Why Generation Z is behind a boom in new food start-ups

03 March 2021, 12:51 PM
  • Young people have been disproportionately affected by the pandemic, but enterprising entrepreneurs have started up hundreds of new food businesses
Why Generation Z is behind a boom in new food start-ups

The Covid-19 pandemic has had varied impacts on consumers. While those in hospitality and non-essential retail jobs have struggled financially, those able to work from home have felt less of an impact – in some cases even saving money they would normally spend on leisure activities.

Young people, however, have been disproportionately affected by the pandemic, Alice Granger, Enterprise programme executive at the Prince’s Trust, told Speciality Food. The latest ONS figures showed that workers aged 24 and under accounted for nearly three-fifths of the UK’s unemployment rate. Recent research from The Prince’s Trust Tesco Youth Index 2021 report also revealed that almost a quarter of young people (23%) do not feel confident about their future work. 

It comes as no surprise then that Generation Z are taking matters into their own hands. Research from The Accountancy Partnership showed that during lockdown, Generation Z, or those aged between 16 and 20, have been behind a boom in business creation.

The report, The Age of Entrepreneurialism, revealed that 2020 saw a 72% increase of 16-20-year-olds registering as sole traders, while all other age groups experienced fewer new businesses than the previous year. Since 2017, there has been a 206% increase.

“For many of the young people we see on our Enterprise programme, opening a business seems like a viable option and something they can focus on and grow during a time of uncertainty,” Alice said.

Social media mastery

Thanks to the rise of e-commerce and social media, the barriers to entry for starting a business are lower than ever – especially for Gen Z, the first digitally native generation, the report notes.

“Gen-Z are incredibly enterprising and are driving the age of entrepreneurialism down,” said Lee Murphy, managing director at The Accountancy Partnership. Of the businesses that launched in 2020, the group found that 31.2% began on Facebook, and 30.9% started on Instagram.

Social media is also a place where the food sector thrives, leading younger people to have a natural interest to start a business in this area. “Social media influencers who focus on food appear to have a real impact,” Alice explained. “Creating ‘gram-worthy’ food is super important to people, and in general Gen Z appear to be food centred in their socialising and therefore may already have a base of potential customers within their friendship group, so feel more comfortable selling to them.”

Lee added that Gen Z’s “confidence and knowledge of social media networks” allowed them to research their chosen market and grow their business despite adverse conditions.

Using their foodie knowledge

The Accountancy Partnership’s research showed that retail was the most popular sector for start-ups in 2020, while takeaway food shops and mobile food stands ranked joint sixth. “A significant number of Gen-Z that work in hospitality have been furloughed from restaurants and bars and have applied the skills from these jobs to create their own businesses in their new-found spare time,” Lee said. Almost 350 new food delivery and collection businesses were started by Gen Z.

“The young people that have set up food collection and delivery businesses have taken their future and earning potential into their own hands. They are trying to create some financial security in their own businesses, which they were not able to find through traditional employment.” In fact, starting up a business might seem a more viable option for young people than trying to find a job through traditional routes, as job vacancies plummeted when Covid-19 hit.

Plus, these businesses offer entrepreneurs a chance to see whether they really want to be their own boss. “It’s almost a ‘dipping your toe in the water’ kind of business idea because it’s simple to test trade and see positive results before jumping in.”

Food and drink start-ups have proven their mettle over the last year, and it’s likely that this new generation of food businesses will have even more to teach established independent retailers.

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