FOOD & BEVERAGE REPORT

Q1 2019 2

CONTENTS

| Sofia Q1 2019 | Sofia I. FOOD & BEVERAGE CATEGORY IN SOFIA SHOPPING CENTRES 3 1. F&B Subcategory Characteristics 3 2. Typical F&B Subcategory Size 5 3. F&B Subcategories3 in Sofia Shopping Centres 5 3.1. , Casual Dining and Bars & Clubs Subcategories’ Share 5 Food & Beverage Report | Colliers International | Colliers Report & Beverage Food 3.2. Mix of Local and International F&B Brands 7 3.3. Food Court distribution by food types 7 3.4. Restaurants distribution by cuisine types 7 3.5. Kiosks that are served by F&B Sector 8 II. F&B SURVEY RESULTS 9 III. FORECAST 9 3

This report covers the Food & Beverage (F&B) category in modern shopping centres in Sofia. It analyzes its share in the tenant mix and the key trends in its evolution presently and in the future. Food & Beverage Report | Colliers International Sofia Q1 2019 |

I. FOOD & BEVERAGE CATEGORY IN SOFIA SHOPPING CENTRES

F&B category1 takes about 6% or a decade ago to 10-15% in present 20,000 sqm of the total space of times and is forecasted to reach 20% of modern shopping centres in Sofia. the total space by 2025. In all modern shopping centres in Sofia it is 2 to 3 In other European cities, the amount of times below the European benchmark. shopping centre floorspace, dedicated to F&B, has grown gradually from 5%

FIG. 1: F&B CATEGORY 16% AS A % OF TOTAL GLA 14%

12% European Average

10%

8%

6%

4%

2%

0% Park Mall of Serdika Bulgaria Paradise So a Mega Center So a Center Mall Center Ring Mall Mall

1. F&B SUBCATEGORY CHARACTERISTICS

TABLE. 1

F&B Subcategory Typical Trading Periods Typical Purchase Typical Dwell Time

Impulse Treats Anytime of the day One item Takeaway Coffee Shops Breakfast, afternoon break 1 coffee drink Takeaway or half an hour, on average Fast Food Lunch, dinner, times Meal deal including a drink 10 – 20 minutes Casual Dining Restaurants Lunch and dinner 2-course meal with or without alcohol 30 – 60 minutes Specialized Restaurants Lunch and dinner 2- or 3-course meal often with alcohol 60 – 120 minutes Bars & Clubs Evening Drink 60 – 90 minutes

3/Fine Dining Restaurants - this subcategory is not presented in shopping centres in Sofia. Source: Colliers International Q1 2019 | Sofia 4 Food & Beverage Report | Colliers International SUBCATEGORIES’ SHARE AND BARS &CLUBS CASUAL DINING SHOPPING CENTRE F&B SUBCATEGORIES PER FIG. 2: FIG. FIG. 3 3 FIG.

DISTRIBUTION OF FAST FOOD, Specialized Restaurants 40% Bars &Clubs5% Casual Dining22% Fast Food 19% Coee Shops12% Impulse Treats 2% Specialized Restaurants 8% Casual Dining20% Fast Food 39% Coee Shops29% Impulse Treats 5% Casual Dining19% Fast Food 63% Coee Shops15% Impulse Treats 3% The Mall Bars &Clubs10% Casual Dining19% Fast Food 50% Coee Shops22% Impulse Treats 1% Park Center 2000 4000 6000 8000 5000 3000 7000 1000 0 Center Bars &Clubs Specialized Restaurants, Fast Food, CasualDining, Park Mall of Mall So‚a The Mall Serdika Center European Average Space Total Food &Beverage Bulgaria Mall Mega Mall Serdika Center ofSo a Mall So a RingMall Mega Mall Casual Dining32% Fast Food 38% Coee Shops23% Impulse Treats 2% Casual Dining49% Fast Food 34% Coee Shops10% Impulse Treats 7% Specialized Restaurants 22% Casual Dining34% Fast Food 25% Coee Shops15% Impulse Treats 3% Fast Food 84% Impulse Treats 16% Paradise Space % ofTotal Food &Beverage Source: Colliers International Center Ring Mall So‚a 0% 20% 30% 40% 50% 60% 70% 80% 90% 100% 5 Food & Beverage Report | Colliers International Sofia Q1 2019 | 2. TYPICAL F&B SUBCATEGORY SIZE

