Food for thought
Published: 17 June, 2014
UK consumers are spending more than ever on eating out, and a tailored food & beverage offer is key to driving footfall and dwell times in shopping centres.
With the modern consumer hungry for convenience and for experiences, the shopping centre food & beverage offer has moved away from a cursory selection of fast food chains and towards the ideal of a wide and varied selection of casual dining concepts, and with the branded restaurant market predicted to grow from £16bn in 2013 to £22bn by 2018, it’s a trend that’s hard to ignore.
Creating an effective tenant mix is key to the success of any shopping centre and providing a varied catering and leisure offer is playing an ever-important role in a mall’s armoury with landlords reconfiguring space to accommodate F&B uses. But how is this trend likely to play out in the future?
“The right F&B offer is absolutely critical,” says Kate Taylor, associate director at Davis Coffer Lyons. “It does increase dwell time, it does increase spend, it does bolster shopping centres as a destination, it does support retail and it does give visitors an experience.
“F&B operators didn’t used to look at shopping centres but now any quickly expanding fast-casual operator wants shopping centre space – they’ve cottoned on to the tremendous opportunity offered by these environments,” she adds. “They want the footfall, and if there’s a cinema they want to benefit from the day to night offer. It’s a strength and it’s compelling.”
Last month, BCSC launched Food and beverage: A solution for shopping centres? A report that aimed to establish whether there is a link between F&B and an increase in footfall and spend and to dispel myths about the tendency for landlords to think of F&B as a foolproof solution for bringing down vacancy rates.
The report’s analysis of floorspace data indicates that 8 per cent of units within shopping centres are allocated to F&B usage but that this proportion rises in large destination centres to around 15 per cent.
The report suggests that adding F&B without a coherent strategy can lead to a less than optimal overall offer that, rather than being supportive of retail, can distract consumers and reduce the amount of time spent shopping overall, pointing to a need for better integration of F&B into a centre’s overall offer.
“Looking back a few years, most centres had 3 per cent F&B or less, now it’s more common to make up 10 per cent plus,” says Taylor. “There has been a bit of a rush towards it but it needs to be well thought out and appropriate; make sure it’s kept at a sensible and sustainable level. If you cannibalise the offer, you will end up with more voids.”
While recent research from CACI showed a strong link between retail spend and catering options, evidence in the BCSC report suggested that while F&B may increase dwell time, it does not directly impact on dwell time in retail units, and that in some cases there is a substitution effect with customers replacing a trip to a retail unit with a food operator.
CACI’s findings are based on 170,000 exit interviews with shoppers in over 100 retail centres across the country as part of its annual Shopper Dimensions report. The research showed that the average spend on catering increased by 9 per cent between 2012 and 2013, and that consumers who use catering spend approximately 48 per cent more on retail goods than those who don’t.
Interestingly, the research also reveals that the different types of catering outlets available to shoppers strongly influence how much they spend. Casual dining restaurants such as Nando’s, Frankie & Benny’s, Wagamama and Pizza Express contributed to the biggest growth in spend, with cafes second over destination dining and fast food and takeaways.
“The shift in catering behaviour seen in our research shows the growth of shopping as a leisure activity and emphasises the importance for retail centres to provide a fully rounded experience encompassing destination retail, high quality catering and a good leisure environment,” says Alex McCulloch, principal consultant at CACI. “The centre that gets a shopper to pause and engage with catering is the centre that sees a significant increase in spend across all retail and ultimately a happy shopper.”
When it comes to location, the BCSC report found that retailers and most F&B operators want food service within centres to be concentrated in a specific area with food hubs preferred for practical reasons and because the synergy between different operators creates an overall impression of variety and choice, often becoming an attraction in itself.
“Historically restaurants couldn’t compete with retail rents and they’d often be shoved up on the third floor. Westfield London changed all that with the café court, it was right in the heart of the scheme, a real feature and a point of interest,” says Taylor. “When leasing, they weren’t looking at traditional food court restaurateurs, they wanted express formats – places where people could expect food cooked to order but also get quick service. Westfield went out to find what they wanted and asked operators if they could deliver. It’s been a fantastic success, and now any operators coming up with fresh concepts will be courted up and down the country. Operators understand that landlords are pushing for a point of difference, and that will benefit us all.”
Taylor says F&B is generally better in a prime location, but she says there is also an argument for placing catering units in zones based on their fit with the surrounding retailers and the type of people likely to shop there.
“If you don’t go down the F&B ‘hub’ route, choosing catering operators that suit a specific zone allows you to tailor the brand not only to the personality of the centre and the demographic but to the specific environment,” she says, adding that there is also an opportunity for caterers to trade from mall kiosks. While they have to be innovative in design and the way they cook it can work, with brands like YO! Sushi taking space on the malls where it benefits from footfall and visibility.
