This article was originally published online by the Orlando Business Journal.
Last week, I was talking to a chief marketing officer from a well-know international restaurant chain. He shared with me that his company does not have a strategy in place to reach U.S. Hispanics and he does not foresee happening in the future.
It was surprising because the chain has more than 150 locations in six continents, plus, their corporate office is in Dallas, the second-largest Hispanic market in the U.S.
Today, more than 35 percent of America is multicultural and Hispanics represent nearly half of all consumer spending. So, that executive and his company are missing a huge business growth opportunity by neglecting the market that is becoming the new mainstream.
When it comes to food away from home, Hispanics represent more than $56 billion dollars in consumer spending. In the restaurant industry, they represented a growth of 25 percent from 2010 to 2015, based on a study from Yankelovich Hispanic monitor.
Hispanics are frequent restaurant visitors. They like choosing restaurant chains (75 percent Hispanics vs. 62 percent non-Hispanics) and they have a greater tendency of dining out with their children (40 percent vs. 29 percent for non-Hispanics).
According to the latest report, “CREST Hispanics” from NPD Group Inc., Hispanics per capita visits to restaurants has increased by 4 percent compared to a 1 percent decline by non-Hispanics.
Restaurant chains will benefit from U.S. millennials to grow their brands. It is estimated that 52 percent of millennials will be multicultural by 2020. As of today, 65 percent of the U.S. Hispanic population are millennials and they represent over 21 percent of total U.S. millennials. In key markets like Los Angeles, Miami, Houston and Chicago, they represent 25 to 50 percent.
Some chains already are capitalizing on the growth of U.S. Hispanics as a way to grow their business. Papa John’s started marketing to Hispanics in 2006. In 2014, they shifted an even larger portion of their marketing dollars toward this growing audience. As a result, Hispanic sales grew 43 percent in 2014. Their traffic rose 18 percent and their average checks went up $1.50 according to the NPD report.
Papa John’s understood that bringing families and friends together resonates with Hispanics. It wasn’t necessary for them to change their menu items or their way of doing business. On the contrary, they just needed to communicate properly to Hispanics and appeal to their needs to build confidence in the brand.
Denny’s “America’s Diner” is another great example of how to engage effectively with Hispanics. One out of four Denny’s customers are Hispanic. In 2014, Denny’s grew its Spanish-language TV budget more than 40 percent, doubled its bilingual Hispanic digital presence, and launched Denny’s Latino on Facebook.
Capturing the Hispanic market is changing from an opportunity into a necessity. Understanding the culture, habits, and how to engage with Hispanics is the challenge most marketing executives will face with the new mainstream America. Presidents of corporations will be pressured to have the right marketing team that can respond to the nation’s demographic shift and provide the right approach and solutions to ensure engagement, results, and ultimate business growth.
Here are three recommendations to keep success on your menu:
• Cultural differences: According to the latest research from Burke and Univision, ”Casual Dining Restaurants Landscape Research 2014,” the top five reasons Hispanics tend to visit casual dining restaurants are: to spend time with family and friends; a social occasion; for celebrations; or healthy meals; and to treat the children. Executives should keep this in mind to promote their restaurants according to these opportunities.
• Feeling welcome: Training management teams and staff is important so they can understand the Hispanic customer culture and address their needs appropriately. There will be some cultural differences and misconceptions about this target audience from some employees and management. Address them properly. Language is a significant factor in the U.S. Hispanics’ use of restaurants.
• Size matters: Hispanics represent larger size parties (4.2 persons vs. 3.3 of non-Hispanics). They also tend to stay longer, so there is an opportunity to up-sell menu items. As we mentioned before, they go out with their family and children. This translates to bigger checks, more sales and larger tips.
Hispanics represent a significant percentage of business that could nourish your sales now and well into the future.