Chains slug it out to be in the shop window

LONDON - NOVEMBER 03:  A general view of shoppers taking a break at restaurant areas at the newly opened Westfield shopping centre on November 3, 2008 in the west London, England.  Despite the current economic downturn in the retail industry, Europe's largest urban shopping mall, which opened to the public this week, is expected to attract 25 million shoppers each year to its 265 shops.  (Photo by Oli Scarff/Getty Images)

Foodservice chain offers in shopping centres are becoming more and more integral to the retail mix. In this joint piece from commercial property consultant CBRE, the company’s David Muslin and Nigel Costain examine the trends making shopping centres a hotbed for large kitchen schemes.

In bigger schemes these days, catering is increasingly seen as an anchor, or at least a major attraction. You only need to go to London Westfield to see the sheer potency of a well-thought-out catering offer that is carefully blended into the mix.

All big new shopping and transport-related schemes now have catering at their heart. Even in small schemes, owners are becoming more careful when they are selecting cafés and restaurants, conscious that consumers are becoming more demanding. The amount of catering going into schemes is getting ever larger.

Wind back the clock 10 years and attitudes were very different. Catering was still viewed as an ancillary service, an after-thought almost. Many food courts, replete with elderly fast food brands, had not changed much since their 1980s heyday. Some owners still do lag behind, sometimes with good reason — it tends to be wealthy, metropolitan consumers spurning traditional fast-food offers — but as more new concepts emerge, change is rippling through the industry almost by default.

Shopping centre operators are spoilt for choice now. But it is no longer just about covenant and who will pay the highest rent. Getting the catering mix right is as complex as creating a potent retail mix. What matters is the overall offer. Some of the edgier London restaurant and café concepts, including quality street-food operators, will take a while to percolate through to the mainstream shopping centre market outside the capital. But there is still a wave of new entrants and chains in the early maturation stage to choose from. And the rising importance of catering is not just happening in shopping centres. We are seeing the same trend in retail parks.

There is still a wave of new entrants and chains in the early maturation stage for shopping centre owners to choose from”

Take Chester’s Broughton Park, for example, which now has six restaurants — including Nando’s, Prezzo and Pizza Express — attracted by the opening of the new IMAX cinema. The leasing strategy is to create a strong concentration of catering, targeting a wide demographic. The aim is to attract more leisure shoppers from the affluent catchment area and increase dwell times.

Other schemes are doing the same thing: upgrading their offers and increasing the range. Although it is often described as such, upgrading an offer is not the same as pushing offers upmarket. Broughton Park’s catering operators are broadly midmarket chain brands with best-in-class offers.

The appeal of these brands transcends social groups. The upgrading really relates to the market-wide shift from traditional fast food to ‘fast-casual’ dining: a different concept. Quality is improved, but the offer remains budget to mid-priced. Affluent shoppers will use these restaurants for convenience and may be persuaded to visit more regularly or extend their dwell time, increasing retail sales as a result.

The next stage planned at Broughton Park is to introduce more innovative and aspirational catering offers to support the repositioning of the park following refurbishment. It is really only in upscale shopping centres such as London Westfield that there is a concerted effort to drive catering upmarket. This is to reflect the quality of the upscale retailers and offer wealthy shoppers an ‘experiential’ destination.

Catering in shopping centres can be ancillary to the retail experience or it can become a destination in its own right. New developments in Glasgow and Oxford will dominate the night-time offer, but will also provide daytime shoppers with a better experience, boosting visitor numbers and increasing retail spend. The spread of offers, from fast-casual to street food to fine dining, will appeal to a broad demographic, with both midrange and premium catering brands appropriate for the mix.

LONDON, ENGLAND - NOVEMBER 20:   Gary Neville and Ryan Giggs take part in a cook off with the restaurant's executive chef, Brendan Fyldes(L), and creative director, two-starred Michelin chef, Michael Wignall(R) at Westfield Stratford City on November 20, 2013 in London, England. Former teammates Gary Neville and Ryan Giggs swapped the pitch for pans when they took part in a cook-off ahead of opening their new restaurant, Cafe Football. (Photo by Jan Kruger/Getty Images)

Footballers Gary Neville and Ryan Giggs at the opening of their restaurant at Westfield Stratford.

It can be tempting for owners of shopping centres to try to replicate some of the more successful catering offers elsewhere, but it is essential that catering mixes are tailored to fit in with local consumer demand.

A lot of offers currently proving successful in London would fail if they were transplanted into shopping schemes outside the capital. So don’t expect the innovative street-food offers that are becoming more mainstream in global cities and beginning to emerge in big metropolitan shopping centres to appear in many food courts outside London any time soon.

What is happening is price-point splitting: the creation in some centres of two food courts — one containing the traditional, budget, fast food operators and another with higher-priced casual dining. But the offers still tend to be tried-and-tested chain restaurants rather than anything more adventurous.

All that is really happening is that the offer is being broadened to make it acceptable to a wider spectrum of shoppers. So reports of the death of traditional food courts (and fast food offers) are somewhat premature.

Peter Backman, managing director at Horizons, talking at the Propel Multi Club Conference, estimated that chain catering operators are set to take a 60% market share in 2015, up from just over 40% in 2002. Backman expects the chain share to grow to 65% by 2019.

Traditional food court models have a lot of life left in them yet. It is just that chain offers are slowly improving qualitatively. The wave we are all riding at the moment is the steady growth in the propensity to eat out in the course of shopping trips. We eat out more because catering provision is seemingly endlessly expanding. We have seen a net annual growth in chain catering branches for more than 30 years.

The market is very competitive. Ranges and concepts are constantly being refreshed. Every centre owner is seeking the same goal: to bring in as many shoppers as possible.

You can download the full CBRE ‘In Restaurants’ Spring 2015 report at www.cbre.eu.

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