The Changing Face of Restaurant Real Estate

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on Dec 5, 2018 9:00:00 AM
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The restaurant real estate industry is redeveloping because of digital ordering and delivery services. They have changed the day-to-day operations of current restaurants and forced owner/operators to reconcile the traditional ways of managing their business with the technology of the future.

The result? A changing restaurant real estate space. Both inside and out.

Industry trends suggest that restaurants in the future will prioritize time-in-motion metrics over individual style; aim to simplify their physical retail space and marketing plans to accommodate the increased demand for takeout; and, restaurants will concern themselves less with square-footage and prioritize efficiency when designing their retail space. 

Prioritizing Time

Time is money. All restaurateurs know that. But digital ordering and delivery services are forcing restaurateurs to focus more of their attention to their time-in-motion metrics.  

A report by MyCheck, a hospitality technology company, found that “time spent taking photographs, connecting to WiFi, and checking email or social media has nearly doubled the average time each party spends in their seats.”

Wingstop has already embraced such changes, and reaped the rewards of doing so. According to a report by Forbes, Wingstop currently accrues 25 percent of its annual revenue through digital ordering and delivery.

Simplification

Prioritizing time-in-motion metrics could also mean that restaurants will need to physically simplify their retail space as well.

John Miller, CEO of Cali Group, owner of the CaliBurger chain, said “people are wanting to eat food made in restaurants more than ever before. They just don’t want to eat in them,” at the Restaurant of the Future SuperSession at the National Restaurant Association Show.

At the same time, low turnover rates and rising labor costs siphon funds that could be used to pay rent. This has led some restaurateurs to embrace solutions such as the pop up model or short-term leasing.

Owner/operators are leaning increasingly on digital ordering and delivery services to recoup revenue lost to increasing expenditures. In fact, digital ordering and delivery are set to account for up to 40 percent of restaurant revenue by 2020, according to recent estimates by Morgan Stanley.

This could cause neighborhood restaurants like taverns or pizza places to sacrifice seating to accommodate bigger kitchen staffs to handle the increasing demand for takeout.

Less Concern for Space

It wasn’t too long ago that the majority of a restaurant’s business came from turning tables. Now owner/operators need to be weary of how their space improves the efficiency of their service.

The National Restaurant Association’s Sate of the Industry Report from 2017 found that 61 percent of adults would rather spend money on an experience, such as a restaurant, than on an item from a store.

Even though fewer people are going out to eat, owner/operators will need to rely more heavily on efficient table management in order to service the customers who visit their brick-and-mortar.  Quickly attending to customers will also become increasingly important with the integration of digital ordering and home technology such as Amazon’s Alexa.

Alexa takes note of how well-rated restaurants are on websites such as Yelp when offering recommendations to users. This places a higher onus on the customer service staff to provide a welcoming experience to all customers because one bad review can be the difference between being recommended to Alexa’s nearly 9 million consumers.

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Topics: Real Estate, Technology

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