Journal of Restaurant & Foodservice Marketing Vol 3, Numbers 3/4 1999 Published by The Haworth Hospitality Press Pp. 93-107.

Generation X And Their Future Buying Behaviors In the Foodservice Industry Megan Hoffichter Vivienne J. Wildes Sara C. Parks

Abstract. This paper details the demographic, societal, and psychographic influences on Generation Xers and discusses how these influences impact their buying behavior, Stereotypes attached to Generation Xers-i.e., they are fatalistic, pessimistic, listless, rootless, and goalless- have led to distinct buying behaviors in this population. Research is reviewed to show that Generation Xers are highly affected by technology, diversity, change, and choices, leading to seemingly paradoxical and elusive behaviors in Generation X's buying patterns. For the hospitality industry, the response to Generation X's consumer needs has taken the form of cyber cafés and entertainment eateries, and recent trends in how the wine industry and the hotel industry are meeting the needs of Xers demonstrated the power of this population. Generation Xers are emerging as leaders who shape the future operations of the marketplace. [Article copies available for a fee from The Haworth Document Delivery Service: 1-800-342-9678. E-mail address: getinfo@haworthpressinc.com <Website: http://www.haworthpressinc.com>]

Keyword. Generation X, consumer research, buying behavior, cyber cafés, hotel and restaurant purchases, wine industry.

Introduction

In their book Generations: The History of America's Future 1584-2069, William Strauss and Neil Howe propose that a generation is defined as "a cohort group whose length approximates the span of a phase of life and whose boundaries are fixed by peer personality." Two elements in this definition of generation are important: (1) The length of time required to produce a generation, said to be approximately 18 to 24 years, and (2) An identification with peer personality (1990). For Generation Xers, these two elements are especially relevant.       Webster's New World Dictionary offers a sustainable, if pessimistic, definition of Generation X: "the generation of persons born between 1963 and 1977, the children of the Baby Boomers, apathetic, materialistic, irresponsible, lacking purpose." They are the thirteenth generation of Americans since the founding of the United States (Copeland, 1991), colloquially referred to as Baby Buster, Grunge Kids and Slackers. Generation X is not only a chronological age but also a perception-a way to look at the world.       Contrary to the image portrayed in the media, many Generation Xers are coming of age, enthusiastic, and ready to meet the challenges they face. Young adults in a booming job market, they expect to be perceived with respect. Above all, they are well aware of their new-found assertiveness and they use it in the marketplace. They do not necessarily view themselves as fatalistic, despite having come of age in a time defined by a depressed economy, restricted job market, crime-ridden streets, and growing environmental concerns (Smith & Clurman, 1997). Given these trends, it is not surprising that Generation Xers view the world differently than their predecessors.       As with other generational groups, Generation X can be defined in relation to their specific buying behaviors. This paper explores the demographic, psychographic and societal influences on Generation X and the impact these influences have on their buying behavior. Specific attention is paid to implications of Generation X's buying behaviors for the hospitality industry. While this generation cannot be defined by a single cachet (ergo the letter X), some distinct factors define their buying behaviors.

Demographic, Societal and Psychographic Influences on Generation X

There are over 58 million young adults between the ages of eighteen and twenty-eight in this country. As the nation's second-largest are group, Generation Xers represent 16% of the total population and 25% if all adults (Zevin, 1997).       Just as factors such as the depression of World War II contributed to previous generation's attitudes toward buying, specific factors have affected Generation X's buying behaviors. These factors differ from earlier ones and awareness of these factors obviously contributes to the success of capturing a share of the Generation X market. In contrast to Matures (born between 1909-1945) and Boomers (born between 1946-1962), Generation Xers grew up in a diverse, paradoxical world (Smith & Clurman, 1997).       Four core factors that affect the demographic, psychological and sociological mindset of Generation X have created a chameleon effect that often defies marketing strategies. These factors are: (1) Technology; (2) Diversity; (3) Change; and (4) Choice. Each of these factors helped to mold Generation Xers through their formative years. Analyzing each factor promotes a better understanding of the future market and its implications for hospitality management.