And she adds: “Higher end F&B concepts aren’t necessarily going to drive footfall into stores but it’s another string to the centre’s bow, and an opportunity to create a really interesting point of difference; there is a place for everything if the audience wants it.” But she warns: “It shouldn’t be so much of a leisure experience that it detracts from shopping, there should be a balance.”
Land Securities’ Trinity Leeds is one example of a centre that has pushed the F&B boundaries. The decision to increase the centre’s catering offer from 13 to 24 per cent with the creation of a dedicated food hub came late in the build process.
Trinity Leeds’ 20,000-sq ft food hall features seven permanent restaurants representing a range of emerging catering brands - Vietnamese noodle bar Pho, Chicago Rib Shack, PizzaLux, burrito vendor Tortilla, Chip + Fish, Notes Café and 360 Champagne & Cocktails – all of which were new to Leeds and for the majority, their first foray outside London, along with five rotating pop-up restaurants.
With an established portfolio, intu has also been quick to react to consumer appetite for catering and leisure. While 11 per cent of its rent comes from food and leisure operators, its £1.2bn pipeline of development projects over the next ten years includes plans to create 1.5m sq ft of catering and leisure space – an 80 per cent increase on the portfolio’s provision today.
Projects include a new food court at intu Lakeside, a new dining quarter at intu Eldon Square, a major leisure destination in the heart of Watford, and a street food concept at Midsummer Place.
“We aim to provide the best places to shop, eat, drink and be sociable and to bring people from further, for longer, more often,” says intu’s asset management director, Julian Wilkinson. “Our research shows that those who eat or drink at one of our centres stay much longer and spend significantly more than just the extra dining expense; in 2013, around a third of visitors chose to dine and the amount they spent on catering rose by nine per cent, on average.”
Southside in Wandsworth has dramatically increased its catering offer in recent years, shifting its previous reputation for coffee shops and pre-cinema fast food to make it one of South West London’s fastest growing leisure hubs. Starting with a limited catering line-up, more than seven new operators have opened at the scheme in the last 24 months - both in external facing units created as part of a wider development, and the existing internal dining concourse.
“With Wandsworth’s predominantly ABC1 catchment, we recognised the lack of an appropriate F&B provision for our increasingly affluent customer base, and saw an enhanced offer as a means of attracting these consumers, increasing dwell time and improving the evening economy,” explains Helen McVie, retail asset manager at Delancey. “The centre is anchored by a 14-screen Cineworld cinema so already had a reputation for leisure. However, with limited dining to complement this, we wanted to find the right mix of restaurants to help position Southside as a full day destination.
“We have worked to highlight the strength of the catchment and have adopted a tailored approach to targeting operators with more family friendly and mid-market dining concepts. As Southside was previously an internal facing scheme, it was also important to shift the perception of those who would not usually visit the centre. To facilitate this, we are part way through a phased £50m investment programme along Garratt Lane to create 155,800 sq ft of new street facing retail, modern and bright restaurant units - complete with outside eating space - and a 81,880 sq ft Debenhams department store. Phase one is now complete and this is having a significant impact on the centre, with a number of new restaurants opening over the last year including Wagamama, Rossopomodorro, Chimichanga, and GBK.”
The Kingfisher in Redditch is another example of a centre redeveloping space to house catering and leisure tenants. The centre was acquired by Capital & Regional and Oaktree in 2012 with a strategy to reposition the 1m-sq ft centre and to better meet the needs of the surrounding catchment. Its new 35,000-sq ft leisure development, The Hub, forms part of phase one and features four new restaurant units – let to Nando’s, Real China Buffet and a London based American diner with strong interest in the forth - as well as a rebranded seven-screen Vue cinema and a 16,000-sq ft Pure Gym.
“F&B is now much more a part of the thought process when it comes to a shopping centre’s offering,” says Taylor. “Attracting operators often comes down to offering optimum unit sizes so maintaining flexibility is absolutely key. This industry moves on constantly, and landlords need to future proof by creating units to suit the operators of tomorrow, not just today.”
BCSC’s report concludes that while F&B isn’t a solution to all problems facing retail property, it can contribute to the future shape of the industry.
“Centre owners have realised that they are moving away from a model where the shopper is merely refuelled to one where F&B adds to the overall experience of the centre and helps to build engagement and loyalty”, the report reads. But while there is no doubt that F&B will continue to increase in importance and provide a crucial element in drawing visitors to shopping locations, it may be a few years before the industry will be able to accurately examine the impact of the recent boom of F&B within retail.
“I don’t see the F&B trend reversing,” concludes Taylor. “There’s been so much innovation and change within the last five years, and it will keep on evolving and improving. Operators are coming up with interesting ideas and pushing the boundaries to create that excitement and buzz, and that’s absolutely fantastic.”