The changing face of food and beverage
Remember when the food and beverage industry consisted largely of a trip to your local pub or RSL, or a bite at a fast food outlet?
Well what if we told you that takeaway food alone is now a $22 billion annual industry in Australia, or that Australian households spend an average of $95.05 every week on restaurant meals or takeaway.
Eating out has become an event in itself, with restaurants positioned and marketed as ‘destinations’ where it’s not uncommon to spend hundreds of dollars in one sitting.
So when did it all change?
According to the 2019 Eating Out In Australia report, average annual spending on dining out or takeaway food has increased by 5.8% year on year since 1983 – almost double the rate of inflation.
While on face value that growth may have been a ‘slow burn’, the changing face of food and beverage now reflects a cultural shift towards dining ‘experiences’, with patrons demanding far more from their food and beverage offerings.
Burgess Rawson’s Melbourne leasing director David Mark says millennials in particular are driving huge changes in the industry.
“Today, particularly with the younger generation, the retail landscape is less about ‘stuff’ and more about experience. Venues need to have something that will bring people out, and this extends into the food and beverage sector,” Mr Mark says.
For commercial property owners and landlords, this growth in both consumer expectations and discretionary spending is of enormous importance and serves to inspire confidence for the future.
As outlined in Burgess Rawson’s Fast Food Property Report, restaurants are now prepared to invest heavily in capital-intensive fit outs – often costing hundreds of thousands of dollars – in order to ensure their property stands out from the crows and appeals to modern diners.
“The need to have a point of difference from competitors is more prevalent than ever before. That could be in the architectural design or property fit out, or the food and beverage offering itself,” Burgess Rawson’s Perth sales and leasing consultant Ben Griffiths says.
“What does that look like? Some shopping centres are now creating open areas with entertainment, flexible outdoor spaces and big screens playing sporting matches, underpinned by dining venues,” Mr Mark adds.
The heavy investment in fit outs from food and beverage operators means they’re often prepared to seek long leases to maximise their returns and the business’ value, which in turn anchors them to the property and provides security for property owners.
But Mark says there needs to be consideration as to the mix of food outlets within the same precincts.
“It needs to be attractive to entice customers into centres. Or if it’s strip retail, there needs to be a cluster or gathering of like-minded food retailers so it becomes a precinct that’s attractive for people to come to for variety and choice,” he says.
In addition, competition among tenants for the best locations is also expected to drive further rent increases over the next five years, boosting yields and returns for investors.
Written by David Mark