Shopping Center Business is the leading monthly business magazine for the retail real estate industry.
Issue link: http://shoppingcenterbusiness.epubxp.com/i/817746
RESTAURANT LEASING 212 • SHOPPING CENTER BUSINESS • May 2017 A s a hospitality restaurant consult- ing group that has a specialized niche within the real estate mas- ter planning world, we frequently receive inquires seeking advice on how to prop- erly plan for restaurants. Developing the right restaurant mix isn't simply bringing in the next hot local chef or building a food hall. It is about understanding the restaurant industry nationally, as well as locally, and more importantly, identifying a solid restaurant operator who will last out the terms of the lease. A 2017 Nation's Restaurant News special operator survey 1 showed that 42 percent of operators expected their cus- tomer traffic counts to be better than last year. When we compare this same statistic, during the same time last year (2016), 59 percent of operators indicated better traffic counts year over year. Even with this decrease in expected customer counts through the first quarter of this year, overall, trends and data indicate that customers in general are dining out more frequently and thus why owners and developers of malls, shopping centers and mixed-use projects are all looking toward restaurants to drive people to their de- velopments. Coupled with struggling re- tail sales and traffic counts, foodservice, restaurants and food halls have seemed to become the "silver bullet" or the next thing to put in every development. A recent report from ICSC indicates that overall foodservice GLA will in- crease from approximately 5 percent to upwards of 20 percent by 2025 2 . Keeping this in mind, developers need to better understand restaurants, their financing and operating metrics, demographics, market demands including the intense competition within restaurants, and gen- eral needs, such as parking, garbage and access, as well as the operator's expecta- tions for traffic and customer counts. To truly develop the right foodservice mix for your development it is important to understand how and why restaurants are different than traditional retail. First and foremost, restaurants are expensive to build and operate. A traditional restau- rant buildout can range from the low end Leasing To (Financially) Healthy Restaurants Restaurants and food-and-beverage users are hot tenants today, but not all of them are financial winners. Watching lease terms and clauses can aid owners when taking on the risk of a restaurant tenant. Jeffrey McNeal Irvine Spectrum Center in Southern California is significantly adding to its food offerings with its latest expansion. 1 Nations' Restaurant News survey, 2017 Operator Survey 2 ICSC Report, "The Successful Integration of Food & Beverage Within Real Estate," 2017