Factor 1: Technology

Perhaps the most significant contributor to Generation X's chameleon effect is the influence of technology. Computer literacy, facility, and comfort with all forms of high technology are distinctive Xer traits. Electronic technology and access to information are fundamental to how Generation x lives, work and plays (Smith & Clurman, 1997). For most Generation Xers, Game Boys and personal computers (PCs) are a defining experience.       Generation Xers are eager consumers of entertainment of all types. Along with broadcasting television, the Internet is an important medium for Generation Xers. The number of hours spent watching TV has acclimated them to sitting at a PC for considerable lengths of time. The on-line universe is a part of Generation Xers' search for community and friendship. Although they are often home alone, accessing others who share similar thoughts and interests is made easy by the Internet. Pre- 1993, the terms Internet, newsgroups, mailing lists, World Wide Web, FTP, and gopher were not part of the general lexicon. To today's Generation Xers, however, the Internet is a way of life.       Generation Xers view everything as entertainment (Richie, 1995b). For example, in relation to advertising, Baby Boomers strictly differentiate news from entertainment and entertainment from advertising. A Boomer with remote control is more likely to switch off commercials, whereas a Xer rarely differentiates among new, entertainment, and advertising. This is partly because mass media is burgeoning and partly because Generation Xers grew up with more intense advertising. They are more comfortable with technology, have more control over the medium, and are keenly aware of its potential in both achievement and failure.

Factor 2: Diversity

This is the most diverse generation in American history. The 1990 census shows that 35 percent of those in the 10-29 age groups are non-white or Hispanic. Diversity in all its forms-cultural, political, sexual, racial, and social-is a hallmark of this generation. According to Smith and Clurman (1997):

This diversity is accessible to everyone and transcends even national borders. This generation shares in a greatly expanded global network of connections and influences. This generation borrows even more freely from the cutting edge influences of ethnic and cultural minorities in language, fashion, and music. The pace feels different for Xers, too. It consists of a whirling vortex of diverse images, messages, and chance opportunities.

As Clurman suggests, multiculturalism is a tangible reality for Generation X. Certainly individual opinions vary and emotions run high on the subject of diversity, but there is no escaping the reality that the world is a smaller place to live, and Generation Xers are highly attuned to this reality.       An awareness of diversity is also required to successfully navigate in the on-line world. Discussants remain faceless; nobody knows whether one is black, white, tall, short, attractive, or ugly. This generation is accustomed to, expects, and enjoys diversity (Zill & Robinson, 1997).       For Generation Xers, diversity extends beyond race to include gender, social justice, and sexual preference. Other values embraced by Generation Xers include concern for the environment and respect for visual arts. This can, in par, be explained by the fact that Generation X has more education than any previous generation, is more knowledgeable and accepting of differences, and as mentioned above, is highly influenced by the Internet (Zill & Robinson, 1997).

Factor 3: Change

One important lesson Generation Xers learned at an early age is to take nothing for granted. Life is unpredictable and full of paradox. This generation can remotely control television, Game Boys and videos, yet also witnessed the Challenger explosion live in their classrooms. This generation has seen Communism fall in Russia, then has fruitlessly demonstrated as Tibet is fading into China. This generation celebrated Martin Luther King's Birthday with a day off from school, but watched Los Angeles in upheaval amidst racial riots.       Generation Xers have come o expect a changeable world in relation to the marketplace as well. Security is not expected. A home is not bought for a lifetime. A job is not for retirement. On the other hand, mastery is flexibility. Success is measured by continual adaptation.       Societally, the changes that shaped the impressionable years of Generation Xers included divorce rates rising from under 10 percent in the 1950s to over 50 percent by 1980. According to the U.S. Public Health' Service, only 50 percent of American youth aged 15-17 lived with both of their biological parents in 1988 (Howe & Strauss, 1993; Smith & Clurman, 1997).       For Generation X, the changing family structure is exemplified in the relationships developed between individuals and groups. Male-female friendships are as likely to be based on friendship as on romance. Generation Xers turn to friends more often than parents or relatives. For Xer youth, a group of friends frequently outweighs the importance of the family, especially if the home life is in turmoil. This point is further reinforced on television, which, as an easy parental substitute, has an incredible impact on this generation.

