How to capture Gen Z, millennial beverage sales

High margins and relative ease of execution traditionally have made non-alcoholic beverages a strong profit center for restaurants. But to grow sales, it’s become increasingly important to offer a menu mix that appeals to younger customers, according to Technomic’s 2016 Beverage Consumer Trend Report.

Of the 1,500 consumers surveyed, the report found that respondents in the 18-34 age group purchase drinks away from home four times a week (compared to three times a week for older consumers) and have more discerning, adventurous tastes. Here are six ways to snag their attention.

Millennials and older Gen Zers seek out emerging and seasonal flavors, ethnic beverages and handcrafted drinks, with 28% saying that they like to try new and unique beverages at restaurants. Operators can profit from this preference by adding beverages with on-trend flavors, such as acai, cucumber and ginger. Test consumer interest with LTOs and by crowdsourcing flavor ideas. Unique beverages also garner the highest prices.

About a third (33%) of Gen Zers and 32% of millennials say they would be more likely to order a nonalcoholic beverage if the menu or server makes a pairing suggestion. Although housemade sodas and specialty lemonades and teas are a natural complement, even a commercial soft drink can be a fit. Noodles & Company, for example, marketed a branded orange soda to pair with its Spicy Korean Beef Noodles.

Iced coffee is up 23% and iced tea comprises 70% of beverage sales at limited service concepts, with most purchases made by younger consumers, reports Technomic. Mocktails also are favored by this group; 51% purchased more mocktails in 2016 than they did two years ago. Adding a few simple mocktails to the menu—like a drink made by muddling fruits in iced green tea, for example—can be an untapped sales opportunity.

While natural ingredients and lower sugar are draws, drinks touting functional benefits are particularly appealing to younger consumers. More than half of this group is likely to purchase a beverage that boosts the immune system (54% as opposed to 47% two years ago), and 37% favor probiotics. Both matcha and kombucha are trending upward in the healthy beverage category.

The Starbucks effect has made customization an expectation for millennial and Gen Z consumers—31% say they are likely to add flavor shots to hot and cold beverages. Build on this opportunity by allowing guests to customize a beverage’s sweetness level, temperature and toppings. FSRs might take a page from the cocktail bar and allow guests to create an alcohol-free drink to their own specs.

Beverage-only sales are on the rise, as more consumers seek out indulgent, healthy or specialty drinks as snacks. Most of the time, these customers are visiting coffee cafes (22%) and beverage/snack concepts (40%), but drive-thrus and vending machines can help steal some of this business, says the report. Chains including Dunkin' Donuts and Jamba Juice may be testing vending machines for dispensing fresh hot or iced beverages.