CREJ - Retail Properties Quarterly - August 2016
The old adage “location, location, location” has been a virtual Bible verse for real estate for more than 60 years. Based on my bias from the hospitality industry, I thought that the phrase was derived from an hotelier by the name of E.M. Statler. However, in recent years, the subject was researched further. Now the roots of this retail coinage phrase is credited to a real estate agent from Chicago in 1926, who published a real estate classified ad in the Chicago Tribune that read: “Attention salesmen, sales managers: location, location, location, close to Rogers Park.” This mantra remains as true now as it was in 1926. Following are several tips to help you determine the right restaurant tenant for your shopping center and the best ways to support that tenant. It is important as a landlord or owner of a shopping center to care about how the restaurateurs approach and handle their business. As a professional food service and hospitality industry consultant working in the Rocky Mountain region, I am witnessing new factors that are driving retail-purchasing decisions. These purchasing decisions stem from how the restaurant uses social media, engages millennials and tech savvy boomers, and acknowledges the influence women have in decision-making. By embracing these needs, restaurants and centers can team up to succeed. The dinner decision – what or where are we going for dinner – often is not made until after 4 p.m., when a quick text after to spouse, friends or family drives the answer. For this reason, the retailer needs to command prominent positions on “near-me” applications, Facebook and Twitter in order to catch the eyes of consumers when they are ready to make their meal decisions. Brokers and landlord should inquire about a prospective tenant’s social media engagement during the review process of qualified tenants. In order to compete in the food service and hospitality industry, a well-laid-out and skillful social media marketing strategy must be employed. This should be discussed as part of an interview with a prospective tenant and should be heavily documented in any business plan presented to brokers and landlords. Design. Restaurateurs, when designing or remodeling their restaurants, look at the number of seats in the restaurant and their compelling need to put butts in seats. This, of course, is a key economic factor to test feasibility of the business. However, one cannot overlook specific details that address comfort, security and cleanliness within the restaurant. As women account for the greatest consumer decision-making power, it is important to look at the concept, menu, attraction and design of a space, and apply some basic Maslow principles to address the basic needs of the consumer and the female patron. These are highly regarded components of the overall experience in a restaurant. Basic components such as ease of parking, distance to the front door, lighting and the overall sense of security are important to meet the psychological and physical needs of consumers. You want a tenant that will pay attention to the infrastructure and address the exterior and interior needs of the property. And, of course, the restrooms are important, especially space for baby changing. Adequate space, adequate lighting, and heating, ventilating and air conditioning are all areas that surveys find female patrons care about. How important these items are to potential tenant can be discovered during the due-diligence part of the interview process of the tenant candidate. Leasing. The right location within a large shopping center facilitates food service operations and, almost always, is in demand because restaurants draw additional foot traffic. However, addressing the needs of the anchor tenant can be challenging, and the “A” sites within the center as well as the end caps present the best opportunities for the landlord, the developer and the prospective tenant. An independent restaurant needs all of the help and opportunity it can get in order to be successful. Closing the door to bright ideas and placing intriguing budding entrepreneurs in the “B” sites is a recipe to increase the restaurant failure rate. Yes, the restaurant business is a risk. Managing the risk from the get go in terms of the final determination of where to locate the restaurant within your space is challenging. During the interview process, be sure to ask questions about the tenant candidate’s beliefs and plans for social media, attracting and retaining female consumers, and overall layout and design beliefs within the restaurant relating to comfort, security and cleanliness. Asking these questions early on can help ensure that the landlord and restaurant tenant are both moving toward the same goals.