Restaurant offerings propping up retail schemes across the world

STRATFORD, ENGLAND - JULY 31:  Members of the public dine in the food court of the giant Westfield Stratford shopping mall adjacent to the Olympic Park on July 31, 2012 in London, England. Trading in the huge 1.9 million sq ft mall has been boosted by the footfall of spectators, volunteers and competitors from the Olympic Park; whilst shops and restaurants in London's West End are reporting up to 70% declines in revenue.  (Photo by Oli Scarff/Getty Images)

The increasing presence of F&B options in shopping centres – often accounting for more than 20% of units in new and redeveloped schemes in more mature markets – is being driven by rapid global growth in consumer spending on eating out, a new report has indicated.

With spending on eating out expected to continue growing over the next 10 years, and consumers’ desire to enhance a shopping trip with social and leisure experiences, a compelling F&B offer is now critical to the success of any retail scheme, the latest report from Cushman & Wakefield states.

All four global regions examined in the report are forecast to experience growth in F&B expenditure, led by Asia Pacific and the Middle East and Africa.

Based on data from Oxford Economics, consumer spending is forecast to nearly double in the latter (£142 billion to £282 billion) and more than double in the former (£816 billion to £1.78 billion).

As such, F&B spend is forecast to grow at an annual average of 7.4% up to 2026 in both regions.

Europe and the Americas, as more mature markets, are not expected to see the same increases in consumer spending but are nonetheless expected to experience healthy F&B annual spending growth of 4.9% and 5.5% respectively.

As spending increases, customer expectation does too. Once-ubiquitous food courts, made up of common seating areas surrounded by fast food outlets, are a dying breed. While mainstream brands – with ability to pay higher rents – still dominate, landlords are recognising the importance of diversity and other concepts, such as the food hall, have evolved, while there is also a move towards creating different zones within shopping centres.

However, Cushman & Wakefield believes there is latent demand for more non-mainstream international food hall market place concepts, which combine restaurants with food and beverage counters and bakeries, along with the sale of cooking-related products and even cookery schools to add ‘edutainment’.

Currently, only a handful of truly international players offer such a format and there is scope for more high-quality operators to emerge and enter new markets.

Darren Yates, head of EMEA retail research and insight at Cushman & Wakefield, said: “The link between shopping and eating is stronger than ever and is evident in the significant growth in F&B outlets in recent years, particularly in shopping centres. We see this trend continuing for the foreseeable future, given that a high-quality F&B offer is now critical to the success of major retail destinations. An increasing number of locations are now incorporating formats which combine the experience of eating and buying food and entertainment, which taps into consumers’ growing interest in food culture.”

Yates added that while the short to medium-term outlook for the F&B sector is positive, strong recent growth in the sector means competition in some of the more mature markets such as the USA and the UK is intensifying.

“As a result, weaker operators may struggle if economic growth begins to moderate and consumers rein back on discretionary spending,” he commented.

REGIONAL BREAKDOWN

Americas

– Meteoric rise of food halls and restaurants is the biggest retail growth story in the US.

– More than 24,000 new restaurants added annually over the last six years.

– Food hall development pipeline has grown significantly: entire US food hall marketplace will have more than doubled in size in just four years.

– In Latin America, the fast food industry has been growing thanks to the expansion of new shopping centres.

– Alternative concepts emerging to satisfy demand for healthier options combining high-quality ingredients and authentic food in a more pleasant environment than the traditional food court.

– Concepts such as Mercado Roma in Mexico City have pioneered the way for others to follow.

Asia Pacific

– India is forecast to have the strongest annual growth of F&B sales between 2017-20 with an increase of 13.1%.

– Average annual growth in China averaged 11.2% over the last four years, but this is expected to slow marginally to 10.7% a year between 2017-20.

– Indonesia and the Philippines are both expected to see a strong acceleration in growth, with 10.1% and 9.6% forecast.

– In Japan one major trend is the family friendly food court featuring elements such as an enhanced kids’ play area.

– Adult-oriented urban food courts which differentiate themselves from the competition through celebrity chefs, or by bringing in local area restaurants, are also popular.

Europe

– Spain was the largest F&B market in Europe in 2016, with consumer spending on eating out ahead of the UK, Italy, Germany and France.

– Turkey is forecast to see the strongest growth in F&B sales between 2017-20, with average annual growth of 8.8%,

– Central & Eastern European markets Romania, Bulgaria and Poland also set for strong growth.

– Developers creating different zones for fast casual, casual, premium casual and contemporary casual operators.

– Continued trend of including a unique F&B anchor, whether this is a roof top restaurant or food market.

– Landlords competing to stay ahead of the competition

Africa & The Middle East

– Saudi Arabia expected to see the strongest growth in sales in the F&B sector between 2017-20, with average annual growth of 8.8%. More modest growth of 5.6% is expected in South Africa and the UAE.

– The rising population of young people attracting more international brands.

– Diversification away from oil dependency towards other sectors such as tourism will support strong F&B growth over the medium to longer term.

– South Africa has the most developed F&B market in Africa, with international brands continuing to make inroads into the country.

– Operators such as Starbucks and Krispy Kreme providing increased competition for domestic operators.

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