retail

Foodservice opportunities in the Canadian retail market

Foodservice expectations, millennial eating habits and online food delivery are just some of the factors impacting the foodservice industry across Canada

By Rebecca Melnyk

One new trend in commercial property management, specifically retail operations, is incorporating foodservice into bricks-and-mortar stores to discourage guests from shopping online. This pairing of two industries is becoming a more viable option to commercial property managers looking to increase foot traffic in their establishments.

At a recent seminar at the Real Estate Strategy & Leasing Conference in Toronto, Dennis Daoust, partner with Daoust Vukovich LLP and session moderator, asked some pertinent questions to a panel of commercial real estate professionals who are all seeing new opportunities and partnerships for retailers and developers in an industry facing disruption.

Foodservice finds room in retail

Bricks-and-mortar stores are embracing experiential retail to create entertaining experiences for consumers who might otherwise shop online. For Vanessa Oliver, principal of Regent Street Commercial, food plays an important role in this experience.

“Food, as a part of retail, is becoming more and more relevant for creating memorable experiences in traditional retail stores,” she said. “It helps make retail stores more of a destination, it gives customers a reason to come into the stores and make that part of their shopping experience, and, most importantly, it’s a part of keeping customers in stores at a shopping centre for a longer time.”

This experiential, retail-food concept “melds well with the millennial lifestyle,” she said. Millennials eat out about three to four times per week, and are now the largest demographic in U.S. history, a statistic that likely applies to Canada, as well. Meanwhile, there is a direct correlation between average length of stays in shopping centres and average sales per square foot.

Creating a unique food experience supports these eating habits, while inviting millennials away from their computers to show them something entertaining. Oliver showcased her father’s business as an example. A few years ago Oliver & Bonacini (O&B) Restaurants partnered with Hudson’s Bay Company and successfully opened Bannock at Bay and Queen in the newly-renovated Hudson’s Bay. Since then, O&B has opened Lena in Toronto’s Saks Fifth Avenue and The Guild in Calgary’s Hudson’s Bay Company building. O&B tailored specific concepts to fit the stores and retailer experience. For example, Bannock restaurant reflects a native Canadian theme and is located on the same floor as the Hudson Bay-branded merchandise.

“There are great synergies to be had there,” said Oliver. “The Bay benefits from partnering with an operator who specializes in this business, but O&B is also benefiting from real estate deals that are far more tenant friendly than if they were doing a restaurant at Bay and Queen, outside of that retail experience.”

Creative use of space

Food also plays a role in showing how retail space can be used in a new way, especially in office buildings. When Dream Unlimited opened a Front Street Foods pop-up on the second-floor terrace of Adelaide Place in Toronto this past summer, it wanted to utilize that untapped space for the 5,000 existing office tenants in the building.

To create a new experience for the tenants, gourmet pop-ups in the outdoor culinary food market included Fish’d by Edo, Brock Sandwich, Fresh and I-Tim.

“It was also a way we could see firsthand what these operators were like; what their production was like, their operation, what their sales were like, what their line ups were like,” said Madeleine Nicholls, vice-president of retail at Dream. “From there, we worked with the most successful operators to put those tenants in our building.”

As a result, Fish’d by Edo, who gained popularity with their sushi burrito, is now working on implementing a permanent location within the building.

Online food delivery

In the restaurant industry, there may be mixed feelings about online food delivery services like UberEats, but it doesn’t seem to be having a negative impact on bricks and mortar leasing.

“Unlike traditional retailers whose business is being eroded by online sales and they’re slowing down expansion or their footprint is contracting, restaurant leasing has been at an all-time high,” noted Oliver.

Most of her clients “love the concept” of UberEats, but dislike it as a restaurant operator because they see it as negative for their business for two main reasons.

“Dining in restaurants is an experience and when you make your restaurant offering available to something like UberEats, you lose control over how that food is delivered, what temperature it is being served at once it is delivered and it’s presented in a cardboard box or takeout container,” she noted. “A lot of our clients take pride in creating a full environment, so they want to be in charge of the atmosphere, lighting, music and the kind of service their servers provide.”

From an economic perspective, Oliver said many clients do not see the financial incentive to using UberEats, which takes, on average, 25 to 30 per cent of the bill’s amount. She hears it might work better for restaurants that are not as busy, in order to break even and keep staff working.

Regarding its impact on real estate, she foresees interested restaurants having to increase back-of-house space, although it “could prove dangerous” as it may disrupt the overall model.

This article was modified and reposted from the original on https://www.reminetwork.com/articles/canadian-retail-market-trends/.


About the author:

Rebecca Melnyk is the online editor of Canadian Property Management magazine.

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