The impact of food outlets in shopping centres

19 February, 2019

 

The focus on convenience is more prevalent than ever, and with the depressing predictions of the decline in the British high street, shopping centres are successfully creating new and diverse spaces offering the consumer an array of choice in retail, leisure and food and drink.

 

Making the effort to go to standalone shops in different locations now seems to be a thing of the past and studies have shown that modern-day consumers are more attracted to the idea of a ‘one stop shop’ where all-day shopping can be  interspersed with breakfast, brunch, lunch and dinner.

 

The food and drink industry is starting to take full advantage of this potentially profitable opportunity and more and more restaurants, cafes and bars are positioning themselves amongst, what were considered previously, to be retail focussed areas.

 

The benefits of food outlets in shopping centres:

For the food outlet (the tenant):

  • Due to the ever increasing popularity of shopping centres, food outlets will undoubtedly see an increase in foot fall.
  • Shopping centres usually group food options together and so a food and drink tenant should benefit from the healthy competition of other food service providers
  • The activity generated by other retail tenants keeps restaurants busier and trading for longer and in particular during those ‘dead periods’ between traditional meal times.
  • Shopping centres are a captive market so the overall performance of a business is more predictable.

For the shopping centre (the landlord):

  • Foodservice attracts more visitors and therefore drives sales throughout the shopping centre.
  • Shopping centres can enhance their leisure offering and combine food with cinemas or entertainment centres to create more of a diverse and popular destination for shoppers.
  • Introducing food differentiates retail spaces from competitors and provides an overall attraction to the property by consumers.
  • Having a strong food offering can make leasing units to other tenants easier as more and more retailers will want to be a part of a successful shopping centre.

 

Points to consider when introducing foodservice to shopping centres

For the food outlet (the tenant):

  • Rental levels can be higher and additional costs such as service and maintenance charges should be considered.
  • The fit out costs may be higher as retail space might need to be adapted to accommodate kitchens, grease traps and ventilation pipes etc.
  • Food industry tenants should make sure that the unit has good access to delivery bays, lifts and refrigeration facilities. Food is arguably harder to transport and store than non-perishable goods.
  • Opening hours of the shopping centre could be restrictive and tenants should make a note of these. However, periods such as Christmas and extended trading hours during holiday periods will outweigh the negatives that these potential issues bring.
  • Leases are more likely to be for a shorter term meaning that there is more flexibility in not having to commit to lengthy agreements.

For the shopping centre (the landlord):

  • Landlords need to understand how the support for restaurant operators differs from retailers and it would be advisable to get to know the tenant’s business in order to make the food outlet a success.
  • Knowing the consumer and the community surrounding the shopping centre is important so that the food offering inside can be customised to suit market needs.
  • Keeping up to date with new trends shaping the food market will help in ensuring that the options available to the consumer remain current and that the consumer returns.
  • Clustering of food outlets can be important, but landlords need to have a strategic approach to avoid too much duplication or weakening of other brands.
  • Foodservice units have very specific requirements and landlords might consider contributing towards the tenant’s fit out costs as an incentive to attract a highly desired operator.

 

Foodservice is no longer just an offshoot of retail. It is now an increasingly important part of a shopping centre’s business model. A coherent strategy by both landlord and tenant will only result in the successful integration of food and drink within traditional retail real estate.