Factor 4: Choices

At a young age, Generation Xers learned not to believe everything they read and heard. They are highly aware of the problems around them such as the destruction of the environment and the growing national debt. Nevertheless, most Generation Xers keep life in perspective and have a distinct balance of priorities, leading them to be cautious consumers.       For Generation Xers, choices often boil down to the lesser of the two evils: McJobs or Microserfs, OJ or LAPD, Mom or Dad, Roommates or moving back home, a BA and no career or an MBA and no career (Richie, 1995b). For Generation X, intimate relationships require a choice between the pleasures of sex and companionship against the possibility of AIDS. A career means giving up quality of life in exchange for work in a typical, routine, boring job.       On the other hand, Generation Xers have seemingly endless career choices at their fingertips. The Internet, computer, electronic mail, faxes, and pagers make life faster and easier for all of society offering choices unheard of for previous generations. Technology makes it viable to work at home, office, on the road, or abroad (Skowronek, 1997).

Buying Behaviors

Estimates of Generation X expenditures hover around $125 billion a year (Zevin, 1997). Generation Xers are said to be second only to Matures in terms of discretionary income. With $125 billion discretionary income and total spending power of over $200 billion annually, their cohesive buying power is impossible to ignore yet difficult to define.       Due to the myriad of available choices, this generation equates choice with power. Salespeople are challenged by this group and must alternate between acting as information source, not being too pushy or slick, and not hovering (Stephenson, 1996).       Nonetheless, Generation X has discrete preferences developed during their ascent to adulthood. Three important preferences relating to Generation X's buying behaviors are discussed below. They are: (1) Immediacy; (2) Independence; and (3) Innovation.

Immediacy

Research shows Generation Xers' attitudes about money differ from previous generations. Generation Xers buy because the opportunity to buy may not arise again. If they wait, they may not be able to afford it. Their awareness of impermanence creates a need for immediate satisfaction. Money is not strictly for saving (Matures) or spending (Boomers), but for protecting against the unexpected. Generation Xers hedge, weighing the now with the possibility of no tomorrow (Zevin, 1997; Smith & Clurman, 1997).       Generation XX has redefined what is meant by convenience. For Matures the definition means quick, for the Boomers efficient. To Generation Xers convenient means eliminate the task (Smith & Clurman, 1997). An accelerated pace is not just a fact, it is a given; not just a circumstance of the times, but a basic condition of life. This is exemplified by time-shifting techniques and ever-changing fashion. For just such a trend, cross trainer athletic footwear was born.

Independence

Generation Xers defy marketers by refusing to allow their lives to be stripped down to a stereotype target group. They reject advertising when they are too narrowly classified. A good example of how a Fortune 500 Company taps into and reinforces an emotional connection with this independence is a recent multi-page Nike print ad in Details magazine. The ad reads: Don't insult our intelligence. Tell us what it is, tell us what it does, and don't play the national anthem while you do it. In the lower right-hand corner of one page is a statement in graffito, turned on end: I am not a target market. I am an athlete. As this ad demonstrates, Nike understands the Generation Xers' aversion to labels and slots and knows how to tap into the need for independence.       An example of how a fortune 500 company missed the target was a 1994 Coca Cola campaign. In an attempt to attract Generation x by tapping into pessimism, Coca Cola test marketed a new drink called OK soda. The gray can featured grim designs, including a doleful youth slumped outside two idle factories. Slogans on the can read: Don't be fooled into thinking there has to be a reason for everything and What's the point of the OK soda? Well, what's the point of anything? The nine-city campaign fizzled (Hornblower, 1997). An example of an ad that worked for coca cola is its 1994 remake of its Sprite soda campaign. Sprite discontinued their long known I like the Sprite in you in an effort to focus on the Generation X market. Their new campaign became Image is nothing; Thirst is everything. Obey your thirst.       In yet another paradox, independence is not defined by leaving home. Today, more young adults are living with their parents than at any other time since the Great Depression. Young adults who live at home and work, but do not pay for utilities, mortgage, or food bills often have more discretionary income than their parents. Even if they do not have ready cash, Generation Xers are wont to use credit cards. Marketers have determined the 20s age group-once known as the nesting stage-to be boomerang years. This is brought on, in part, because Generation Xers are lagging at least 10 years behind their parents in major life events such as marriage and childbirth (Richie, 1995a).       Lastly, as America's first latchkey kids, frequently on their own while mom and dad were at work, Generation Xers learned to make purchase decisions quite early. While doing so, many Generation Xers have even become the designated decision-makers for their parents or other relatives. This is especially true in those areas where young adults have particular expertise, such as electronic equipment, computers, or in some cases, automobiles (ibid).

