Emerging Concepts

Where Are Restaurants Opening? The Urban Setting Re-visited

Over two years ago, we highlighted the changing landscape of the restauranteur as more establishments gave up their urban setting and headed to the suburbs. As the French writer Jean-Baptiste Alphonse Karr wrote, “The more things change, the more they stay the same.” 

Nation’s Restaurant News recently spoke with Hudson Riehle, National Restaurant Association’s senior vice president of the Research and Knowledge Group. He shared the urban market downtrend that occurred when the lunch and after-work office crowd dispersed, heading to their suburban work-from-home offices. 

According to Placer.ai, the trend toward returning to the office environment varies largely across the country, thereby affecting restaurant traffic. The city regions highlighting the greatest return of workers include Dallas-Fort Worth and New York-Newark-Jersey City. The regions that remain hybrid workforce friendly are Chicago-Naperville-Elgin and San Francisco-Oakland-Berkeley. 

Let’s explore how restaurants are adapting to this geographically diverse landscape and the return, or not, of the office worker.

Heading to the Office

When Placer.ai took a closer look at the visitation pattern in four core-based statistical areas, they found office visits were concentrated mid-week, with Fridays experiencing the fewest visits. Restaurants in urban areas that saw heavy foot traffic during their Friday happy hour must now revise those dynamics. 

The other interesting observation was that high-occupancy office buildings that demonstrated the greatest post-COVID recovery served a larger-than-average percentage of single employees as compared to those with families. Almost 50% of an office building’s onsite workers in Dallas consisted of one-person households.

These high-performing office buildings related to onsite workers also saw more of their managers and executives making the journey to the office. These offices also tended to lean toward professional services, including finance, real estate, and tech. 

Restaurants Appealing to this Segment

So, if you’re a restauranteur looking to appeal to the office crowd, where do you go? According to Texas Monthly, some of the best new restaurants are found in the Dallas-Fort Worth area. These include Le Margot, a French restaurant with a sense of humor, and Quarter Acre, a Dallas restaurant owned and operated by a New Zealand chef.

Offices in Dallas, along with Atlanta, Miami, Washington, D.C., and New York, are experiencing some of the biggest comebacks, with the leaders, Miami and New York, seeing office visits return to 86% and 83%, respectively, of what was seen before the pandemic.

An Example of Shifting Dining Centers

Richmond, VA, was, at one time, the region’s dining center. In 2019, it added 120 restaurants. Since then, it has remained at about 100 new restaurants every year. While definitely remaining a place restaurants are calling home, the surrounding suburban counties of Chesterfield and Henrico have also added up to 100 restaurants yearly, a significant increase from their pre-pandemic growth, according to Axios.

Richmond’s most prominent restaurant group, Lindsey Food Group, recently opened ML Steak in Chesterfield and anticipates opening two more in the affluent, suburban community in 2024.

Coldwell Banker Commercial’s 2024 Spring CRE Trend Report found that QSRs are also switching up their locations. They are focusing less on places in the heart of cities that once competed for the coffee before work and drinks after work crowds. Today, they, too, are heading to the suburbs.

Two of the major players in this arena, Chipotle and CAVA, have transitioned their development strategies to the suburban market. These locations are outperforming their urban-dwelling counterparts, who are, in some cases, reducing staff and cutting back operational hours.

The Urban Challenge

Riehle reported that there are more factors at work transforming the urban landscape, once the competitive backdrop of the restauranteur. The higher real estate costs, labor costs, and taxes have also left many rethinking their “next best location” for their brand’s expansion plans. 

The suburbs are not without their own challenges, such as how many different concepts can enter a particular market before it’s saturated.

At Emerging Concepts, we provide real estate solutions for the industry’s top restaurant and entertainment concepts. Our data scientists and real estate experts work together to determine the latest hot spots and the areas best suited for different target markets and brand approaches. Then, we negotiate on our client’s behalf, maximizing their returns while minimizing their risks. 

To learn more about our approach to helping brands successfully expand or to schedule a consultation, contact EMERGING.

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