Millennials are on track to become the biggest spenders at grocery stores and restaurants within the next ten years, according to a recent CBRE report.
As their spending power ramps up, CBRE predicts that millennials will start to eat out at full-service and high-end establishments and grocery stores. However, amid the demographic shift, there will still be demand for low-priced food options such as fast casual and fast food.
The food-and-beverage sector is “just as susceptible as others to sweeping demographic changes, which we’ll see influence real estate through formats such as grocery-restaurant combinations, more kitchen-only outlets, and delivery services,” said Melina Cordero, CBRE Global Head of Retail Research, in a statement.
Millennials likely to shift toward higher-end options
The constraints of student loan debt will ease up as millennials’ income grows, which is likely to drive an increase in preference for higher-end options among this age group. CBRE predicts that millennials will start spending more on food and beverage, “sometimes in volume and sometimes in price.”
At the same time, baby boomers are expected to spend less as they transition into retirement. The report authors say these demographic changes in spending habits highlight the need for retailers and retail-center owners to analyze and understand their customer base so that they can plan their menus and locations to cater to age group nuances.
“We see consumer preferences influencing many facets of retail real estate, including store location; store design to accommodate delivery pickup or prepackaged meals; and different store layouts to incorporate automated ordering and self service,” said David Orkin, an Executive Vice President leading CBRE’s Restaurant practice in the Americas.
The report found that although millennials dedicate the highest share of their income to food and beverage, they don’t spend more on food than older generations did at the same age.
In 1989, baby boomers spent 14.7 percent of their income on food; In 2001, Gen Xers put 13.2 percent of their expenditures toward food; In 2016, millennials spent 13.1 percent of their income on food.