Food and beverage real estate trends

As stated in a new report, the U.S. restaurant industry and real estate are being reshaped by fundamental industry shifts, comprising the rapid growth of third-party meal-delivery services, growing acceptance of in-store automation, and the progressive proliferation of fast-casual ideas from CBRE.

CBRE’s report highlights eight trends, including the spread of small-format “eatertainment” concepts, to examine their impact on the food-and-beverage sector and real estate. Restaurants today account for 17% of U.S. retail sales beyond any other retail industry, and restaurant sales growth has surpassed overall U.S. retail sales profits in recent years.

“In today’s ever-changing retail landscape, it’s more significant than ever that retail center owners install in restaurants that impart well to the center’s environment and clientele,” said Carol Schillne of CBRE in Phoenix. “It’s no more just about creating a beautiful restaurant space; it’s regarding creating a space that brings the good type of energy to the center and keeps customers around long after they’ve completed their shopping.”

Following are a few of the eight trends reviewed in the report and their impact on retail real estate.

Delivery: The New Drive-Thru

Third-party delivery services are asserting a growing share of the meal-delivery market, to an anticipated 70% in 2022 from 58% last year, according to one measure. The restaurant industry, in turn, is testing strategies to reduce the cost of these services, which at times are high enough to make certain meal deliveries unprofitable for restaurants.

A feasible solution: alluring more customers to utilize restaurants’ in-house delivery apps, platforms, and services. Additional: Sharing more data about orders with third-party delivery services in exchange for revising the delivery price more in the restaurant’s favor.

With delivery service growing quickly, restauranteurs and chains are designing their locations with separate areas – and at times separate entrances – for meal pickup to avoid inconvenience to dine-in customers.

“We always hear that consumers crave experiences; plenty of restauranteurs have gone above and beyond to form unique, elevated dining experiences that resound with their customers,” said Kerry Linthicum of CBRE in Phoenix.

“But the customer experience expands far beyond the four walls of the restaurant; catering to consumers’ busy lifestyles by oblating delivery services or curb-side pickup spots are other easy ways in which restaurants can give their customers with an elevated experience even when they aren’t dining in.”

Tech Resets The Table

More food-and-beverage businesses embrace technology to rationalize their front-of-house services and better manage their back-of-house operations, like inventory. A latest National Restaurant Association survey concluded that more than half of restaurants answering planned to install more front-of-house tech, and many plan similarly for their back-end work.

Numerous national chains have installed hardware such as kiosks, tablets, and tableside ordering systems to automate their meal-ordering process for customers. It is expected that this technology will help restaurants rein in their labor costs and possibly reduce space dedicated to queueing customers expect to make their orders.

“Inserting a tech component to the restaurant experience creates an opportunity to enhance operations and concentrate more on customer interaction and overall experience while handling labor and inventory costs,” said Linthicum.

The Fast-Casual Frenzy

The fast-casual pattern – better quality fare than fast food, comparatively quick service, and lower prices than full-service restaurants – has mastered restaurant expansion in recent years. Almost four in five restaurants opened by top-500 chains past year were fast-casual eateries. The dare for retail-center owners will be to choose the right fast-casual operators for their center and avoid loading up on too many.

Entertainment Goes Smaller

Eatertainment ideas that combine food & beverage service with live and virtual sports already have populated many suburban malls and freestanding locations. Now various operators are testing smaller-footprint ideas to crack urban markets to capitalize on the constant customer traffic created by densely crowded populations of inhabitants and office workers. Topgolf, Dave & Buster’s, also Punch Bowl Social are within those testing with smaller formats.

“As densities grow and fewer large vacant retail spaces become available in premier retail centers, entertainment ideas are adapting to the spaces they find by reducing their footprints and tailoring their ideas to meet the demands of the center’s clientele,” said CBRE’s Schiller. “Finally, this approach creates a deeper sense of customer intimacy.”

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