TABLE. 2

Optimal Unit Size Optimal Unit Size F&B Subcategory sqm | Europe sqm | Sofia Impulse Treats 20 -30 6-20 Coffee Shops 148-250 20-200 Fast Food 200-400 20-200 Casual Dining Restaurants 300-600 150-1500 Specialized Restaurants 300-600 150-700 Bars & Clubs 350 100-400

Source: Colliers International

3. F&B SUBCATEGORIES3 IN SOFIA SHOPPING CENTRES

F&B subcategories distribution is shopping centres in Sofia. On the divergent and shopping centre specific. contrary, Specialized Restaurants Nevertheless, in all cases the largest and Bars are presented in only 3 out share is taken by Fast Food. Colliers’ of 8 malls. Fig. 2 shows the F&B research in reveals that the latter subcategory distribution by shopping subcategory and Casual Dining are centre. adequately represented in all modern

3.1. FAST FOOD, CASUAL DINING AND BARS & CLUBS SUBCATEGORIES’ SHARE

According to the International Council Only three of the shopping centres in of Shopping Centres (ICSC), about 80% Sofia are below these 80%, for the rest, of the F&B space in a shopping centre the percentage varies between 81% should be dedicated to Fast Food, Casual and 89%. , The Mall and Dining Restaurants and Bars & Clubs, are very close to the ICSC with the remaining 20% focused on benchmark distribution. (Fig. 3) Impulse Treats and Coffee Shops.

3/Fine Dining Restaurants - this subcategory is not presented in shopping centres in Sofia. 6

FIG. 4: IMPULSE TREATS 12% 10% 8% 6% 4% 2% | Sofia Q1 2019 | Sofia 0% Park Mall of The Mall Serdika Bulgaria Mega Paradise So a Center So a Center Mall Mall Center Ring Mall

Local International *Mega Mall deviation is due to the small base of F&B space Food & Beverage Report | Colliers International | Colliers Report & Beverage Food FIG. 5: COFFEE SHOPS 30% 25%

20%

15%

10%

5%

0% Park Mall of The Mall Serdika Bulgaria Paradise So a Center So a Center Mall Center Ring Mall

Local International

FIG. 6: FAST FOOD 50% 40% 30% 20% 10% 0% Park Mall of The Mall Serdika Bulgaria Mega Paradise So a Center So a Center Mall Mall Center Ring Mall

Local International

FIG. 7: FOOD COURT DISTRIBUTION BY FOOD Other National Cuisine 9% TYPES Bulgarian Cuisine 5%

Pastry & Burgers & Sandwiches 8% 31%

Asian 9%

Healthy 14%

Pizza, , Sea Food 24%

Source: Colliers International 7 Food & Beverage Report | Colliers International Sofia Q1 2019 | 3.2. MIX OF LOCAL AND INTERNATIONAL F&B BRANDS

F&B category in shopping malls in Coffee Shops and Fast Food. Figures Sofia predominantly consists of local 4 – 6 present the proportion of local and brands. The highest concentration of international brands per subcategory international brands is registered for and shopping centre.

3.3. FOOD COURT DISTRIBUTION BY FOOD TYPES

The typical meeting place in a shopping (22%). The growing awareness of centre is the Food Court. The most healthy nutrition determines the good common culinary offers of Food Courts positioning of this type of food in in Sofia are burgers & sandwiches comparison to others. (Fig. 7) (32%) and , pasta and sea food

3.4. RESTAURANTS DISTRIBUTION BY CUISINE TYPES

Restaurants are another typical meeting malls are Asian, Italian and International. place in a shopping centre. The most (Fig. 8) popular cuisine types in the surveyed

3.5. KIOSKS THAT ARE SERVED BY F&B SECTOR

Kiosks are placed on almost every The current share of kiosks served by corner in a shopping centre with the aim the F&B sector in the shopping centres to foster impulse purchases. in Sofia is 18%.

