In 1992, Americans spent $163 dollars on groceries for every $100 spent dining out. But today, reservations are becoming a must and spend is shifting. According to JLL research, “Americans now spend more money at restaurants than they do at grocery stores.”
It’s no surprise that appetite for restaurant real estate has been insatiable in recent months. In fact, JLL’s new Retail Trend Alert revealed that four out of the five fastest growing retail categories included food-related industries. The rise of foodie culture is creating new, lucrative opportunities for commercial real estate tenants and investors alike. JLL research projects that the influence of restaurant growth on real estate could impact the industry by 55.4 million square feet.
The new Retail Trend Alert dives into the rise of the “Foodie Nation,” and its impact across national retail sectors. Below, I’ve highlighted top trends identified in the report, as well as the current impact on our local market.
Tastes and Traditional Retail
Those in the dining services industry aren’t the only ones capitalizing on the foodie craze. More retailers are incorporating eateries into what was once traditional department or grocery stores.
The result: Customers are staying in-store longer, and ultimately increasing sales. According to the report, retailer Tommy Bahama earns double the revenue per square foot in its restaurant-retail stores.
While restaurants and retail make a perfect pair, the old-school food court isn’t cutting it. Foodies and shoppers are increasingly choosing higher-quality menu options. Fresh, upscale food services were projected to outpace fast-food brands last year. Today’s consumers prefer fast-casual and fine-dining restaurant experiences, like Chipotle or Panera bread.
Food Trucks Mobilize Menus Across the Nation
Who needs a seat at the table when you can order at the window? JLL’s report predicts Food Truck revenue to increase nearly 80 percent by 2020.
Food trucks bring culinary experiences to city sidewalks, playing fields, festivals and boardwalks across the country. What’s more, higher expectations are driving higher quality choices. Food trucks are now backed by permits, and have transitioned to feature a variety of cultural food experiences.
Even famous chefs have mobilized their kitchens including well-known Columbus chef Tony Layne, who launched his Por’Ketta truck this spring. In Cleveland, “Walnut Wednesday” attracts downtown professionals to Walnut Street each week in the summer. Walnut Wednesday hosts more than 50 food trucks and offers a variety of tastes, from sushi to classic barbecue.
Today’s Special: Dining in Ohio
When a five star culinary scene comes to mind, you might think NYC or LA. But, in recent years, Ohio’s restaurant scene is getting rave reviews. What’s more, it’s also lending to the urbanization of downtown areas, luring in millennials that prefer dining out to eating in.
Ohio’s major cities, Columbus, Cincinnati and Cleveland in particular, are experiencing rapid growth in restaurant real estate.
Cleveland boasts at least 10 world-famous chefs, and its downtown now hosts more than 100 eateries, according to the Downtown Cleveland Alliance (DCA). The DCA also confirmed new development on the horizon. As part of the Flats East Bank Phase Two project, Cleveland will open Flip Side, Toby Keith’s I Love This Bar & Grill, The Big Bang, The Beer Market Craft Beer Cellars and more.
In the heart of Ohio, Forbes Travel Guide named Columbus among the “Five Secret Foodie Cities.” And, further south, renowned New York City food blogger Jacqueline Raposo said there are Cincinnati restaurants that she wished existed in the big apple.
Restaurant Retail Fuels National CRE Growth
Foodie culture has made a significant impact on local economies and commercial real estate markets.
The National Restaurant Association reported that Americans spent about $660 billion annually dining at restaurants. And, according to the JLL, “food-related retail equals big business and represents a significant growth factor for real estate.”
See JLL’s full Retail Trend Alert for more.
About the Authors
Mary Bresnahan is a Vice President with JLL working on the Retail Brokerage team from Columbus, Ohio. Mary specializes in agency leasing, tenant representation and real estate advisory for tenants and investors. Melissa Ruther is a Vice President with JLL working on the Retail Brokerage team from Cincinnati, Ohio. Melissa specializes in tenant representation, agency leasing, and real estate advisory for tenants and investors.