Millennials With the Munchies Are Driving Late-Night Sales at Taco Bell, Whataburger

Sales are surging at Taco Bell, Whataburger, In-N-Out and other fast-food restaurants late at night, thanks to hungry Millennials and older Gen Z diners looking to curb their cravings while bar hopping.

Wendy's started making a push into the night owl market in May, extending hours at several U.S. locations in the months since from 1 a.m. to 4 a.m.

"In 2023, Late Night was a big bet we made to drive visits knowing customers were looking for better options late at night — and it paid off," Lindsay Radkoski, Wendy's chief marketing officer for the U.S., said in an emailed statement.

In the face of economic uncertainty and stubbornly persistent inflation, one sector of the fast-food industry is continuing to grow: late-night dining. While overall visits to fast food restaurants fell by 2.4% year-over-year in the third quarter, the share of customers patronizing popular quick service chains like Taco Bell and Pizza Hut between 9 p.m. and midnight spiked, according to the analytics firm Placer.ai, which tracks restaurant visits at major brands.

Whataburger saw the largest share of diners late in the evening. Some 28% of its total sales during the third quarter came from late night visits, compared with a little more than 23% during the same three months in 2019, according to Placer.ai.

The legendary West Coast fast food chain In-N-Out Burger saw 26.3% of its traffic come during late-night hours in the third quarter, compared to 19.6% in the same period four years ago. Placer.ai compared visits to pre-pandemic levels since Covid-19 lockdowns devastated the industry over the last few years.

Taco Bell, which is popular among college students and twentysomethings heading home from bars and parties, saw 20.3% of its traffic late at night in the third quarter, compared to 15.4% in 2019.

Marco’s Pizza, Raising Cane’s and Pizza Hut saw similar increases.

Pizza Hut announced in October that thousands of its stores will stay open past midnight, some as late as 2 a.m., in a bid to attract younger customers.

"Placer.ai looked at other brands but these were the ones with the most significant late night visit gains," R.J. Hottovy, head of analytical research at Placer.ai, said in an email.

The increase is driven mostly by older Gen Z eaters and younger Millennials, he said.

"The areas where these late diners came from have a higher percentage of young singles and starter families typically between 25-30 years old, suggesting that Gen Z and younger millennials are driving a lot of the late-night visits," Hottovy said. Gen Z are currently 11 to 26 years old while the youngest Millennials are 27 and oldest are 42.

Analysts who follow the restaurant industry also noted that a push for business in the evening could be an attempt to make up for the drop in lunch and early morning business hurting some restaurant chains thanks to the persistence of remote work.

John Gordon, an independent restaurant analyst and founder of California-based Pacific Management Consulting Group, said most restaurants don't stay open late, meaning brands focused on the late-night crowd face little competition.

"Many of the fast casuals are closed by 9 p.m.," he said.

Customers tend to spend more money in the evening, Gordon added.

"There's a saying, 'you pay rent 24 hours a day, you need to do business as many of those hours as possible,'" said Stephen Zagor, a food industry consultant and adjunct professor at Columbia University. And with restaurant visits trending down, "a lot of those companies need those supplemental dollars."

Some of the titans of the fast food industry, including Burger King, McDonald's and Wendy's have expanded their operating hours, opening earlier in the morning and closing later at night, research from the financial services firm Stephens shows.

Stephens' research singled out Chipotle. In the third quarter of 2023, the burrito chain's restaurants closed at 10:16 p.m., an average of 27 minutes later, than 9:49 p.m. in the first quarter of 2021.

"At Chipotle, we evaluate the hours of operations at our locations on an ongoing basis and adjust to a later closure in select restaurants when it makes sense for the trade area," Laurie Schalow, chief corporate affairs officer for Chipotle, said in an emailed statement.

Representatives of the other of the companies mentioned in Placer.ai and Stephens' research did not respond to messages seeking comment.

The move to late-night dining also represents a return to normal, said Joshua Long, restaurant analyst for Stephens.

Many restaurant chains shortened operating hours at the height of the pandemic in the face of staffing troubles and a changing consumer behavior.

"Part of this is a function of getting to where it was pre-COVID," Long said.

Wendy's in particular is making late-night dining a part of it's post-pandemic strategy, he said.

"Wendy's has been really leaning into late night and that opportunity to regrow sales," Long said.