To fill vacant restaurant space with new dining concepts, owners need more than foot traffic data – Commercial Observer
The pandemic has been particularly hard on the restaurant industry, from national chains to local mom and pop operators. While some have been able to adapt to changing consumer preferences for takeout, curbside and delivery, others have been left without customers and forced to close.
With so many restaurant closures, many consumers no longer have a favorite restaurant, and many centers no longer have dining options that generate desirable foot traffic. What can landlords and owners do to attract new restaurants to their centres?
“By introducing an entirely new restaurant chain or new-to-market dining concept, commercial property owners and owners can keep consumers coming back to their centers,” said Scott Jana, senior vice president and head of platform sales for Buxton, a consumer analytics technology company based in Fort Worth, Texas.
Buxton’s platform consists of three innovative and complementary apps that combine demographic, psychographic and location information to give real estate executives insight into the true performance potential of their properties. With information from Buxton, landlords and developers have the information they need to make smarter decisions about new and existing tenants.
“The new dining options will act as a differentiator, drawing consumers to the center and hopefully restoring foot traffic to pre-pandemic numbers or better,” Jana said. “The question is: which restaurant concepts will be most successful in your centre? You need more than foot traffic data to answer this question. You need consumer intelligence data. »
Americans miss restaurants
More than half of restaurateurs said it would take a year or more before business conditions return to normal, according to the National Restaurant Association. Food and labor costs are significantly higher, reducing profit margins. However, there is a huge pent-up demand among consumers who have missed dining out and are now trying to catch up.
While the restaurant industry is expected to hit $898 billion in sales in 2022, most restaurants have yet to experience a full recovery in sales to pre-pandemic levels. More than 60% of operators said their sales volume in 2021 was lower than in 2019, according to a January 2022 survey by the National Restaurant Association. Only 25% of operators reported an increase in same-store sales between 2019 and 2021.
The association’s survey found that the vast majority of operators in each of the six major restaurant segments reported a decline in same-store sales between 2019 and 2021. (For reference, the segments are family restaurants, restaurants dining, fine dining, quick service, quick casual and coffee/snack restaurants.)
About seven in 10 operators in each of the three full-service segments said their 2021 sales were down from 2019 levels, while nearly six in 10 operators in the three limited-service segments reported similar results. .
“The two most important drivers of sales are convenience and socialization, but there will always be a tug of war or balance between the two,” said Hudson Riehle, senior vice president of research for the National Restaurant Association. “Nevertheless, consumers will still want to visit restaurants, whether for the dining experience or to celebrate a special occasion. The industry, which has shown that it is resilient and capable of meeting any challenge thrown at it, will adapt to any operating environment it faces.
Fierce competition for restaurant tenants
Overall, landlords have tried to be flexible with their restaurant tenants by offering reduced rents and rental abatements. Many have gone the extra mile to help these tenants by adding outdoor seating areas and patios to accommodate diners who aren’t yet ready to eat inside.
It’s a smart move – the NRA survey found nearly four in 10 consumers say the availability of outdoor seating would make them more likely to choose a restaurant over a similar one. Additionally, about half of U.S. restaurateurs believe the availability of seating on a sidewalk, parking lot, or street will become more common in their segment this year.
Restaurants have more choice than a few years ago, which means landlords and landlords will have to be even more persuasive and persistent when looking for new tenants. And they need to be able to demonstrate that their center is a perfect fit for these expanding restaurateurs.
Many national and regional fast food chains no longer want online space, but prefer visible locations – usually endcaps and outparcels. Of course, there’s a limited amount of this type of space, so these chains either pay top dollar for their ideal space or they’re looking for the next best thing, which creates an opening for landlords who have vacant online space. .
“For owners and owners, the competition for new restaurant concepts is fierce,” Jana noted. “When it comes to finding space today, restaurateurs can be difficult. Consumer intelligence can help landlords and owners make the case that their center is the best place for these operators to open a new location. »
Many new and expanding restaurant concepts
For owners facing a rise in pandemic-induced online vacancies, the good news is that there are many new and expanding restaurant concepts, both company-owned and franchised.
Chipotle Mexican Grill, for example, recently announced plans to expand 7,000 units in North America. It targets small towns, those with around 40,000 or more residents, because they offer a “better” unit economy than traditional Chipotle locations.
“While many real estate owners have more vacant space than they want, this is a great opportunity to create excitement in their centers by opening a new restaurant or two,” said Tim White, vice -Senior President of Sales at Buxton. “There are many exciting brands that are introducing people to new cuisines or expanding into areas where dining options are limited.”
Two examples of brands bringing new flavors to American palates: Marugame Udon, the world’s #1 udon concept, and Koibito Poké, the fast-casual concept known for its award-winning, build-your-own Hawaiian poke bowls.
Marugame Udon currently operates restaurants in Hawaii, California and Texas and plans to expand its company-owned stores, as well as its franchise operations. Likewise, Koibito Poké is looking to expand its footprint across the United States. It recently partnered with True Capital Partners to expand with over 300 locations in eight states. The company expects the first 120 stores to be up and running within the next 24 to 30 months thanks to the new partnership.
“The benefits of bringing new channels or concepts to your center are pretty obvious, but at the same time there are some risks,” White pointed out. “Because these new concepts have a limited track record, owners must look to consumer intelligence to determine whether these restaurant brands will be successful in a particular location. Without this data, owners make uneducated decisions and put their centers and all their tenants at risk.”
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