Editor’s note: This is the third story in CNBC’s three-part series about the future of America’s malls, as developers transform the spaces and add new retailers, experiences and even apartments. read first and second part.
Shopping malls were once home to the busiest stores. Now they are home to the hottest restaurants.
The slow death of department stores and the rise of online shopping have hurt U.S. shopping centers, especially over the past decade. The once significant number of malls has dropped from a peak of 2,500 in the 1980s to about 700 today, according to Coresight Research.
But many in the retail industry now say rumors of the mall’s demise have been greatly exaggerated. many Generation Z consumers prefer Shop in person and love the mall experience. Developers’ creative solutions come to nothing Department stores move into residential areasto bring consumers closer to stores.
Landlords are dedicating more square footage to restaurants and bars, which makes shopping centers more attractive.
“This is a huge shift,” said David Henkes, senior principal at Technomic, a market research firm focused on the restaurant industry. “It used to be that the shopping occasion drove people to the mall and then you might go get something to eat. In many ways, that’s been completely flipped. Now the dining options drive people there and then you’d like them to shop there.” .
Yelp found that 17 of the 25 most popular mall brands based on consumer interest are restaurants. Report published October.
Going back 10 or 20 years, restaurants accounted for only about 5% to 10% of the total leased space in malls operated by Brookfield Properties, said Chris Brandon, Brookfield Properties’ senior vice president of restaurant retail leasing. This usually includes a food court and several full-service restaurants. Things have changed in recent years.
“That number has grown incredibly over the last five to 10 years,” Brandon said. “In some of our malls, we’re seeing 20 to 30 percent of the total square footage (general leasing area) dedicated to When it comes to food, this is 100% the original intention.”
Brookfield owns 129 shopping centers, including Tysons Galleria in McLean, Virginia; Christiana Mall in Texas; and First Colony Mall in Sugar Land, Texas. Its mall restaurant tenants include more than 540 full-service restaurants and approximately 2,000 fast-casual establishments.
Not just a food court
Brookfield Properties renovated the food court at the Staten Island Mall in 2018 with an updated exterior and new restaurants.
Source: Brookfield Properties
More than half a century ago, New Jersey’s Paramus Park Mall became the first example of a successful shopping mall food court in the United States when it opened a food court on its second floor. .
Full service chains such as cheesecake factoryTGI Fridays and California Pizza Kitchen have also become mainstays in the mall.
But these familiar names are no longer the only options for shoppers. Today, shopping malls offer a wider selection of restaurants and refreshments, from local restaurants to local chefs and emerging bubble tea chains.
“What malls are looking for tend to be higher-end restaurants, what we might call ‘modern casual’ restaurants,” Henkes said. “It’s not fine dining per se, but it’s a step up from traditional casual dining.”
These “modern casual” restaurants include upscale restaurants such as Korean barbecue, steakhouses or sushi. While prices vary, dining at these new mall restaurants can cost upwards of $30 per person, or more.
For James Cook, director of retail research at real estate firm JLL, the expansion of dining options provides a familiar experience but still enhances the experience.
“The difference for me is that I don’t necessarily have to dress up to go to the mall,” he said. “This is a restaurant where I can spend more money but not necessarily feel like I have to wear a blazer or anything like that.”
The pandemic has also made shopping malls more attractive to restaurateurs.
During the lockdown, operators saw their traffic disappear. Even as consumers begin dining out and commuting again, CBD restaurants will still struggle to attract diners given the new hybrid workforce and other changes in consumer behavior. But malls bounced back.
“Even today, foot traffic in suburban malls has returned to pre-pandemic levels, while in cities and city centers foot traffic has not yet recovered,” JLL’s Cook said.
This foot traffic also attracts emerging chains looking to expand quickly. Catering companies such as sweet green and Mendocino Farms are opening new stores in shopping centers as they seek to boost sales and brand awareness.