FIG. 8: RESTAURANTS DISTRIBUTION BY CUISINE

TYPES Asian 27% Italian 42%

International 31%

Source: Colliers International 8

FIG. 9: DO YOU INTEND TO OPEN NEW PREMISES No IN 2019? 33% | Sofia Q1 2019 | Sofia

Yes 67% Food & Beverage Report | Colliers International | Colliers Report & Beverage Food

FIG. 10: WHERE DO YOU PLAN TO OPEN NEW High Street 50% PREMISES? 56%

Retail Park 25%

O ce Building 38%

Other 19%

FIG. 11: IN WHICH CITIES? Soa 88%

Varna 25%

Burgas 19%

Plovdiv 13%

Russe 6%

Haskovo 6%

FIG. 12: WHAT IS YOUR 6-8% 17% OCCUPANCY COST RATIO? 8-10% 17%

10-12% 17%

12-15% 21%

Above 15% 13%

No answer 17%

Source: Colliers International 9

II. F&B SURVEY RESULTS Food & Beverage Report | Colliers International Sofia Q1 2019 |

In November 2018 Colliers International 21% of the participants in the survey conducted a survey among F&B reported occupancy costs in the range operators in Bulgaria. It revealed that of 12-15%. Defining a sustainable 67% of the participants have intentions occupancy costs ratio for the F&B to expand in 2019. High streets and sector in shopping centres is complex shopping centres are the most preferred as it depends on profit margins of the locations, but the vivid development of operator, country specific labor costs the office market motivates 38% of them and the dominance of the retail scheme to consider opening point of sales in itself. Occupancy costs ratio below 15% office buildings as an option. 88% stated typically may be used as a threshold for that they plan to open new locations in healthy relationship between costs and Sofia. benefits of a lease of a F&B operator.

III. FORECAST

• Shopping centres that successfully • There is room for improvement of innovate and create the right the F&B category in Bulgaria: concept and environment can »» Plan, design and execute become social hubs. Enjoying food enlargement of the food court together has become a sustainable zones; part of the shopping centre »» Add more international operators experience. to the tenant mix; »» Food types represented on food • The right mix of F&B in shopping courts will grow in terms of centres is an effective tool to diversity of the offer; increase footfall, dwell time, »» Specialized restaurants and customer spending and overall Bars & Clubs are currently sales growth. underrepresented in shopping malls in Sofia and filling this niche may provide a competitive advantage to certain projects.

10

Definitions: 1. F&B category – includes all impulse treats kiosks, 2. Report covers shopping centres above café, restaurants and fast food operators 10,000 sqm 3. F&B types | Sofia Q1 2019 | Sofia

F&B Types Definitions

Point of sales aimed to trigger an unplanned Impulse Treats decision to buy a product

Food & Beverage Report | Colliers International | Colliers Report & Beverage Food Coffee Shop A space which primarily serves hot coffee, related coffee drinks and other hot drinks. Many cafés also serve some type of food, such as light , muffins or pastries Fast Food A quick service restaurant that serves fast food cuisine and has minimal table service Casual Dining Restaurants Restaurants that serve moderately-priced food in a casual atmosphere, typically table service is provided Fine Dining Restaurants Full service restaurants with specific dedicated meal courses and a set of dining rules for the customers, often including a dress code. Interior design of the premises features higher-quality materials and luxury ambience Specialized Restaurants Restaurants specializing in a particular cuisine Bars & Clubs Entertainment venues that usually operate late into the night and serve as places for social interaction FOR MORE INFORMATION

Dimitrinka Rakovska Adriana Toncheva Manager | Retail Services Senior Market Researcher phone: +359 2 976 9 976 phone: +359 2 976 9 976 [email protected] [email protected]

Colliers International | Sofia European Trade Center 115K Tsarigradsko Shose Blvd. Build. B, 7th floor | 1784 Sofia The information contained herein has been obtained from sources deemed reliable. While every phone: +359 2 976 9 976 reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to colliers.com acting on any of the material contained in this report. Copyright © 2019 Colliers International. Colliers International