New CBRE Report Identifies Emerging Food Concepts Poised To Take Off
Food-and-beverage outlets are now among the fastest-growing categories in retail centers, according to a new CBRE report that identified four innovative eatery formats poised for significant expansion: food trucks, food halls, celebrity-chef restaurants and “grocerants.”
The report underscored booming growth in restaurants. Total US restaurant sales surpassed grocery sales for the first time last year, according to government data, and have fared better since the recession ended than any other retail category. While Millennials dine out more often than other age groups, the older generation spend more overall in restaurants, which implies continued restaurant growth as Millennials age and their incomes rise.
These factors and others suggest a fundamental shift in American dining and spending habits, rather than a post-recession recovery indicator. “San Diego has a great selection of unique restaurants and craft brewers, and we have seen a trend towards more authentic, one-off restaurants,” says CBRE SD VP Carrie Bobb. “Restaurants set the tone for great retail spaces with their patios and outdoor space. They are scaling down into smaller spaces with larger outdoor footprints, becoming the new anchor and setting the stage for the overall retail experience.”
Restaurants are the new shopping center anchor, says CBRE EVP David Orkin, restaurant practice leader. Retail center owners are not only focused on traditional, proven restaurant concepts, they are wiling to embrace a broader range of emerging and, in some cases, untested concepts like food trucks, he says.
Led by David, a team of CBRE restaurant experts identified up-and-coming restaurant formats likely to drive the category’s further expansion in retail properties, because they have attributes that appeal to modern diners and shoppers: diversity, convenience, uniqueness, relative affordability and experiential focus. Here’s their analysis:
Food Trucks: While food trucks don’t usually pay traditional rent, they attract shoppers to a center and sometimes serve as incubators for new restaurant concepts that later become brick-and-mortar tenants.
Food Halls: This urban retail format features a changing mix of local and often independent food-and-beverage outlets that collectively add to the center’s atmosphere and uniqueness.
Celebrity-Chef Restaurants: While often expensive and risky to establish in a center, restaurants helmed by well-known chefs can be significant, exclusive traffic generators for a property when successful.
Grocerants: Grocery stores that offer prepared foods and made-to-order meals provide a mix of freshness, convenience and affordability that prove attractive to shoppers and, by extension, property owners.
David says cultivating these formats can be risky for property owners. Restaurants, especially new, independent establishments, have a notoriously high failure rate and usually require property owners to contribute substantial capital to outfit a space for restaurant use.
CBRE’s head of retail research, Melina Cordero, says there’s movement away from the traditional tenant-landlord relationship toward financial partnership with restaurant owners. “That’s something that landlords are going to have to be open to if they are pursuing some of these categories,” she says. In many cases, their ability to create an atmosphere that attracts customers makes the investment worthwhile.