Innovation

Generation Xers want an honest, innovative approach to marketing, one that gets to the point and sticks to the subject. Over the years, Generation Xers have acquired an instinctive sense of what is involved in trying to sell them something. Because they have been bombarded with such a great variety of information during their formative years, and because they are often savvy about technical possibilities, Generation Xers can be tremendously cynical of the media.       As the Generation Xers' purchasing power grows, marketers worldwide are struggling to understand these young adults frequently portrayed by advertisers and the media as angry, alienated, lazy, resilient, tough, independent and environmentally concerned. This maturing population has willfully adopted genuine concerns and issues. They demand innovative answers to achieve a level of balance while maintaining perspective.       Examples of products or services that meet the needs of Generation Xers to stay in touch while remaining in control include car phones, beepers, pager, answering machines, computer, e-mail, and fax machines. These are necessities, not luxuries, to this generation.

Implications of Generation X's Buying Behaviors for the Hospitality Industry

In 1997, Generation Xers spent approximately $30 billion on eating out. They are the highest consumers of fast food, beer, wine cooler, rum, tequila, and vodka. Food categories that Generation Xers lead the way in terms of purchases include: carbonated beverages, chocolate candy, salty snacks and beer (Richie, 1995; Nielson, 1998).

Restaurant purchase patterns of Generation Xers

Lack of concern over choosing healthy foods carries over into Generation Xers restaurant purchases as well. The importance of food content and preparation to those in their twenties seems to give way to the other, more pressing needs of convenience (carry out or delivery), price (popularity of fast food), and taste. When eating out, Generation Xers are less likely to order baked or rotisserie chicken, chili or salad, and will favor Mexican food, pizza or hamburgers. Generation Xers favor large-sized cola drinks and generally stay away from consuming coffee and tea (Holtz, 1995).       To certain hospitality markets, Generation Xers are important consumers. They buy a vast majority of soft drinks and fast food, and enjoy music and low-cost fashion. In select categories, they are an economic force. As they age, they will expand their horizons, and continue to spend substantial sums of money as a cohesive group.       The number of quick serve restaurant patrons is considerably higher among Generation Xers than for older consumers. Casual dining restaurants are not as popular with Generation Xers, receiving just 5% of all visits, with midscale restaurants receiving 14% (Zevin).       Regardless of the type of restaurant they choose to frequent, Generation Xers' focus on value does not keep them from spending more per meal than other groups. Though they favor less expensive restaurants, their average check sizes are bigger, wherever they eat. CREST statistics show that average check size per meal by restaurant category decreases as age group increases, whether it is fast food or gourmet fare being purchased. One could also speculate that amore active lifestyle requires a bit heavier eating than is necessary as age advances (Zavada, 1996).

