Restaurants Helping Retail

by Katie Lee

— By Scott Benson —

No longer an afterthought, food and beverage is taking up more space in the retail landscape than ever before.


The ways in which consumers choose to spend their time and money are changing and so must the industries that serve them, and the food and beverage industry is no exception. Food and beverage is flourishing in a time when many traditional retailers seem to be treading water. People are dining out more than ever — the average American household spends approximately $3,365 per year at restaurants — causing restaurants of all shapes and sizes to move into retail centers that were once dedicated solely to shopping. These days convenience is key and placing these foodservice establishments in close proximity to shopping and entertainment centers provides a one-stop destination for consumers with busy lifestyles. Approximately 25% of retail sales in the U.S. comes from the food and beverage industry, which means if landlords aren’t keeping up with the growth of the sector they will quickly be left behind.

Scott Benson, Metro Commercial

Perhaps the biggest shift in the food and beverage industry is the idea that one is going to a place to have a meal versus going to a place to experience a meal. Experiential dining, where ambiance and presentation count, is taking over and consumers are demanding more to earn their business and loyalty. With social media at the epicenter of daily life for many up-and-coming spenders, Instagram-worthy food and atmosphere matter almost as much as the quality of the product. Starbucks touts the photogenic Pink Drink while Black Tap Craft Burgers and Beer and Barton G. continue to wow guests with over-the-top desserts and food presentation. Some call it a gimmick, but the reality is that delivering shareable content to consumers ultimately helps develop brand equity. With this change in direction and focus, customers have a wide variety of options, making the food and beverage landscape more competitive than ever. As the industry becomes more crowded, food and beverage retailers must reevaluate what will allow them to stand out, and one of the biggest ways to gain a competitive edge in a crowded industry is to occupy a space that is situated in close proximity to other popular retailers.

Savvy shopping center owners are pursuing food tenants because they know they’re going to drive a steady number of additional vehicles to the property that traditional retail isn’t bringing in anymore. In newer developments, owners and developers are putting food and beverage tenants in place early to fill parking lots and attract traditional retailers to set up shop in the development. Owners recognize that food and beverage tenants are drawing customers to the development, and traditional retailers are hoping to make the conversion between secondary foot traffic and in-store purchases.

While landlords are diligently working to attract new food and beverage tenants to their shopping centers, keeping a good mix remains a key aspect to any center’s success. There should be a focus on creating a diverse combination of tenants while keeping in mind existing tenants’ exclusive covenants in their leases to prevent overcrowding of parking lots or direct competitors taking away from their market share. It’s important to take these possible conflicts into consideration, whether it means keeping the existing tenant in place or replacing them with a more suitable option.

While shopping centers are certainly becoming the go-to location for restaurants, they are not the only option. Traditional retailers are fighting back in the e-commerce takeover of the industry with an “if you can’t beat them, join them” mentality. While Nordstrom started incorporating restaurants in its stores nearly 40 years ago, other upscale, specialty retailers like Restoration Hardware and Crate & Barrel are jumping on board with the food and beverage boom. In Restoration Hardware’s Meatpacking District store it currently operates three drinking and dining options on the premises: RH Rooftop Restaurant, Rooftop Park and Wine Terrace, and RH Barista Bar. Crate & Barrel recently opened The Table at Crate in its Oakbrook, Illinois, location where customers can shop the restaurant while enjoying a meal. According to Food and Wine Magazine, Crate & Barrel’s CEO Neela Montgomery said the restaurant “ties into their customers’ love of entertaining” and it “is an opportunity to give them an immersive brand experience.”

It’s clear that retail is in the midst of a transformation. It is no longer enough to occupy a space to sell products. Today’s consumers expect more — more convenience, more experiences and more options. While brick-and-mortar retailers and landlords look for more creative ways to “Amazon-proof” their businesses and drive foot traffic into their shopping centers, incorporating food and beverage options into the shopping experience seems to be a large part of the movement.



— As vice president of brokerage services for Metro Commercial, Scott Benson represents tenants on a regional and national scale. Active clients include Edge Fitness, honeygrow, ATI Physical Therapy, Oak Street Health, Drive Shack, Krispy Kreme, Geico, Goldfish Swim School and Miniso. In addition, Benson represents numerous regional and institutional owners on a project leasing and sales basis. Some active owner clients include Brandywine Realty Trust, Brickstone Companies, Cedar Realty Trust, Kimco, International Financial Company, LLC, PMC Property Group, Ashkenazy Acquisition, Post Brothers, Blank Aschkenasy Properties, Tower Investments and Alliance HSP. 

You may also like