggest minority group in the United States. They numbered approximately 43 million people in 2006, or 14.4 percent of all U.S. residents. Chicago-based consumer research firm Mintel estimates that by 2011 Hispanics will grow to 49 million people, or about 15.7 percent of the total U.S. population.

“We’re looking at Hispanics and Asian-Americans being high-growth population drivers,” says David Morris, a senior research analyst with Mintel. “That makes them important to any business.”

How important depends on the type of business you operate. Hispanics’ median household income in 2004, the most recent year for which data was available, was $34,000, well below the $44,000 for all U.S. households, according to Mintel’s analysis of Bureau of Labor Statistics data. Hispanics also spend a smaller portion of their income on dining out than non-Hispanics —35 percent and 43 percent, respectively. Hispanic households are also more likely to be larger in size than non-Hispanic households, which has a direct impact on dining-out decisions. “There’s a higher propensity for dining in the home, especially for dinner,” says Morris.

The combination of lower income and bigger households means that Hispanics are more likely than other ethnic groups to visit fast food and fast-casual restaurants, according to Mintel. Being kid-friendly, a la McDonald’s play areas, is probably an advantage here. “That creates a demographic appeal to families with children in general that’s going to perhaps resonate more with Hispanic families,” says Morris.

Juan Tornoe, an Austin, Texas-based Hispanic marketing consultant, predicts that as Hispanics’ income rises, so, too, will their use of higher-priced restaurants. “Hispanics’ economic clout is growing much faster than their head count,” says Tornoe, who writes the blog Hispanic Trending (juantornoe.blogs.com/hispanictrending). “They’re young, they’re working, they’re hungry. They’re here for a reason, and that’s to provide better for themselves and their families.”

Hispanic consumers are much more receptive to advertising and marketing messages than is the general population. Yankelovich, the Chapel Hill, North Carolina-based research firm, found in its 2007/2008 Monitor Multicultural Marketing Study that nearly 60 percent of Hispanics “enjoy looking at or listening to advertising,” compared with 30 percent of non-Hispanic whites.

However, says Sonya Suarez-Hammond, vice president of multicultural marketing insights with Yankelovich, operators mustn’t abuse that openness. “Authenticity is absolutely critical,” she says. “You have to stay true to your brand essence and let the consumer know that you’re specifically talking to them.”

One chain that did so successfully is Pizza Patrón, No. 17 on the Restaurant Business Future 50, which specifically targets Spanish-speaking communities for its largely take-out business. Earlier this year, the company introduced its controversial “Pizza por Pesos” promotion, which drew widespread media attention amidst the national immigration debate. Pizza Patrón reported a better than 30 percent increase in same-store sales for the first two quarters in which the promotion was in effect, and has since decided to accept pesos permanently. “It was so successful with their target audience,” says Tornoe. “Yeah, they ticked off a bunch of guys that hate Hispanics, but they’re not Pizza Patrón’s customer anyway.”

Morris says that Denny’s has had success with Hispanics by taking a more subtle approach. The chain does a better than average job of drawing Hispanic consumers, he says, due to a few factors. One is that the percentage of Hispanic consumers who dine after 9 p.m. is higher than average, so Denny’s extended hours are a plus. Another is that while Hispanic consumers spend less than average on eating out, they spend proportionally more on breakfast than non-Hispanics. “When you look at the Denny’s menu, it doesn’t appear to be Hispanic-centric,” Morris says. “But in a sense it is when you think about eggs as a staple in many Hispanic households.”

Furthermore, with one click at Dennys.com, a consumer can access the entire Web site in Spanish. The company has also developed Spanish-language ad campaigns that air in targeted markets.

But marketing experts warn against a one-size-fits-all approach. “Long gone are the days where a marketer would just take a general-market ad, translate it and stick it on Univision,” says Suarez-Hammond. “Today reaching Hispanic audiences is much more complex.”

That’s because the Hispanic market isn’t just one market; it’s many, with influences ranging from country of origin to language of choice to level of acculturation, or the degree to which a person has acclimated to the prevailing culture. Marketers break the subgroups out in various ways, but they all agree that customized strategies are key. Yankelovich has found that about 50 percent of Hispanic consumers tend to speak Spanish and are closely affiliated with their country of origin. Another quarter are what the firm calls “relatively assimilated,” while the remaining quarter—and the group growing most quickly—considers itself bicultural.

It’s that last group that represents the biggest opportunity for operators—especially those in the fast food or fast-casual segments, according to Suarez-Hammond. “Yes,” she says, “the Spanish consumer is going out to fast food places, but the more acculturated group is likely to go more often. You adopt and adapt to behaviors going on around you.”

Tornoe recommends that restaurant operators—indeed, all marketers hoping to reach Hispanics—locate their specific target audience on what he calls the “matrix” of Hispanic consumers. “If you’re Coca Cola, you can reach out to everyone,” he says. “But the rest of us simply can not afford to do that. So if we’re marketing regionally or locally, let’s understand how the Hispanic community really is in our neck of the woods and say, ‘Ok, we’re going to reach out to this particular segment of the community because that’s the one we can serve better.’”

Trending

More from our partners