Cyber cafés and Entertainment Eateries

Two distinct areas of the hospitality industry where Generation X has an enormous and direct impact are worth attention: cyber cafés and entertainment eateries. These concepts blend food service and electronic communication in an innovative way and have produced dynamic new products for the hospitality industry

Cyber cafés

In addition to the menu items, the typical cyber café offers six computers complete with Internet access for consumer use. Most cyber cafés charge a fee for Internet access and many provide classes to educate their less computer-literate consumers. The atmosphere is generally eclectic and relaxing with couches, chairs, tables, music, and posters and paintings on the wall. Varieties of coffee, including espresso and cappuccino, sandwiches and a variety of baked goods are also available. The cyber café's main goal is to attract business professionals during the day and college students during the evening.       The first cyber café, Internet Café, at 82 East Third Street, opened in spring 1995 in New York City. Graime Keegan, manager of the Internet Café, says "on a given night, keyboards clicking, the café is bustling and busy. The crowd of cybercitizens is an unmistakable mix of Baby Boomers and Generation Xers." The success of cyber cafés reflects the growing cross-generational appeal of and participation in cyberspace itself.

Entertainment Eateries

Another important hospitality-related change due to Generation X is the onset of entertainment eateries such as Disney Quest, Game Works, and Dave & Busters, a chain providing new, wholesome, and adult oriented entertainment, is different from typical bars and clubs. Part of the concept is to give back to adult customers some of the fun they lost from their childhood. Facilities feature full-service bar and restaurants, billiards, shuffleboard tables, play-for-fun blackjack casinos, Murder Mystery Dinner theaters, karaoke lounges, and a staggering array of the latest video and skill games (e.g., golf simulation and virtual reality attraction). Entertainment eateries are to adults what Chuck E. Cheese Pizza Time Theater is to children.       Gary Duffrey, Director of Amusement for Dave & Busters, says entertainment is the leading segment for the company, coming before food and beverage. The concept is to create an entertainment attraction value targeted to adults in the 21 to 50 age group.       Disney Quest combines the "excitement of Disney" with innovation, design, technology and story telling to create an avenue for interactive entertainment. The goal is to provide a new kind of entertainment experience aimed at the family of the future. According to Michael Eisner, President of Disney, "engaging interactive technologies to create an entertainment adventure is necessary to attract Generation Xers." As Generation Xers' purchase power grows, Disney Quest hopes to build a lifetime of brand loyalty. If the marketers can catch consumers in their formative years, consumer loyalty might extend throughout their lives.       Disney believes the product of entertainment eateries is worthwhile enough to launch a new subsidiary: Disney Regional Entertainment. They are not alone, however, in creating new venues to keep pace with current customer needs.       Game Works is another entertainment eatery to combine acclaimed technology with a nightclub atmosphere. Like Dave & Busters, Game Works' design processes come first. A conglomerate of technological leaders that includes DreamWorks SKG, Sega Enterprises, and Universal Studios Inc., Game Works uses technology and architecture to encourage social interaction and the spirit of play. The club-like atmosphere consists of different zone, or sections, to provide for diverse entertainment and social experience associated with particular games. This new breed of club redefines play. The aim is to connect with people, play the newest games, relax with friends, and escape the pressure of daily life. Some examples of Game Works zones are: (1) the Arena, a high-energy area featuring signature and multiplayer games; (2) the Loading Dock, a competitive zone where quests put the newest games to the test; (3) the Loft, a relaxing environment offering a variety of classic video games, traditional games, Internet activities, a full-service restaurant, stylized coffee bar, and full-service bar.       Entertainment eateries and the trend they represent are evident in the growth of theme restaurants during the past decade. Generation Xers represent a significant proportion of entertainment eateries' patrons, and their buying behavior is largely responsible for the rapid development. A key element of theme restaurants is the ambiance, which can take on numerous manifestations. The goal is to transform the dining experience into an escaped reality. Rainforest Café, for example, simulates a jungle. Another example is Quark's Bar & Restaurant in Las Vegas. Here restaurant patrons are transported to the outer edges of the galaxy. Modeled after a television show, Star Trek: The Experience, Quark's concept includes performers costumed as aliens who interact with customers. Quark's is a merger between hospitality, entertainment, and technology.

