Where are we going with food in our centres?

The future of the old food courts has been in decline for some years now; over the past 10 to 15 years the rental growth has near exceeded the turnover growth and during this period most landlords have added more food competition into an ever oversupplied space.

The older food courts used to be anchored with the usual suspects: McDonalds; KFC and Subway to name a few. The more modern approach today is to bypass these majors as a focus, to spread around the spend dollars to the smaller growing retailers likes Roll’d or Soul Origin.

This in turn has led to the downfall of some medium retailers such as Sumo Salad. The problem here is that newer, fresher retailers are becoming ‘category killers’ that cut across the usages of other food operators in the same food courts. When Hero Sushi began we didn’t see the future in food courts and as such we chose to take sites externally to the major supermarket players.

This has worked a treat, besides the fact that Hero is super professional and has a great platform with Japanese Sushi chefs. However in many instances the property owners have seen the turnover from a Hero store and have placed other competition even as close as ten metres away. There is the need for these shopping centre owners to maintain the rental flows from a declining market, and in so doing are creating a stopgap retail sector (the strong will survive).

There is no care taken to try and maintain a credible tenancy mix and it is a lazy approach to a retail market. Fast food courts will always have a place in the current shopping centre environment, however landlords must respect the lives of some of the food operators. I believe that the current fast food courts will be fine for the operators such as the major players remembering that they do not require chefs and can compete with casual labour and junior wages.

The emerging brands such as Soul Origin, Roll’d and Gozleme King (to name a few) have the capacity to generate sales without the massive costs of others. However with the growth in wages, electricity and gas, landlords can’t just OK the turnover and assess that the retailer is making a fortune because of the increased turnover.

The running costs of a business today far exceed the expectations of even five years ago. It has taken many years for owners to now understand the decline of the fast food courts. The question is where are we going? Well, the latest growth is in casual dining or cafe courts.

As the shopping centres need to reinvent themselves the new growth is entertainment and pleasure. As usual WESTFIELD and AMP have been the prime movers in this area with Macquarie shopping centre Pacific Fair and now the newer Chermside centre in Queensland anchored by cinemas and seconded to bowling, skate parks and the regrowth of amusement centres.

The new precinct provides for lower rentals and longer trading hours. With the current pricing of fast food, people are prepared to pay an extra few dollars to be seated within a restaurant rather than an open food court.

THE NEW ERA OF FOOD IN CENTRES WILL BE MORE CENTRED ON CAFE COURTS

The new WESTFIELD Chermside (Qld) is the perfect example of this. The new area is linked with cinemas, Timezone and children’s play areas thus creating a full day’s entertainment zone. Rentals here are based on a lower rate per square metre and given some incentive to the fitout makes for an easier transition. A food court has a trade period of 2-3 hours per day. The cafe courts have the same timing but can maintain a trade period for the dinner times, thus enabling two serving periods per day. I believe that this practice will continue on for the next 5-10 years.

Already many more are planned and due to open throughout Australia.

Lawrence Brown has been in the retail property industry for more than 35 years. He has grown Nandos Australia, Hokka Hokka. Hero Sushi, Soul origin and worked with numerous food operators to establish their brand in Australia. Has also consulted to centre owners in Singapore and China and is active amongst all centre owners and operators in Australia.



Business First is a peer-to-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.


Leave a Reply

Your email address will not be published. Required fields are marked *