Trends In The Evolution Of Food And Beverage Retail
We all love a juicy burger, craft cocktail and smooth cold brew coffee (though preferably not for the same meal). But it takes more than tasty food to succeed in eateries and drinkeries. CBRE pinned down some essential ingredients (get it?) in food and beverage opportunities.
Shoppers and tenants demand restaurant neighbors, but landlords must consider some serious costs and risks before capitalizing on the opportunities.
One such opportunity: backfilling empty anchor space with restaurants. But this kind of retail center evolution has challenges. Parking presents a problem for spaces originally designed for retail, not food service. A 6k SF retail center might require 30 parking spots, but the same size restaurant would require more like 125 spaces, CBRE EVP and restaurant practice leader David Orkin (above) tells us. Landlords need to ensure parking works for the new mix of tenants.
Plus, many prospective restaurants have weak or no credit and operational and build-out costs to add kitchens, ventilation systems and additional requirements can cost a pretty penny.
Though per capita spending is highest in San Francisco, Washington, DC, and Dallas, respectively, the biggest growth markets are secondary cities. CBRE's report says Minneapolis, Baltimore, Philadelphia, Detroit and other second-tier cities that have seen job, income and population growth are bringing home the bacon—or rather, eating it in restaurants more often and with a higher bill.
The top 10 cities for restaurant expenditure growth, in order, are Minneapolis, Miami, Dallas-Fort Worth, Philly, Detroit, Houston, Cleveland, San Diego, Baltimore and Seattle.
CBRE Americas head of retail research Melina Cordero (above) says these areas are benefiting from a "spillover" from higher-priced primary urban hubs.
Attracting and retaining talent—especially Millennial talent coming from large universities—is key to building population density and a consumer base that is willing and able to spend on retail, restaurant and other related goods, Melina tells us (and David agrees).
CBRE's latest food and beverage report also shows exactly which foodie formats are well-positioned for growth and how generations spend on food.