In this week’s podcast, Technomic Managing Principal Joe Pawlak explains how demographics could be affecting restaurant sales.
Specifically, he said this:
“The boomers are getting older. As you age, or as the population ages, they go out to eat much less. They’re eating at home a lot more. That’s taking a little wind out of the sails of foodservice.
“Millennials are starting to have children. So more of their disposable income is being spent on other things than going out to eat. That’s taking some of the potential out of the business.”
Baby boomers, the generation born between 1946 and 1964 (though definitions tend to differ), are retiring. Roughly 76 million people were born during this period, and that group has had a pretty major impact on society in general. Some industries are affected more than others—for instance, a flourishing healthcare industry and a booming elder care business.
In general, people eat out less often as they age. In 2017, according to federal data, the typical American spent nearly 44% of their food dollar food away from home. That percentage typically peaks for people under 25—who had mean food spending of nearly 50% on restaurant food.
People 75 and older, however, spent 38% of their food dollar on food away from home.
And seniors simply spend less on food in general. People 35-44, for instance, spent $4,249 at restaurants in 2017, more than any other age group. But people 65 and older spent $2,511. That’s 41% less than the younger group.
Some 10,000 people are retiring every day. Simple data suggests that this is a concern for the industry going forward—especially as seniors approach 75 years of age, when consumers spend the least.
Another concern is that baby boomers have financial problems. A 2016 survey by GoBankingRates.com found that a third of Americans had $0 saved for retirement.
That same survey found more than half had balances far behind typical retirement fund benchmarks and 26% had retirement balances of under $50,000, “an amount that is insufficient for people nearing retirement age.”
The results of that survey have some wondering whether the country is facing a “retirement crisis.”
In other words, baby boomers are hitting an age in which dining out is less of an option and they have less saved for their retirement years than they should.
The millennial generation, meanwhile, tends to be a moving target depending on the demographer but, according to Pew Research, its members were born between 1981 and 1996.
That’s a large group—it is the largest living generation, in fact, making its impact on the economy significant and thus leading many people to blame them for challenges in various industries.
But it’s also a poorer group, having come of age during the recession. According to Pew, the group has higher rates of poverty than any other generation.
It’s also a group contending with all sorts of financial issues. It is heavily in debt and has had to deal with soaring home prices.
The good news is that this group, the oldest members of which are in their mid-30s, is getting to an age in which they spend more overall on dining out. But that won’t make up for the retirement of the baby boom population.
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