Too Many Food Choices?
The growth of food service options is being fueled by the numerous factors.
Les Sax

Over the past decade, the country has seen explosive growth in existing and new concepts in the food service/restaurant business. There used to be two groups dominating the food service industry: full-service restaurants and fast food outlots. The emergence of two new groups — fast/quick-casual as a third group and grocers/alternate forms of food service as a fourth group — has complicated the food service business and caused the competitive environment to be more brutal than ever.

What has caused the expansion of options? Four main factors seem to be fueling the expansion of food alternatives as follows:

1.Dual income households.

2.Time deprivation of income earners.

3.“Hassle factor” of life.

4.Growth of lifestyle centers and change in lifestyles.

In this article, we’ll examine these four factors in depth.

Dual Income Households

Dual income households or mega income households (those with one high salary earner) now dominate the majority of the standard metropolitan statistical areas (SMSAs) in the United States. The extra income allows more of the family budget to be allocated to food away from home and drives casual dining sales in all types of restaurants.

Time Deprivation

Income earners are working more hours, encountering longer commutes to their offices, and have more things going on in their lives, (children, exercise routines, social events, networking, religious activities, other optional recreational things to do). So everyone is busy, busy, busy all the time and that does not leave time to shop for food, cook the food, and clean up afterward. Recent articles in The New York Times detail how the typical 9 a.m. to 5 p.m. workday is now 9 a.m. to 9 p.m. or 6 a.m. to all hours. Trains going into Manhattan are now bringing workers in before 6 a.m. so people can start working earlier.

Hassle Factors Of Life

Everyone feels more hassled these days. We are all working at warp speed. Companies do not seem to have enough help, so everyone is working harder. Before we even start our work for the day, we have to manage our voicemail, e-mail, regular mail, Blackberries/organizers, etc. If we are traveling for work, we encounter traffic jams, security lines at airports, lines for rental cars and buses and trains. Our companies want us to save money on travel so we may be taking longer routes (for cheaper fares) or staying farther away from our business appointments (to save money on hotels).

Just taking people out for dinner is now a major event. Restaurants are “managing their book” so they want you to eat when it is convenient for them as opposed to when you want to eat/make a reservation (if they even take reservations). With 2-hour waits at some popular restaurants, concerns over smoking or non-smoking and food allergy concerns, it is no wonder that carry-out food has boomed as a segment. Unless they screw up your order, take too long to prepare it or you cannot park easily when picking it up, you’ll generally find it a convenient option.

Growth Of Lifestyle Centers And Changes In Lifestyles

The emergence of lifestyle centers and the demands/requirements of bookstores and other anchors for restaurants have fueled chain expansion. Besides the usual well known names and segments, we now have Irish pubs and Brazilian steakhouses opening all over the country. And lifestyle changes in general are changing eating patterns. We joke in Washington, D.C., that new houses are being built with nothing in the kitchen except a phone and list of restaurants!  A friend of mine moved into an older house and looked into his refrigerator; it was empty. He said he thought it was “available for lease.” He asked his wife where the food was and she said, “Who’s going to cook it? I’m not. Where are we going out to eat?” And out they went. Our kids are always going out to eat which turns into a social experience as well. With families running in 10 different directions, they find that eating out is one of the few times when everyone can get together and talk.

So these four factors are driving record growth, addition of seats and options all over the country. From a real estate developer’s point of view, one has to pick the type of restaurants for a property (full-service, quick-casual, fast food or other type of food service), type of deal (whether sale, lease, lease with allowance, or build-to-suit), and how much food as per cent of total GLA allocation and make the anchors happy as to restaurant/food mix, parking, etc. The key question is as follows: Can all these new options survive? And the answer is, “Of course not.” So it will be the survival of the fittest. Landlords and developers need to pick “the right horse” in their initial lease-up and also have plans for the second use if they made a bad decision.

Les Sax is owner of Bethesda, Maryland-based Sax Realty, a boutique commercial real estate company specializing in tenant and landlord representation in the Washington, D.C.-Baltimore Metro area. Started in 1986, Sax Realty, a member of the Council of International Restaurant Brokers, represents a diverse tenant roster including P.F. Chang’s China Bistro, Darden Restaurants, Jared Jewelers, Bed Bath & Beyond and Lowe’s Home Improvement Centers. Les Sax can be reached by e-mail at LSax@saxrealty.com.