TORONTO — Canada is fast on its way to embracing a celebrity chef “craze” that has been welcomed in major cities around the world, according to a new report that says Canadian shopping malls will be at the centre of this trend.
“Following in the footsteps of cities that have accepted the celebrity chef restaurant craze, such as London, New York, Chicago, and L.A., this is a trend that is certain to continue,” says a research paper from CBRE Ltd., a global real estate company.
The report, released Monday, details the impact that restaurants are now having on the Canadian shopping experience.
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“Restaurateurs in premier malls and major urban centres are stepping up their game in order to match the experience consumers want, and are willing to pay for it,” says the report, suggesting that the rise of the restaurant should help landlords trying to keep their malls relevant as more Canadians embrace online shopping.
“While typically an afterthought to filling a retail property, landlords are now turning towards restaurants as a significant part of their tenant mix,” says the report.
“Restaurants are no longer a fringe element in any real estate development, but rather a key tenant that acts as an important draw, and best of all can withstand the rising tide of online retail. In an effort to woo more customers, landlords are increasingly turning to experiential retail, namely restaurants and food services.”
CBRE says “fit out costs” for a new restaurant can be from $400 to $500 per square foot and go even higher for what it calls ultra-elite restaurants. The key is these restaurants can bring more than $10-million annually in revenue, which translates to sales of $800 to $1,000 per square foot — an attractive payoff for landlords who get a percentage of sales in a lease.
Canadians are expected to spend $2,104 per household on restaurant food in 2014, about 2.4% of total household expenditure per household nationally. The number is going up every year and as of Aug. 31 was up 5.6% year over year nationally, with Alberta, British Columbia, and Saskatchewan above the national average.
Some of the largest landlords in the country are embracing the restaurant trend, including Yorkdale Shopping Centre in Toronto, which is managed by Oxford Properties and owned by Alberta Investment Management Corp. (AIMCo), on behalf of its clients, and Oxford Properties Group.
Yorkdale is in the process of a major expansion and as part of that growth it has attracted celebrity chef Jamie Oliver, who is teaming up with the King Street Food Co. to open up the first Jamie’s Italian in Toronto. More locations are planned in the future, the partnership announced in June.
“There has been a lot of buzz recently around the partnership,” says CBRE which notes restaurants such as Cactus Club, Hy’s, Rodney’s Oysters and The Keg Steakhouse are all opening new locations in markets across Canada.
The real estate company also points to upscale grocer Pusateri’s Fine Foods partnership with Saks Fifth Avenue, which is launching high-end food halls in multiple Canadian locations.
Quick-service restaurants are also on the rise. Carl’s Jr. continues to expand eastward and has plans for a Toronto location, while Five Guys Burgers & Fries will add to its 59 locations in Canada. CBRE says Firehouse Subs is now looking to expand into Canada by hitting the Ontario market first.
“Canadians have also shown an insatiable appetite for fresh casual restaurants,” says CBRE, adding that Toronto-based IQ Food Co. is looking to expand west while bGood is set to open its first Canadian locations in Toronto. “This trend toward fast and fresh healthy eating options have been driven by demand from Millennials, especially in urban areas, and has shown lasting power in the Canadian marketplace.”
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