REAL ESTATE

Restaurants Setting a New Course

BY Jeff Green

One of the most fascinating developments over the last several years in our industry has been the explosion of new and different types of dining concepts. And it’s not only the restaurants chains evolving and emerging, but also about the way that dining preferences are changing. I suppose it’s a chicken-or-the-egg situation in regards to which development prompted which, but there is no doubt that the success of a new generation of innovative alternatives (and the comparatively poor performance of a number of iconic brands) is being driven primarily by consumers who are tired with stale choices and want something new from their dining experience.

Today, I see many of the customers that previously would have gone to full-service dine-in restaurant chains like Oliver Garden, Red Lobster, Cheesecake Factory and Chili’s migrating over to fast-casual concepts or more unique dining experiences. Names like Café Express, Chipotle and Potbelly are on the rise. While there is obviously variation within the fast-casual category, these restaurants tend to be more affordable, to serve a fresher, healthier assortment of menu items, and to prioritize convenience over the bells-and-whistles associated with a more formal dining experience in a full-service restaurant.

Within the fast-casual segment, there are some distinctive and successful sub-categories, perhaps most notably the fresh sandwiches/bakery concept. With names like Corner Bakery, Panera and Paradise Bakery all continuing to expand significantly throughout the U.S., I wonder if these fresh bakery concepts are filling a niche that was formerly the exclusive territory of Bruegger’s Bagels and Einstein Bros. Bagels.

Another growing category is the “breastaurant” (an industry term coined in the 1990s as Hooters gained popularity): bar and pub-style eateries such as Twin Peaks and Tilted Kilt. While still a comparatively small piece of the overall marketplace, I suspect that these themed concepts are siphoning off some business directly from the more established chains.

Maybe the most interesting development is the explosion of local and independent chefs throughout the country coming up with their own unique concepts and growing them into local and regional chains. The Fox Restaurant Group and its True Food concept out of Phoenix, for example, offer a range of fresh, vegan and gluten-free choices, and have now opened restaurants from Boston to Los Angeles.

The big question of course, is why? What has made consumers shift away from established chains and toward these growing segments? Part of it is economic — consumers excited to eat out more often at a lower price point — and part of it is almost certainly connected to the fact that these restaurants offer a more diverse array of options (often including fresh, organic and locally sourced ingredients) that are simply not available in many traditional chain restaurants. Chipotle, in particular, has made a point of highlighting its commitment to providing organic and locally sourced menu items.

Whether it’s freshness, value, variety, or a combination of different factors, the success of many of these growing brands is that they don’t feel like chains — more like the local sandwich shop or an independent artisan outfit. I don’t think it’s a coincidence that this segment has thrived as specialty food trucks have taken off: both allow people to eat out more while spending less, and to do so without feeling guilty about consuming fast food.

The other side of the coin, of course, is that there is only so much business to go around, and some established national brands are performing poorly. In particular, Olive Garden and Red Lobster are really struggling and Chili’s is closing some stores, largely because they are having trouble appealing to younger diners. While Applebee’s isn’t exactly setting records, it is doing better than some of its competitors, and I suspect that has to do with both a lower price point and a business/franchise model that often makes it the only game in town in many smaller markets. In addition to the fierce new fast-casual competition, I see the lack of innovation continuing to be a big problem for the established chains. There is a sense — particularly among younger diners — that the menu and the experience is stale or dated. If these restaurant icons are going to halt their slide, that will have to change.

From my perspective, the boom in fresh and affordable options is a great thing, no matter what your personal tastes may be, but it may make for a tumultuous few years on the real estate side as these changing trends solidify. Have your dining (and spending) habits changed in the last few years? How are these significant shifts affecting the retail real estate business? Join the conversation by adding a comment below, or by emailing me at [email protected].


Click here for past columns by Jeff Green.

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REAL ESTATE

Baybrook Mall’s Texas-scale expansion

BY Michael Fickes

Friendswood, Texas — The 1.2-million-sq.-ft. Baybrook Mall in Houston is getting another 550,000 sq. ft. The mall owner, General Growth Properties, and the landowner, a CDC Houston-managed entity, have formed a joint venture to carry out he project. Work will begin in early May and completed by the 2015 holiday season.

Except for outlet centers, few new shopping centers are going up today. As the economy continues to rebound, retailers are eager to open new stores in “A” locations, which, like Baybrook, are usually near 100% occupancy. Retailer demand, then, has sparked mall expansions across the country.

In an era of shopping center expansion, Baybrook’s half million plus new sq. ft. will likely rank as one of the largest.

The multi-million dollar Baybrook expansion will add more than 30 retailers, 10 restaurants and entertainment and hospitality venues to the property.

On the north side of the mall, a new 285,000-sq.-ft. lifestyle expansion connects to the existing property between Forever 21 and Dillard’s.

A 270,000-sq.-ft. power center will add a variety of big-box anchor tenants, restaurants and family-friendly activities.

To accommodate increased traffic, the expansion will also add a single-story parking deck.

The project includes the addition of a lawn the size of a football field. Envisioned as a gathering spot for the community, the lawn will provide benches and seating areas and offer play areas for kids and venues for events.


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REAL ESTATE

Brea Mall completes major renovation

BY Michael Fickes

Brea, Calif. — Simon Property Group and Brea Mall are celebrating putting the finishing touches on the renovation of the property with a special community event and a series of showcase weekends throughout April and May.

The renovation included redesigned mall entrances and new signage, flooring, landscaping, glass handrails and overhead lighting. The mall now displays updated textures, colors and amenities such as soft seating and charging stations.

A new Play Area has become a popular amenity for families. It features surrounding soft seating, a playhouse featuring a chalkboard, and various cars, boats and plane play fixtures inspired by the Simon Kidgits Club characters.

Brea Mall’s new family restrooms, which are also a hit, feature five changing stations, two nursing rooms, soft lighting and comfortable chairs, creating a cozy space where parents can feed children and relax. The family-style restrooms are located near the Play Area on the lower level.

Taken together, the upgrades have made Brea Mall a more contemporary and inviting shopping environment.

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