“One thing our properties can offer is scale, and scale very quickly. If they were used to doing X at a food truck, now they’re doing X times two or three,” Brandon said.
For example, Taiwanese restaurant chain Din Tai Fung has targeted malls as it expands in the United States, said Yelp restaurant director Alison Lin. According to the chain’s website, locations are coming soon at Fashion Square and Brea Mall in Scottsdale, Southern California. Din Tai Fung ranks second in Yelp’s report on the most popular shopping mall brands by consumer interest. (Din Tai Fung declined to comment).
New food court? food hall
People visit a food court in Brooklyn, New York City on July 11, 2024.
Spencer Pratt | Getty Images
As malls devote more space to food and drink, a newer, more upscale alternative to food courts has emerged: the food court.
Like food courts, food courts offer a range of dining options, usually at booths, with regular seating available once diners have purchased and collected their food and drinks.
But unlike food courts, these halls typically offer more expensive options, often tout connections with local chefs and promise more interesting fare than food courts. While food courts sell gourmet meals from national chains, food courts often feature only local vendors with fewer locations.
“The food court can give you a burger, fries or pizza so you can stay in the mall longer,” Cook said. “The food court is part of the experience.”
Often, food halls have multiple vendors. But Eataly is an exception.
The newly opened Eataly store in the Short Hills Mall in New Jersey sells fresh pasta in addition to other handmade groceries.
Source: Eataly
The Italian chain markets itself as a way to travel to Italy without having to fly. Its large venue features a full-service restaurant; artisanal groceries; a quick-service counter selling ice cream, pizza and espresso; and cooking classes. Eight of Eataly’s 13 stores in the United States are located in shopping malls, with more stores to open next year.
Eataly North America CEO Tommaso Bruso joined the company last year after working in the fashion industry for two decades, leading mall brands such as Bennettton and Diesel.
“People go to malls for shopping, but they also go for cultural experiences,” Brousseau said, adding that Eataly has found success with consumers inside and outside malls.
But the food court didn’t win over everyone. Brandon said the food court at Brookfield Mall is doing better. He pointed to Chick-fil-A and Panda Express as two tenants that typically have strong sales in food courts. In 2023, average annual income Chick-fil-A’s store sales are $4.5 million; the chain’s top-performing mall restaurants have annual sales of nearly $19 million, according to franchise disclosure documents.
cheesecake factor
The neon lights of the Cheesecake Factory restaurant glow at dusk at Westfield Mall in San Jose, California on December 2, 2023.
The Smith Collection | Gadot | Archive Photos | Getty Images
Even though competition for shoppers is tougher than ever, The Cheesecake Factory still manages to stay ahead of the competition. It shows how restaurants can help wider shopping centres.
Known for its comprehensive menu and towering pillars, the chain ranks No. 1 in Yelp’s mall brand report.
It’s been a tough year for the company. Like many restaurants, the chain has struggled to attract diners, many of whom have spent less at restaurants. In the most recent quarter, the company’s same-store sales grew just 1.6%. Activist investors have also been putting pressure on the company to divest smaller brands such as Northern Italy. (The Cheesecake Factory declined to comment.)
Still, the company is outperforming the broader casual dining category, according to metrics provided by industry tracker Black Box Intelligence.
Cheesecake Factory’s shares have risen 43% this year, outpacing the S&P 500’s 27% gain over the same period.
While mall staples such as California Pizza Kitchen and TGI Fridays have filed for Chapter 11 bankruptcy in recent years, the Cheesecake Factory has escaped the same fate.
It might even help the landlord’s financial situation. An enclosed shopping mall with a Cheesecake Factory is more likely to pay back its loan on time. Moody’s Analytics Report Starting in 2023.
Still, Reddy said having a restaurant location helps. Brookfield’s Brandon agrees.
“Oh my gosh, are they productive? Their capabilities are unbelievable and they are a great partner to us. We have dozens of leases with them and we really value them as tenants,” he said.
