Did you know there is a sustainable volume of food and hospitality revenue for every project?

Kambri Pricinct at ANU
(Image via Visit Canberra)

Did you know there is a sustainable volume of food and hospitality revenue for every project?

Determining a hospitality strategy that maximises food and hospitality revenue is the goal that many of our clients wish to resolve when they partner with Future Food. However, in order to do that we must first understand the size of the project’s food and hospitality revenue potential and then the important part – aligning that available spending with the need states and aspirations of their target market(s) in order to maximise the potential for the project.

We love to talk about food and hospitality, food and experiences, food and sociability, food and beverage and just plain food.  We love to work with operators, landlords and developers to bring precincts to life with a well-considered F&B strategy and activation plan.  We recognise, however, that none of this can operate in a vacuum and that every F&B precinct, whether it is a Mixed-Use Development, Shopping Centre, Airport, Stadium, a Club or any of the diverse project types for which we provide advisory services, has a unique threshold of sustainable spending for food and hospitality. Without this vital piece of information, nothing can proceed.

Our aim is not just to “fill spaces” that may or may not leverage the unique opportunities of the site with a diverse range of offers, but rather to understand the targeted customer profiles, their aspirations and needs within the proposed project and how best to capture that available spend with a comprehensive food and hospitality strategy.  All of this has to be balanced by an understanding of how many of these potential customers there are and how much they are likely to spend. 

Food Theatre by Roti Road
(Image via Roti Road)

The Experience Economy

The Experience Economy is the biggest trend driving consumer spending.  It is shaping F&B precincts right now and yet its greatest impact is still to come.  In Australia and globally, it is the aspiration of modern precincts to deliver experiences. This objective of experience over ownership, is not just a by-product of studies into millennial spending habits but is demonstrated through a broad cross-section of globally-trending spending-patterns: 

Experience per Square Metre is Rising! 

The message that is coming through is that there has been a structural change in that shoppers and diners want their retail spaces to be experience driven, not just a place of commerce.  This alters the financial dynamics of an outlet’s or precinct’s sustainable volume of F&B.  Understanding the economics of these undercurrents is vital to the success of a project because a well-considered project and subsequent strategy can unlock latent food and hospitality spending.

Therefore, taking an experience-first approach will pay dividends in the long-term. Research from Unibail-Rodamco-Westfield has shown that, globally, 80% of shoppers are willing to pay more for a better experience.  (Source – Westfield How We Shop The Next Decade - Unibail-Rodamco-Westfield 2020 

The CEO of Westfield, Peter Allen, comments that in recent years there has been a shift towards experiential retail and consume on site. “Today, 43 per cent of the stores in our portfolio are experience- and services-based.”

Enhanced food products & services and food & leisure partnerships are key trends determining the future of food for many projects, aligning development programming with authentic F&B experiences and ‘dinertainment’. However popular the heady combination of food and entertainment may be, it is not a suitable response to every vacant tenancy conundrum! The answer to every empty retail space can’t be ‘put a restaurant in it!’

Determining demand is a core component but overlaying an F&B strategy that can maximise this available spend requires a considered plan that takes into account the total available food spending, and asserts a market share and spend per head, respective to the target customer profiles and their respective aspirations and needs. The result is an understanding of the market and each component group of customers for any given project.  What results is a total available spend for F&B for that particular project at that particular address.

Mad Giant Brewery in Johannesburg
(Image via Pinterest)

Change is Happening Fast

Whilst we frequently espouse the belief that F&B can be a significant Point of Difference for a development, this won’t happen if the same shaped tenancies get leased to the same old concepts and brands.

Whilst some developments are happy with a “back to basics” leasing approach, in reality they are making life difficult for themselves with an old-fashioned approach. Just because there is plenty of available spend in the catchment, customer spend is not guaranteed and filling spaces with names is not good enough in the age of the informed consumer.

The fact of the matter is that business across all sectors are changing and with that comes evolving customer expectations. F&B businesses that are going to survive in this increasingly data-driven, competitive landscape need to be flexible and agile. The modern customer is looking for diversity, value and innovation. As such the strategic alignment of food & hospitality must consider up-to-the-moment food trends, innovations and entrepreneurs. Without this imperative, the sustainable volume of F&B spending could never be achieved.

In summary, the Future of Food in your development can be rationalised, benchmarked and strategised. More importantly, it can be the difference between successful activation of a development and a line of empty tenancies. It can be the unique point of difference that your project needs or more of the same. It can result in increased asset value and it can yield higher rates of income. No matter what the project is or wants to be, it must be strategically executed to an estimate of the sustainable volume of food and hospitality.

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Cover Image: Café Murano at St James (Image via Timeout)