Food and Beverage (F&B) Within Shopping an Over Reliance on This Sector of the Centres
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Foo dand beverage A solution for shopping centres? Foreword The retail industry has been the subject of substantial change in recent years. The current structure of the industry was unforeseen just a decade ago when the answer for greater sales was more floorspace. While this is still a significant part of area must be carefully considered and retailers strategy, with the advent understood, and the overall proportion of of multichannel retailing there are now F&B to pure retail needs to be evaluated. numerous avenues open for retailers to Securing the value of an asset and expand the top line. BCSC has highlighted providing an attractive opportunity for the evolution of the sector with publications investors cannot be achieved by simply focusing on multichannel retailing and more providing a one-size-fits-all quota and recently the degeneration of the high expecting it to drive value. This report street. However the industry continues to discusses these dynamic issues at hand. evolve in a number of ways and the food and leisure sector is no differ ent. If shopping centres are to remain the focal point within communities, then they With previous BCSC research focusing on must reflect the needs and wants of the technology and changing consumer consumer. The statement by some that F&B attitudes, this report addresses the role of is close to recession proof may indicate food and beverage (F&B) within shopping an over reliance on this sector of the centres. F&B has become viewed by some industry, an option which should not be within the sector as a possible solution to overplayed. Through expert analysis and the challenges of high vacancy rates. By the consultation with leading members giving ‘recession proof’ F&B operators more of the F&B and retail property sectors this units, landlords can reduce empty spaces report is essential reading for anyone within their centres, mitigate rates charges that seeks to understand the changing and increase rental income. The proportion face of retail property. of F&B units within shopping centres has grown exponentially in recent years and the diversity of offers available to consumers has strengthened the industry. Today new centres are being designed with a greater focus and emphasis on F&B while existing centres are converting former pure retail units to F&B. This report seeks to understand the truths behind F&B in centres and dispel some of the myths, while giving a clear overview Tom Meager of the challenges within the industry. BCSC President The demographics of each individual Director of Property, Pr im ark Food and beverage: A solution for shopping centres? Researched and written by: Richard Barron, Aspect Market Research Stephen Toal, Savills Aspect Market Research 54-56 Bridge Street Manchester M3 3BW Savills Belvedere 12 Booth Street Manchester M2 4AW BCSC Charter House 13-15 Carteret Street Westminster London SW1H 9DJ www. bcsc. org.uk T: 0207 227 4480 ISBN: 978 1 897958 61 2 © BCSC (British Council of Shopping Centres) 2014 Acknowledgements BCSC wishes to thank members of the steering group for their Ken Higman, Coverpoint Catering Consultancy / Davinder Jhamat, support throughout this research: Sarah Banfield, ICSC / Steve Bela m, BCSC / Deepan Khiroya, Land Securities / Serena Mills, Jones The Oracle, Reading / Padraig Carroll, BCSC / Edward Cooke, Lang LaSalle / Chris Paterson, Aviva Investors / Thomas Rose, BCSC / Jonathan Doughty, Coverpoint Catering Consultancy / Cushman & Wakefield / Tim Walley, Bullring, Birmingham. Disclaimer The text of this publication may not be reproduced nor may talks or lectures based on material contained within the document be given without the written consent of BCSC. No responsibility for loss occasioned to any person acting or refraining from action as a result of the material included in this publication can be accepted by the authors or the publishers. Food and beverage: A solution for shopping centres? Contents Executive summary PAGE 03 Introduction What do we mean The relationship Current usage of by food and between F&B F&B in shopping 1 2 beverage (F&B )? 