CHARTS: Domino's is the only fast food chain winning over millennials

Photo: Getty/Imeh Akpanudosen

Just weeks after selling most of his restaurant empire, including Burger Project, to the private-equity backed Urban Purveyor Group, the one Sydney restaurant Neil Perry still owns, the former Rockpool fine diner, now rebranded as Eleven Bridge launched a gourmet burger range exclusively for Deliveroo this week.

For $17, you can get a “strange flavour chicken” or “smoked pork with kim chi” burger delivered to your office from a restaurant better known for its $165 tasting menu.

But it’s precisely this focus on gourmet burgers – Noosa’s legendary Bettys Burgers has just opened an outlet 1800km away in Melbourne’s CBD (Sydney’s also on the drawing board) – that’s causing heartburn for the major hamburger chains as part of a phenomenon Roy Morgan Research calls the “hipsterisation” of fast food.

McDonald’s, which had its own stab at gourmet burgers with the “create your taste” touchscreen range, with mixed success, has been hardest hit and is losing market share among the next generation to upmarket, smaller rivals.

It’s now two years since the chain launched its unbranded “hipster” experiment, The Corner, on the edge of Sydney’s CBD, but nothing further appears go have happened since, with the company focusing instead on an all-day breakfast menu and wacky toppings for its fries.

Roy Morgan looked at who was heading to Maccas at least once every four weeks between 2012 and 2016, and visits have have declined from 31.2% to 29.4%.

Generations Y (falling from 39.4% to 35.3%) and Z (from 40.3% to 36.1%) are increasingly heading elsewhere, while, Gen X and the Boomers are dropping off.

Rival Hungry Jacks has largely managed to hold its ground with a small slip in monthly visits, down from 13.1% to 12.7%, with Gen Y showing the biggest decline from 19.2% to 16.5%), but that was offset by a jump in Gen Z customers, up from 15.7% to 16.8%.

What’s interesting here is that it’s not mainstream alternatives picking up the slack. Gourmet burger chain Grill’d, established in Melbourne 12 years ago, and now with 125 outlets Australia-wide, has had mixed fortunes according to Roy Morgan, with Gen X visitors increasingly slightly, Gen Z falling slightly, and Gen Y evaporating, down from from 8% to 5.4%.

So where’s Gen Y going? To “other” outlets, with visitation rates on the four-week average rising 1.7% to 6.4%. That’s where places like Neil Perry’s Burger Project, which has been rolling out new stores this year, with its $10 burgers, and other chef-based chains, such as Shannon Bennett’s Benny Burger and Warren Turnbull’s Chur Burger are likely to be luring in Gen Y after their smashed avocado brunches. Roy Morgan thinks old school “mom-and-pop”-style outlets are benefiting too.

Here’s their chart showing the changing hamburger habits of the various generations.

Source: Roy Morgan Research

Roy Morgan Research’s Norman Morris said one trend they’ve noticed is that Gen Y and Z are increasingly focused on Mexican fast food, and they’re planning to have a closer look at places like Guzman y Gomez and Mad Mex next year.

“Like any industry, quick service restaurants have changed over the years, adapting to evolving consumer preferences and needs. From Hungry Jacks introducing a vege burger to their menu more than two decades ago, to the appearance of gourmet pizza chains like Crust and Pizza Capers, this is not an industry that is resistant to change,” he said.

“But as Australia’s ‘foodie’ culture grows—evidenced in our changing cuisine preferences and the move towards vegetarianism, for example—the fast food industry is obviously going to be affected. And the much-reported trend among ‘Millennials’ (a group which spans approximately the first half of Generation Z and the second half of Gen Y) for hipster culinary experiences cannot be ignored.”

Chicken’s undergone a similar transformation.

Sydney chef Luke Mangan, who runs Glass Brasserie at the Hilton Hotel, as well as P&O cruise ship restaurants, announced earlier this month that he plans to open a chicken burger chain, Chicken Confidential, early next year. Meanwhile, another chef, Morgan McClone, now has five Belles Hot Chicken outlets – 3 in Melbourne, 2 in Sydney – with plans for many more.

But the cock of the walk, KFC, has seen its fortunes rise and fall like the Australian cricket team’s sponsors. Over the last four years, its market share has slipped slightly, down from 20.4% to 19.3%. KFC is most popular with Gens Y (23.9%) and Z (26.2%), but the former’s visits have declined, while the latter’s have increased.

Red Rooster has nothing to crow about either, with the Y and Z crowd evaporating from the WA-founded chain as part of a broader decline in visitation, down from 8.5% to 7% per month.

Here’s Roy Morgan charting the changing habits of Australia’s chicken eaters.

Source: Roy Morgan Research

That said, one company has had a spectacular year: Domino’s Pizza, which has become a global powerhouse selling $2 billion worth of pizzas, and captured the public imagination by embracing technology from drone delivery to apps that track you approaching the store.

Domino’s is killing it, with Gen Y up from 13.6% to 15.3%, and Gen Z up from 14.2% to 18.5%, a growth also seen across other generations.

Of course that’s come at the expense of rivals such as Eagle Boys, which collapsed and vanished this year, snapped up by the company which now owns Pizza Hut and is hoping to revive that brand.

There’s plenty of room for improvement, but in the meantime, smaller gourmet chains such as Crust and Pizza Capers have been carving out a niche and increasingly luring in the Gen Z.

Here’s Roy Morgan’s analysis of the sector:

Pizza visits. Source: Roy Morgan Research

Norman Morris notes that Roy Morgan’s data shows that, in general, there have been declines across every generation in terms of visits to quick service restaurants, with Domino’s as the exception to the rule.

“Fast food brands wishing to gain an advantage over their rivals in this competitive and ever-changing market need to ensure they have an in-depth understanding of their customers (as well as those of their rivals) and how their culinary tastes are evolving,” he said.

How long before Ronald McDonald has a career change from clown to drone pilot?

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