Wine Purchasing of Generation Xers

Research on the wine industry indicates that the vast majority of wine is consumed by a small group of dedicated Boomers. Wine is not a beverage of choice for Generation Xers; therefore the industry is attempting to refocus its marketing efforts toward 20- and 30-year-olds. The $20 million campaign invites Generation Xers to think about wine as a casual beverage like bottled water, beer, and soda. To this end, wine marketers have made efforts to erase the image of wine as a product of snobs (Jensen, 1997).       According to Jensen, the 1997 study conducted by the Wine Market Council shows that a mere 11% of the nation's 21-59-year-olds drink 88% of the table wine consumed. New marketing efforts promote wine with a more accessible fun image. For example, new print and TV ads for Gallo's Sonoma Estate Wines feature the Gallo families' 30-something, third-generation wine makers. The company promoted Generation Xers to executive positions within the company and uses them to think of ways to attract younger adults.       Wine industry leaders are also using alternative channels to reach this new target market. For example, David Hyde Pierce, a television actor popular with Generation Xers, narrated a television series entitled: "Wine 101." The series introduced basic wine terms and discussed how to enjoy, buy and store wine (Jensen, 1997). It will be interesting to watch over the next few years and see if the special attention paid to Generation Xers, by the wine industry will increase their market share of drinks consumed.

Hotel Purchasing Habits of Generation Xers

In 1997, 64% of Generation Xers took a domestic trip within the previous year and nearly one-third traveled abroad (including Alaska and Hawaii) within the past three years. Unlike the manner in which Matures and Boomers traveled in their young adult years, Generation Xers do not use backpacks or stay in youth hostels. Instead, they employ travel agents, stay in hotels, and fly business class (Richie, 1995b).       A new trend that Generation Xers have introduced to the hotel industry is termed cocooning. Cocooning is the stay-at-home trend, reflecting a strong desire to protect themselves from the harsh, unpredictable realities of the outside world (Popcorn, 1991). In the hotel industry, cocooning translates into seclusion within a hotel room. When corporate Generation Xers check into a hotel room, they do not emerge until morning. Generation Xers do not use the traditional amenities of full-service hotel. Instead, they order room service watch in-room movies, and surf the Internet on laptop computers (Mount, 1997).       The wine and hotel components of the food service industry lag behind the restaurant component in regarding Generation Xers as a significant segment of the market share. Both would be wise to heed lessons learned from the restaurant industry regarding Generation Xers' tastes and preferences. As Generation X matures, their influence as buyers will become important for both the wine and hotel divisions of the food industry in both manufacturing and service.

Conclusion

Like all previous generations before them, Generation Xers are undergoing life-cycle changes. Their experiences, however, differ. Divorce, diversity, and declining income are some factors that deeply affect consumer behavior for Generation X. Because of the unique life experiences that have shaped them, Generation Xers have broadened our definitions of family, convenience, and independence.       Generation Xers abhor advertising that uses hype and insincerity. While their lives may be steeped in issues such as gangs, a bankrupt social security, environmental destruction, and the scars of divorce, they wish to be seen as a diverse ensemble, independent and enthusiastic, not fatalistic. Savvy marketers see Generation X as viable, maturing, a generation with an attitude; one of chameleon charm that will continue to challenge the future of marketing.       The question on the minds of many marketers as they struggle to understand today's Twenty-somethings is whether their quest for value, coupled with their marketing savvy, makes Generation Xers more or less brand-loyal. So far, Generation Xers have not demonstrated any particular attraction to select brands, yet many advertisers target this group, hoping to cultivate a lasting relationship.       The hospitality industry would be wise to study this generation further. Will their buying behaviors change when they move out of their parents' home and have less discretionary income? Can they maintain the same lifestyle they are accustomed to without the extra income from parents? What dining experiences will be most attractive as Generation Xers age? Will the relationship between Generation Xers and the impact of the information technology affect their intent to purchase of hospitality services?       Generation X has sparked some lasting and innovative contributions to the future of the hospitality industry. Their comfort level with technology has created entirely new products such as cyber cafés and entertainment eateries. They bring a new focus to marketing in the wine industry and all food companies. Lastly, Generation Xers' tendency to cocoon has even created new hotel amenities. As these trends demonstrate, the Generation Xers ability to merge the food service, technology, and entertainment industries is a major factor that puts them in the forefront as leaders in how the marketplace operates.

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