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American Express (AXP) has gone all-in on dining in an effort to attract younger customers. Now, millennials and Gen Z are among the company’s most loyal cardholders.
When Amex began its foray into the restaurants and events space with its acquisition of reservations platform Resy in 2019, it kicked off a refresh of its offerings. In July, it added luxury options with its purchase of premium reservation platform Tock and mobile payments company Rooam.
This business model is paying off, especially when it comes to younger cohorts, the company said when reporting its third-quarter results Friday. In the three months ended Sept. 30, 80% of new Gold card accounts were opened by millennials and Gen Z. The card also saw 30% higher uptake than the company’s Platinum card.
“The strong early results we’re seeing from our product refreshes reinforce my confidence that we’re investing in the right areas to enhance our value propositions and meet the financial and lifestyle needs of our customers,” chief executive Stephen Squeri said in the earnings release.
The company said it has seen strong customer retention, with new millennial and Gen Z customers staying loyal to their Amex cards more than older generations.
Amex unveiled a refreshed Gold card in July of this year, including new dining credits for spending at U.S. Resy restaurants and Dunkin’. The card has an annual fee of $325, offering 4x points on dining and at supermarkets and 3x points on travel.
Millennials and Gen Z use their cards for dining nearly twice as much as other cardholders, the company said, including making up a higher share of reservations through Resy than any other generation.
Overall, millennial- and Gen Z-billed business growth jumped 12% — the highest of any generation (but still a percentage point slowdown from the prior quarter). That metric refers to transaction volumes on payment products issued by Amex.
Squeri said the company sees its strategy of luring in younger cardholders as a long-term investment.
“These are cohorts that will continue to grow with us, that will see an uptick in organic spending over time, that will wind up being upgrading from a Green to a Gold, a Gold to a Platinum, and so forth,” the CEO said. “And so, you know, once again, I think that we’re really laying the foundation with the investments that we’re making for strong growth going forward.”
Shares of Amex fell 5% Friday morning after slightly falling short of analysts’ overall revenue expectations. The company reported a record $16.6 billion in revenues for the quarter, up 8 % year over year.