Restaurant revolution for property development

Gone are the days when catering in a shopping centre meant a solitary food court parked at the end of a mall, a cluster of kiosks selling chicken nuggets and fries and a dining area made up of plastic chairs and squirty ketchup bottles.

In today’s retail world, it’s a more serious business. So much so that the BCSC describes a properly managed food and leisure offer as “fundamental to successful retail destinations”.

BCSC executive director Edward Cooke says: “Catering used to be seen by landlords as an afterthought, with low-rent units churning out cheap plates of fast food in uninspiring surroundings, but not any more.” He says its research indicates that 70% of consumers view shopping as a leisure activity. “Creating the right mix of catering, cinemas and other leisure uses enhances the customer experience and gives another reason to make the trip to shop in-store rather than buy online,” he says.

Retailers, too, welcome the development. Among them is Jonathan Trepo, executive director for retail development of French fashion retailer The Kooples. “It’s a really positive trend,” he says. “Shopping centres are the most convenient way of shopping and you need good diversity in a centre to offer something really excellent to customers.”

The new breed of shopping centre is much more slick, and the food brands have upped their game to match. Well-polished operators are creating food empires, chains of restaurants, coffee shops and cafes planned to every detail, in carefully chosen locations at the core of centres and retail parks.

Restaurant revolution

So what’s changed, and what does the arrival of a new generation of caterers mean for the retailers that share the space with them?

Shopping habits have moved on, retailers have made leaps and bounds and property developers and agents have adapted their business to meet the growing demand.

“There’s a revolution going on out there at the moment,” says Hammerson catering controller and former restaurateur Sarah Fox. “People are more in the habit of eating out and they want to eat out when they go shopping.

“By creating some sort of leisure experience, landlords are creating time and space for people to interact with each other. It’s relaxing while you’re shopping.”

With more and more being spent online, the nature of the shopping trip has changed. When people do make the trip into town, or to a retail park, they want an experience, not just a physical alternative to the internet store.

You only have to look at Bluewater in Kent, which has embraced the foodie movement, to see what a well-managed catering offer can do for a scheme and its retailers. With an uplift of 24% in like-for-like food sales in December last year and a host of restaurants and cafes on the way, the centre is very much au fait with the trend.

Of course, the sceptical view is that as retailer demand for bricks-and-mortar stores shrinks, landlords are having to resort to plan B. But while the healthy appetite of restaurants and cafes for space is certainly a welcome relief, it’s not quite that simple. MMX Retail director Nick Symons explains: “Coffee and food isn’t just being used to satisfy the lack of demand, it’s more of a strategic requirement at the moment. I can’t think of a situation where putting a caterer into a centre has been because there’s no one else to do it. This is the new format, and it’s crucial to get it right for everyone’s benefit.”

Playing the game

The demand for space from retailers has dropped significantly as they seek to reduce their hefty property bills and trade more online. The restaurants and cafe chains such as Yo! Sushi, Carluccio’s, burger specialist Byron Hamburgers and Wagamama, already hardened property players, have taken full advantage.

Fox says: “There’s been a huge growth of restaurant brands which, 10 years ago, were in their infancy. Now they are large national brands. The big brands have shareholders who have expectations and they are having to expand.”

The landlords are happy for two reasons. The BCSC estimates as much as 10% of shopping centre space is now taken up by catering. If developers have made theircentre attractive enough they can enjoy a relatively healthy level of occupancy. And very often, the type of lease can work particularly well. Theo Fordham, head of catering and leisure at property agency Lunson Mitchenall, says: “The deals tend to be on a turnover rent and the turnover the caterers are taking in is pretty lucrative. Landlords are getting major income from catering.”

With the big catering players having now matured, the whole process is being distilled to a fine art. Caterers are now reaching the point that some of the big fashion and grocery brands have been at for a while.

“The formula for getting units rolled out is very well versed now,” says Fordham. “We know how we’re going to handle each aspect of the job. They’re taking smaller and smaller units because they’re becoming more efficient.”

In many ways, caterers are starting to think like retailers. They have learnt the same lessons when it comes to property expansion, and are even starting to design their units the same. Nigel Gillingham, partner at agency Bruce Gillingham Pollard, says: “There’s a much greater willingness to sit alongside retailers now. There might even be an element of retail in the way they design their stores, such as the Carluccio’s deli counter where they sell books, food and pasta. It’s an important part of their business.” He adds: “They think big because they have to. The big chains are absolutely on the ball and they’re very organised about expansion and explaining their requirements to landlords.”

Best of both worlds

What Capital Shopping Centres (CSC) asset management director Martin Breeden describes as a “commonality with the way retailers think” has emerged. This, above all, is the major change retailers should be aware of. Fordham adds: “We’re seeing a lot more integration between food and retail. That’s represented in some of their designs and how they’ve evolved. They’ve become more integrated with retail and are fitting in with the shops more than they ever have done.” He adds that he has observed a major shift in the way food operators are rolling out stores across the CSC portfolio, which includes Lakeside in Thurrock, the Trafford Centre in Manchester and the Metrocentre in Gateshead. At the latter, a specific catering development MetrOasis is currently being built. “The restaurants have become destinations in their own rights,” says Breeden.

The opportunity to offer great food and leisure to shoppers was always far too appealing for the right operators not to come along and get it right. The mould for the shopping centre of the internet age has been made and at the heart of the schemes of the future will be food and leisure. Shopping can now so easily be done online that if the traditional model of the big shopping centre, with dozens of units and circa 1 million sq ft of space, can have any kind of future, it needs to adapt. The centre needs to become the place to be, not just a space to shop.