Food and beverage tenants to be main anchor tenants
Large destination shopping centers can benefit from creating dining destinations, according to the ICSC report The successful integration of food and beverage within retail real estate.
As spending shifts from transactional to experiential food offers, food and beverage (F&B) is growing in importance to retail real estate. In some regions of the United Kingdom, Canada and the United States, the amount of space in properties dedicated to F&B is forecast to reach up to 20 percent or more of total space by 2025 (and it could surpass 30 percent in Asia).
In the United States, sales at restaurants and bars overtook spending at grocery stores for the first time in March 2016.
The ICSC report notes F&B can act as an anchor in retail centers.
An ICSC consumer survey conducted in March 2017 in the United States shows that 66 percent of mall visitors say the F&B offer is important to them when choosing a center to visit. About 55 percent of mall visitors visit these establishments when they go to malls. Compared with five years earlier, 34 percent of mall visitors who eat/drink there say that the amount of money spent per visit at food and beverage increased; 44 percent responded that the amount has stayed the same; and the balance (22 percent) said that it decreased. Another survey highlighted that full-service restaurant gift cards remained the most popular cards received during the 2016 holiday season — demonstrating how important this sector is at any given point of the year.
The biggest challenge for landlords is to understand how their support for restaurant operators differs from their responsibilities to traditional retailers.
There is a general consensus from landlords that, while there are clearly frontrunners and landlords who understand the requirements of food service operators, the industry remains at the beginning of a journey, and there are many lessons to be learned.
For example, as with retailers, the surrounding trade area and infrastructure are important determinants for food service operators when defining their location strategies. The attractiveness of a shopping center to each food service category will vary and depend on the specific local trade area and shopper characteristics.
Another challenge is for leasing teams to keep informed of the latest gourmet trends, find the right tenants, with the right blend, and put them in the right areas of the center, to satisfy customer needs, keep tenants happy and ultimately drive the right levels of rental income. For landlords, it is a question of balance, and ensuring, as with traditional retail, that there is enough food service quantity and variety to meet customer needs.
In the United States, for example, every landlord currently wants a Cheesecake Factory and/or a Shake Shack. As Suk Singh, chief development officer at Bloomin’ Brands, commented, “No other operator does the volume that Cheesecake Factory does. Cheesecake Factory offers a big menu with real variety. The price points are higher than many of the diners there are used to, but the quality and the portions are so large that the average diner feels like they’re getting value for their money.”
At the same time, in common with other countries, many of the traditional national chains in the United States are starting to feel tired, and lack the high-end décor, excitement and entertainment that modern diners are craving. On top of this, landlords need to factor in the tastes of the millennials, who are seeking local and authentic restaurants with fresh concepts and great service.
To read the whole report, click here.