Food: More Prepared Meals, Home Deliveries Spicing Up Consumer Menu, CBRE Reports
HOUSTON – (By Dale King, Realty News Report) – It may have seemed ludicrous a few years ago to imagine home delivery of meals from places like McDonald’s, Chick-fil-A, Denny’s and Starbucks. But Big Macs and breakfast “Slams” are just an app message away, and next year, Dunkin’ Donuts will join that shop-to-home service with its mobile app.
An ongoing overhaul of the U.S. food and beverage industry and its associated real estate, has been documented in a new report by CBRE.
Some “interesting items of note” within the CBRE report:
As the U.S. population increasingly moves to metropolitan areas, the food and beverage industry is expanding most in the suburbs;
Grocers are expected to devote more space to prepared foodsto capture shifting consumer demand;
Millennialsdine out more than other generations, but they’re thrifty diners;
Currently, Baby Boomers collectively spend the most on food and beverages, and Gen Xers spend the most on a per-household basis.
“The food-and-beverage category claims nearly 25% of retail sales in the U.S., and few other sectors have expanded their presence in shopping centers as quickly as restaurants and grocery stores,” said Melina Cordero, CBRE global head of retail research.
“But this sector is just as susceptible as others to sweeping demographic changes, which we’ll see influence real estate through formats such as grocery-restaurant combinations, more kitchen-only outlets and delivery services.”
Other market variants to chew on as CBRE looks to the second quarter of the 21stcentury include a greater push for convenient, prepared foods, a growing millennial influence and the emergence of inner-ring suburbs as the industry’s hottest market.
CBRE’s new report, the first in its multipart “Food in Demand” series, makes several predictions about the restaurant and grocery industries and potential implications for retail real estate. Those industries – collectively the food-and-beverage sector – “will undergo rapid evolution due to demographic shifts, economic factors and automation,” the report notes.
Among CBRE’s predictions:
Neighborhoods on the edge of the urban core will become even hotter food and beverage destinations.
Much densification is occurring in inner-ring suburbs. In turn, restaurants, bars and grocery stores are ideal anchors for mixed-use complexes developed in these neighborhoods, serving as gathering points for residents and employees alike.
Due to their location, these inner-ring suburbs get the dual benefit of higher food-and-beverage spending by suburban households. Few first-ring suburbs have the higher lease-rates typical of urban cores.
Growth of single-person households will boost demand for convenient dining.
The percentage of single-person U.S. households rose to 28% last year from 17% in 1969, with growth reported across most age groups, says Commerce Department data. That, coupled with a rise in dual-income households, means people have less time to prepare and cook meals.
Among the real-estate implications of this shift are added momentum for convenient food and beverage formats like fast-casual and fast-food restaurants, and inclusion of bars and restaurants in grocery stores to offer made-to-order, higher-margin fare. Some restaurants are adding kitchen-only locations catering solely to delivery and carryout customers.
Spending in restaurants and grocery stores will outpace other soft-goods categories for the next five years
The food-and-beverage category’s share of total U.S. retail sales has grown to 24.3% in the past 10 years from 22.7% in the eight years prior to the recession, says Commerce Department data. Meanwhile, the category sees lower e-commerce penetration than most others.
Those factors have resulted in restaurants, bars and grocery stores claiming an expanding share of retail real estate.
The International Council of Shopping Centers says U.S. mall square footage dedicated to restaurants – excluding food courts – increased by 18% since 2007 to 43 million SF.
Millennials’ spending on food and beverage will exceed all other generations within 10 years
Millennials dine out more than other generations, but they’re thrifty diners. Currently, Baby Boomers collectively spend the most on food and beverage, and Gen Xers spend the most on a per-household basis.
However, millennials’ wealth constraints will ease over the next decade as they pare their debt and their income grows, resulting in millennials spending more on food and beverage, sometimes in volume and sometimes in price.
Boomers, meanwhile, are likely to spend less as they progress in retirement.
The CBRE report “underscores the need for retailers and retail-center owners to analyze and understand their customer base, often through location-analytics technology, so they can tailor their menus and store locations accordingly,” said David Orkin, executive vice president leading CBRE’s restaurant practice in America.
“We see consumer preferences influencing many facets of retail real estate,” he added. These include: Store locations; store design to accommodate delivery pickup or prepackaged meals and different store layouts to incorporate automated ordering and self-service.