The food and beverages arena is fast-moving and fiercely competitive. As Land Securities’ Andrew Turf explains, a strong F&B offer is now a must-have
Today’s food and beverages (F&B) marketplace is an exciting arena to be involved in. It’s competitive, entrepreneurial, evolving and dynamic. Not only that, but it is also taking an even greater share of buildings’ gross internal area and an ever more prominent role within those spaces. No longer do food courts sit atop the third floor of shopping centres as an afterthought. No longer are they called food courts either. Food halls, as they are more appropriately described today, are designed to be a main attraction. They are the focal point.
It is because of the ubiquity inside most shopping centres, whether it be Los Angeles, Sydney, Shanghai or Milan, that food has truly become the great differentiator among them all. For example, restaurants, food halls, farmers’ markets, food trucks and wet-led kiosks all provide customers with the experience that is quite often missing from most developments. If done right, they will become the soul of the development. While we can all find a garment or bracelet online, we can’t find the moment we sit with our friends and family to eat a Vietnamese noodle soup, a pulled pork sandwich, or a Mexican fajita washed down with a glass of Pommery Champagne at Circle 360 (a Champagne bar out of Manchester).
And that will never change. Therefore, F&B has become the experience that often binds us together and informs our decisions on which destination to visit. We, as developers, are continually searching for the ideal mix of tenants that bring these sights, sounds and smells to life. A strong, varied F&B offer is no longer ‘nice to have’ as in the past for retail landlords. It is now a ‘must-have’.
Sizing up investments
Quite often, when seeking a new tenant, our approach/due diligence is much the same as a potential private-equity firm when sizing up new investments. It’s a long-term commitment at our end too, so it behoves us to do our homework. Some questions we seek answers to are – how does their covenant stack up? Does their managing director possess business acumen? Does he/she possess a passion for the industry? Is he/she still tied into the business? How about leadership? How is the brand perceived in the marketplace? Have we had past dealings with them?
What element does it add to our development? Is it a fad and do they have a future? Do they have cash to withstand a slow opening or a weak trading period? Does the team enjoy eating there? How is the service?
Questions like these help asset managers make thorough decisions to evolve their assets, but they are not the only ones, of course. Choosing restaurants for the future isn’t easy and cannot be solved through an equation, no matter how hard you try to simplify the process. Restaurants, as most owners will tell you, are extremely demanding work. They require constant attention, shifting and evolution.
With the advancement of Yelp, Twitter and Opentable.com, everybody now has a voice and most certainly an opinion. So, this attention to detail is greater than it ever was before, and it is this attention to detail on the macro level that we as landlords must get right. How can we be sure what has worked in London may work in the regions and vice-versa? Are we sure that Cosy Club will work in London? What about Le Bistrot Pierre or Laynes Coffee? Can Gail’s or Caravan move up north? How about Bukowski or MeatLiquor? A model that works in Brixton is certainly not guaranteed to work in Portsmouth.
It is all this that we must keep in mind when trying to understand what will ultimately make our developments compelling, while simultaneously minimising our risk. It’s not an easy game. But it is a game that, if played well, provides significant advantage to the scheme.
Northern ventures
Speaking of providing a great benefit to a scheme, one of my favourite operators hails from the north. As most restaurateurs are focused on developing a presence in London, seeing it as Mecca, Tim Bacon and Jeremy Roberts have taken a contrary approach. They are doing fine dotting the northern landscape with terrific restaurants. Living Ventures, their company, houses a number of inimitable brands and – to me – it is the epitome of a talented and dynamic business. It has the ability to take interesting spaces, such as a basement space in Spinningfields, and turn it into one of the hottest restaurants in Manchester with Australasia. Just around the corner from Australasia, it has a 16th-century oast house. Adjacent to The Oast House it has The Alchemist. Each one of these different brands offers something, whether it be food, décor or drink. All tastefully done. Landlords love to work with them because they offer something fresh and unique to an asset.
Another example of a quality restaurateur who embodies the new wave that we, as landlords, seek is Stephen and Juliette Wall at Pho. While their story has received significant press coverage lately, it is important to note that in the sale of their Vietnamese noodle business to ISIS, they did retain exclusive say over their menu. This, to landlords, is reassuring. We know that the brand will therefore retain its vivacity and allure.
I could say much the same for some other operators, such as Brandon Stephens at Tortilla, with his business acumen; Mark Selby at Wahaca with his creative flair; Tom Molnar at Gail’s for his perfection of a bakery; Jamie Barber at Cabana with his vision; Dong Kim, at Wasabi, with his ambition to build the world’s most successful grab-and-go sushi chain (having just ventured to NYC) or Jamie Berger at Pitt Cue Co, who graduated with a PhD from Oxford and speaks fluent Mandarin.
These younger entrepreneurs are just a few (most certainly not all) of the fresh brands blazing new trails and giving us a great choice in the future. They are the reasons this business is an exciting arena to be in. They are bright, hungry and ambitious and have opened the public’s eyes to new tastes that did not exist just a few years before. Landlords are now having to assess individuals, not just covenants.
However, while some of us crave the youthful brands, we must not forget the mainstays that form the foundation of most developments. These are the brands that consistently offer the customer a great experience. They are always approached first in the early stages of development. They are the bedrock of the industry and are as follows: Gondola Group, Spaghetti House, TRG, Nando’s, Carluccio’s, Las Iguanas, Pret A Manger, TGI Friday’s, GBK, Patisserie Valerie, Tragus, Wagamama or YO! Sushi. These offer landlords the consistent draw, the familiarity, which customers also actively seek. We must not forget that they are also immensely profitable.
It is this blend between the young and the familiar that makes developments truly successful. Too much of one or the other typically doesn’t lead to success, so it’s imperative we get this mix right. We can’t all be a Brixton Village, which has some of the most interesting A3 concepts going. That works well in London, but it might not necessarily work in Gateshead. And if a business wants scalability, it must consider the rest of the population. It must know its customer. At the end of the day, it’s all about an experience; an experience they cannot find elsewhere and one that fits within the realities of the surrounding population.
At Land Securities, we are opening the only retail and leisure destination in 2013 – Trinity Leeds. We will provide our customers with an unparalleled dining experience with a tenant line-up that strives to be exciting and meets everyone’s needs. From there, we will take those ideas to our other retail destinations, which already feature more than 170 dining outlets, so as to ensure a lasting impact on the 300 million visitors we have to our properties annually.
Andrew Turf is leasing manager (retail) at the commercial property company Land Securities.