3 and retail 4 centres PAGE 06 PAGE 10 PAGE 14 PAGE 18 Failure rates of F&B and the wider The economic The impact of F&B operators urban agenda argument for F&B F&B on retail 5 6 7 in shopping centres 8 PAGE 22 PAGE 24 PAGE 25 PAGE 28 F&B in smaller F&B as part of The future of Appendices centres and the night time F&B in retail i) Case studies 9 10 11 12 ii) List of contributors secondary locations economy iii) Bibliography iv) Glossary of terms PAGE 30 PAGE 32 PAGE 34 PAGE 36 02 Food and beverage: A solution for shopping centres? Executive summary There appears to have been something of a rush towards increasing food and beverage (F&B) spaces within centres in recent years and many within the industry appear to view F&B as a major opportunity. In many cases, the impacts of increasing increased from £12.30 to £13.30. In terms of F&B are still to be fully appreciated and a the type of F&B categories, about a fifth of number of centres have indicated that it is fast casual diners are under 24 years old, simply too early to tell. Nevertheless, there attracted by the informal atmosphere and is evidence in this report to suggest that keen to achieve value for money. adding F&B without a coherent strategy can lead to a less than optimal overall offer that, rather than being supportive of retail, F&B space within can distract consumers and reduce the shopping centres amount of time spent shopping overall. Analysis of floorspace dat a6 indicates that 40% 8% of units within shopping centres are allocated to F&B usage. This proportion of Approximately 40% of The opportunity Spaniards were eating space for F&B rises in larger destination at 2.50pm and about Consumers are eating out more often than centres to around 15%. When Savills’ 30% at 9.30pm. in previous year s1. In addition, mealtimes managed portfolio is analysed, the total Conversely, at no point are no longer conventional or clearly net floorspace being analysed came to in the day were as defined with people eating often and many as 20% of 16.7 million sqft. Of this, 1.38 million sqft Britons eating. quickly throughout the day. According to was apportioned to F&B — again 8% of the The Economist , a stud y2 comparing Britain total. There has been a significant amount and Spain found that approximately 40% of of reconfiguration from retail to F&B use in Spaniards were eating at 2.50pm and about centres in recent years. Conversion from 30% at 9.30pm. Conversely, at no point in A1 7 to F&B usage in 2009 stood at just over the day were as many as 20% of Britons 700,000 sqft; however this increased to a eating. This behaviour presents an peak of just under 3 million sqft in 2011 opportunity for F&B operators to be able to dropping to 1.7 million sqft in 2012. spread trade across the day from breakfast, through lunch and into the evening. Failure rates for F&B operators In terms of different types of F&B, coffee In terms of failure rates for F&B operators, and sandwich shops have the largest market those incorporated in 2010 were more than share at 30% of the going out market 3. The twice as likely to have failed in the first fastest growing category was ‘fast casual’ year compared with those incorporated in dining (sit-down dining with counter rather 2008 — and even more likely to fail in 2012. than at-table service). According to The credit crunch was at its height in 1 QuickBite survey , Horizons, (July 2012). figures 4, the fast casual sector has seen 2010 which led to a dramatic slowdown in 2 Behaviour change and the temporal ordering of eating practices : a UK-Spain comparison. visits rise by 0.9% and sales increase by consumer spending. In addition, the Southerton D. , Díaz- Méndez, C. and Warde A. 1.7% in the year ending 30 September 2013. economic downturn allowed a number of International Journal of the Sociology of In addition, since 2009 this sector has seen fledgling businesses to emerge and this Agriculture and Food 19, no. 1(2012): 19-36. 5 3 Taste of the Nation report , Deloitte, (2012). a compound annual growth rate ( CAGR) of will have led to a more competitive 4 Eating out is the new staying in , Marketing 2.1%. It appears that the mid-priced fast environment in recent times along with an Week, (19 December 2013). casual sector is attracting cost-conscious 5 Compounded Annual Growth Rate ( CAGR) is increase in the likelihood of new companies a method used to provide a constant rate of diners who want more than a ‘quick failing within the first couple of years. return over a particular time period. service’ / ‘fast food’ experience. 6 Callcredit Information Group. 7 The Town and Country Planning (Use Classes) Order 1987 (as amended) puts uses of land In terms of demographics, young adults eat Dwell time and F&B and buildings into various categories known out most frequently. 2013 data shows that The inclusion of F&B in centres is often as ‘Use Classes’. In broad terms class A1 covers shops, retail warehouses, hairdressers, 75% of those aged 18-24 and 76% of 25-34 justified by the belief that it leads to undertakers, travel agencies, post offices, year olds had eaten out in the past two increased dwell time and therefore growing pet shops, sandwich bars, showrooms, domestic hire shops, dry cleaners, funeral weeks.