REAL ESTATE

As fast-casual segment grows, restaurants get aggressive by re-thinking real estate strategies

BY CSA STAFF

By Carrie Smith, [email protected]

It is undeniable that fast-casual restaurant chains in North Florida and South Georgia are resuming their expansion plans. The local unemployment rate ended 2013 under 6%, home building permits jumped nearly 30%, and car sales climbed — all signs of an improving local economy.

As the outlook brightens, another business trend is taking place: Restaurants are right-sizing. Store owners and operators are becoming more efficient, creating opportunities for landlords who are able to reconfigure their spaces to meet this new market dynamic.

The Silver Lining
Consumer demand dropped dramatically and lenders were reluctant to finance businesses. Many tenants and landlords put plans on hold during the recession, which curtailed franchise, corporate restaurant and retail expansions.

NPD Group, a global market research company, reported that while consumers remain cautious about spending, fast-casual and quick-service restaurants anticipate achieving the same, if not more, success in this year than in 2013. The research firm predicts that fast-casual chains will grow an average of 10% annually through 2017.

That’s good news for landlords that have lost tenants or struggled to fill vacant spaces. In Jacksonville, Panera Bread began signing leases after a year hiatus, Tijuana Flats set the stage to grow in Savannah, Ga., and Seasons of Japan expects to expand after opening in St. Johns Town Center in suburban Jacksonville.

Finding the Right Footprint
As the number of fast-casual restaurants grows, the spaces they lease are shrinking. Bono’s Pit Bar-B-Q is one of a number of fast-casual chains that is reducing its footprint. The company, which is based in Jacksonville, Fla., is shrinking its typical store from 5,000 sq. ft. to half that size.

Similarly, Panera Bread is moving from 6,000 sq. ft. to between 3,500 sq. ft. and 4,000 sq. ft. Red Robin Gourmet Burgers, whose full-service restaurant occupies 5,800 square feet, is rolling out a 4,000-sq.-ft., fast-casual version and a branded Red Robin’s Burger Works that occupies only 2,200 sq. ft.

Why? First, to control real estate and labor costs. Second, to stay competitive. The average check at a fast-casual restaurant averages more than $9, but operators can’t push that figure much higher without experiencing backlash from consumers who are now more inclined to bring their lunches to work. If prices can’t go up, costs must come down.

At the same time, the newest entrants in the fast-casual category are starting small and lean. Lime Fresh Mexican Grill, which doubled its number of locations in 2011, occupies 1,800 sq. ft. to 2,800 sq. ft. Umami Burger, which was second in growth according to Technomic, can occupy as little as 1,000 sq. ft.

Uncle Maddios, a pizza restaurant where consumers create their own pizza, opened its first location in Tallahassee last year and is looking for opportunities between 2,200 sq. ft. and 2,600 sq. ft. Burger Fi will open its first location in Jacksonville at the St. Johns Town Center this year, with plans to expand further, which is in the 2,500 sq. ft. and 3,000 sq. ft. range.

Smaller spaces require fewer employees to operate, which helps chains compete against established names such as Pei Wei, the fast-casual version of P.F. Chang’s. For example, Famous Dave’s BBQ Shack opened its doors in 2012 with a 3,000-sq.-ft. layout that’s half the size of its full-service affiliate.

Finding Space Solutions
Smaller footprints are ideal for inline spaces but can be a headache for shopping center owners trying to reconfigure a vacant, standalone restaurant of 5,000 sq. ft. or more. When our brokers meet with landlords, the conversation begins, “How can we cut up the space so that we can entice two or three tenants?”

The answers bubble up as we explain that fewer chains are taking 5,000 sq. ft. to 6,000 sq. ft., so finding another restaurant for the entire space is less likely than it was five years ago. Then we move to a discussion about marketing to tenants that complement, not compete with, each other.

In recent months, our brokers have helped convert a former Bennigan’s into two restaurants. They are doing the same thing with a closed Perkins Restaurant & Bakery. One option is putting service-oriented retailers, such as a dentist or optometrist, next to a restaurant to alleviate parking space shortages.

Solutions like these enable clients to adjust to new market dynamics. As we focus on inventive ways to use and re-use space, they will be able to attract the newest and best fast-casual tenants, driving traffic to their centers and offering consumers new, attractive dining experiences.

Carrie Smith is Regional Managing Partner in Franklin Street’s Jacksonville office, specializing in retail tenant and landlord representation throughout North Florida. She can be reached at 904-271-4120 or via email at [email protected].


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News

American Greetings appoints new CFO

BY CSA STAFF

American Greetings has promoted Gregory Steinberg to CFO, effective March 1. Steinberg was most recently the company’s corporate treasurer.

He will be responsible for all finance functions at the company. The previous CFO, Stephen J. Smith, recently resigned to accept another employment opportunity.

"We are very pleased to promote Greg to the role of CFO. Greg has already demonstrated leadership in leading our organization through complex transactions, managing key stakeholders, and we are confident that this transition will be seamless,” said co-CEO Zev Weiss. “In addition, we have a very talented and experienced finance team that will support Greg and the rest of the organization. Steve Smith has been a valued member of the management team over the past decade. He will be missed, and we wish him well.”

Steinberg has been the corporate treasurer at American Greetings since 2006 where he was responsible for managing relationships with lenders and rating agencies to ensure the company’s access to the capital markets. As treasurer, he oversaw the company’s global cash management, foreign exchange, risk management and various financial planning and analysis functions. He also plays a key role in M&A activities including the acquisitions of Recycled Paper Greetings, Papyrus and the recent management led buyout of American Greetings.

Steinberg previously served as the executive director of investor relations, assistant treasurer and has held a number of other positions in the credit, finance and treasury operations of the company since first joining American Greetings in 1996. He started his career in finance at Western Management, a management company for a diversified portfolio of businesses in the auto industry, was a finance instructor at a local college and was assistant treasurer at GrafTech International, a developer and manufacturer of graphite and carbon material solutions.

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FINANCE

Walmart acquires tech startup Yumprint

BY Marianne Wilson

San Bruno, Calif. — WalmartLabs, Walmart’s online and digital development division, has acquired Seattle-based recipe technology startup Yumprint to expand its online grocery delivery services.

Yumprint has a website and mobile app to search and discover new recipes from thousands of food blogs, plan meals and calculate nutritional information.

In a blog post, WalmartLabs credited Yumprint founders Chris Crittenden and Wes Dyer for their vision on how technology can improve how “all of consumers discover and prepare our meals.”

“Chris and Wes’s ideas and ambitions for transforming the grocery shopping experience match the global opportunity Walmart enjoys in this space, and their accomplishments with Yumprint just scratch the surface of what we’re going to do next together,” wrote Ben Galbraith, VP of global products, WalmartLabs, in the post continued.

"Bringing Yumprint into the Walmart family will help customers more easily make shopping lists from their recipe finds before they shop," the retailer said in a news release.

WalmartLabs has made several acquisitions over the past year, including Bay Area startups OneOps and Tasty Labs. The retailer recently also opened a new e-commerce tech center in Sunnyvale.

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E.Wendell says:
Mar-05-2014 11:36 am

I think their presence Chris
I think their presence Chris and Wes’s in the walmart solution development team will help them to improve their eCommerce services significantly.

E.Wendell says:
Mar-05-2014 11:36 am

I think their presence Chris and Wes’s in the walmart solution development team will help them to improve their eCommerce services significantly.

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