Peter Filiaci: How to Market to Hispanic Customers
Hispanic consumers are increasingly crucial to the success of bars and restaurants, and that’s not likely to change much in the 21st century. Peter Filiaci is a vice president in the Strategy and Insights Group at Univision Communications. He will address the importance of the Hispanic consumer in his session, “Connecting with Hispanic Consumers to Drive Growth,” at the upcoming VIBE Conference. Filiaci will reveal how over the next 10 years their continued rapid growth in the younger demographics will be in stark contrast to the aging non-Hispanic population, and what that means for restaurant chains.
VIBE: Briefly, why is the Hispanic consumer so important now?
Peter Filiaci: I think it’s because the overall growth in consumption is driven by growth in demographics. The census data for the next 10 years projects 20% (or 2.6 million) more young Hispanic adults, while there will be a continuing aging and decline on the non-Hispanic side. This has been happening for a while but it’s projected to continue to lead the growth of population. An analysis we had done for us shows that between 2014 and 2019, Hispanic spending on beverage alcohol is projected to grow 32%, which is more than twice the rate from non-Hispanics.
VIBE: Much of the beverage attention regarding Hispanic consumers has been focused on Mexican beer, but there’s more to the story than that, isn’t there?
Filiaci: What we’ve seen consistently over the years is Hispanics are much more likely to order food and beverages together on over 90% of the occasions they visit, whereas for non-Hispanics typically beverages are included only about 75% of the time. Beverages are clearly helping to drive up check averages. On the consumption side, a lot of beer companies and brands have advertised to this community, not just the makers of Mexican beer, but also domestic and imports. Heineken is a good example of a company that has marketed to this consumer, even though they wouldn’t necessarily be a natural fit, but they really committed to it after looking at the numbers and they have done a good job.
On the spirits side, in general they are an underdeveloped area but growing faster than the non-Hispanic. It is a little more, as you would expect, overdeveloped among categories like tequila and rum, but even in underdeveloped categories we’re seeing a superior growth rate.
VIBE: What about the chain restaurant environment? What have they been doing to attract more Hispanic consumers?
Filiaci: Today it’s probably a different answer than even a couple of years ago. Quick-serve restaurants (QSR) have marketed to this community for a long, long time, and with a high frequency. But the casual dining chains have only recently started paying more attention. What we’ve found in casual dining is that on an average year-to-year basis, the average Hispanic check is higher than the non-Hispanic. This is especially true at casual dining, and what’s been really interesting is that the Spanish-language dominant average check has been even higher.
Olive Garden is the full-service chain that has done the most, and their Hispanic market has more than doubled over last 10 years due to this investment. Chili’s stepped up a few years ago and is doing well, and in 2015 Applebee’s, which was already doing well, started advertising in language and in culture and is seeing growth. Now TGI Friday’s and Buffalo Wild Wings are seeing that this growing population, once they get in, tends to spend more.
VIBE: So is it mainly advertising outreach that is required?
Filiaci: Although it’s a little self-serving to say since that’s our business, we’ve talked to Hispanic consumers and even the bilingual consumers say they see advertising as recognition that their business is valued and they are welcome. We’ve learned from many of our clients that typically they don’t need to change the menu much, maybe a few items here and there, but what they are really trying to do is find a sweet spot where it will appeal to general market consumers as well as Hispanics. So yes, it’s mainly outreach and the way they communicate with this consumer.
VIBE: Is there any research that indicates different behavior when it comes to beverages?
Filiaci: We see from the CREST data that beer is strong, but year over year at casual dining we’re seeing an increase of servings of beer and beverage alcohol overall, where you don’t see that as much among non-Hispanics. Cocktails are underdeveloped but we do see some pretty significant growth at casual dining.
The wine segment is underdeveloped but what we saw when we did some proprietary research a couple years ago is that Hispanics were much more likely to visit happy hour and late night, perhaps due to the group skewing younger than non-Hispanics. During those times they are far more likely to order alcohol, and more variety of alcohol, too.