An Economics Approach: Why Does Gen Z Loves Fast Casual Dining Over Fast Food?

An interesting phenomenon that I have noticed lately on my college campus is the ghosting of fast food restaurants by college students for more “fast casual” establishments, such as Chipotle, Punch Pizza, and Brueggers. A twenty-something would rather spend $10 on a neapolitan-fired Margherita over 2-buck chicken nuggets. But why? Evidently, most college students do not possess a steady stream of income, making these purchases seem economically irrational. So what isthe root cause of this fast casual hype for Gen Z? In order to answer this question, I will utilize my own knowledge of economics.

One thing that fast casual dining provides Gen Z with is a variety of options to choose from. Sure, you could eat a burger and fries on Monday, and yes, it will taste absolutely amazing after a long day of study; however, the amount of utility that you would gain from eating this grease-laden, fried meal day after day would gradually fade, and by Friday, the mere thought of McDonald’s would make you sick.

In economics, this concept is what we call “diminishing marginal utility," which essentially states that the more of an identical item you have, the less utility you will gain from it after you accumulate more of that thing. What does this mean? Consumers love diversity of preferences. In other words, even though you love burgers, you would also love to have access to hot dogs just as much so that you can trade off between preferences based on your mood and constraints. Therefore, because fast casual dining gives Gen Z multiple flavors (asian food, latin food, etc.), we don’t have to worry about the problem of diminishing marginal utility, and this makes the consumer better off. To put it short: you end up happier at the end of the day.

So the hype about fast casual has been settled: it is the diversity of preferences that restaurants like Chipotle, Qdoba, and Brueggers can give Gen Z that makes them look twice before entering a Burger King or McDonalds. Additionally, the choice of fast casual over fast food may cost the Gen Z consumer more; however, the choice is economically rational because twenty-somethings will spend money on what they can afford, and if Punch Pizza suddenly becomes too expensive on day, then McDonald’s is the default option.

To conclude: Gen Z loves fast casual dining experiences because it gives them the ability to choose, and choice brings about the most powerful thing for a person––freedom.

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