A new survey of teenage consumers has good news for Chick-fil-A and limited-service restaurants and bad news for Starbucks and casual dining.
Chick-fil-A has officially displaced Starbucks as teens’ preferred restaurant across income groups, according to the latest Taking Stock With Teens survey by Piper Jaffray. The Atlanta-based chicken chain was preferred by both upper-income teens and average-income teens for the first time.
It’s just the latest in a long string of strong consumer survey results for Chick-fil-A, consistently one of the fastest-growing restaurant chains in the country, including 14.2% total sales growth last year, according to Technomic data.
The company’s meteoric rise is echoed in the teen survey: In 2010 it wasn’t among the top five chains among either average- or upper-income teens, but has steadily moved up the rankings ever since.
“They’re just pushing everybody out,” said Piper analyst Nicole Miller Regan.
Starbucks, the Seattle-based coffee giant, had been the top restaurant brand among average-income teens for every survey since 2011, when the chain displaced McDonald’s among that group. While it remains more popular among teens than any other publicly traded company, its support among young people has steadily eroded in recent years.
The weakening comes as Starbucks’ transaction growth in the U.S. has largely stalled.
“Either [teens] gravitate a little away from caffeine or dairy in the drink, or there’s a lot of competition when it comes to tea-based drinks,” Miller Regan said.
Piper’s semiannual survey interviewed 8,600 teens at an average age of 16, 36% of whom are employed part time. Three-quarters of the teens surveyed have an average household income of $56,000, while 2,400 teens have an average household income of $102,000.
The survey found that food remains the top spending priority for teens, representing 24% of their spending, compared with 21% for clothing. Food surpassed clothing in 2014 as teens’ top spending priority, and the gap has widened ever since.
“They’re spending more on food than on clothes,” Miller Regan said, noting that young people increasingly prefer “experiences over things.”
That gets amplified as consumers age, she said.
One other notable result is that teens over the years have increasingly preferred limited-service restaurants over full-service concepts. According to the survey, 68% of teens said they prefer limited-service concepts to full-service concepts. But in the spring of 2009 that was reversed, with 57% of teens preferring restaurants with waitstaff.
But, Miller Regan noted, that flips once consumers get into their 20s. Two-thirds of millennials, for instance, prefer full-service restaurants, and an even bigger proportion of older, nonmillennial consumers prefer waitstaff.
Three of the top five chains cited by millennials, for instance, have waitstaff: Olive Garden, Texas Roadhouse and Buffalo Wild Wings. None of the top five chains among teenagers are full-service restaurants. After Chick-fil-A and Starbucks, the top five chains for average income teens include McDonald’s, Chipotle and Taco Bell.
As consumers age, she said, they increasingly prefer full-service, which Miller Regan said is more evidence that consumers are increasingly demanding experiences.
“As consumers age, [their preference for] experience over things gets amplified,” she said. “Sitting down, socialization become much more important.”
Miller Regan said that Chipotle’s numbers were particularly positive, noting that the chain wasn’t mentioned among the top five chains for average-income teens in either of the previous two surveys.
That’s important for the Newport Beach, Calif.-based fast-casual chain, which has consistently performed well among wealthier teens but has stronger sales potential if it can win with those of average income.
That’s due to simple mathematics: There are a lot more consumers in average-income households.
“For Chipotle, that’s the largest opportunity,” Miller Regan said. “They’re not going to get a loyal user to come more than three times a week, so they have to get the average income market where the mass consumer is.”