Between Sydney and Melbourne CBD alone there are over 3,700 registered food businesses taking up ~900,000m2 of GLA. More than 1 out of every 3 shops in these two CBD’s is now a food business. What’s more, the number of food businesses in Sydney CBD is growing threefold compared to other retail. It’s a little slower in the other capital cities but maybe they are just waking up to the trend!
In this feature article, Brain & Poulter (B&P) shares their current analytics and assessment on CBD food drivers and profiles 5 key trends affecting CBD retail planning. This is vital information not being produced anywhere else so read on and take advantage of this exclusive intelligence.
5 Key CBD Customers & What They Want From F&B
Competition within the CBD is fierce with 2,200 businesses in Melbourne and 1,500 in Sydney vying for trade each day but who are they feeding? The infographic below shows our breakdown of the 5 key F&B consumer groups in Australian CBD’s and their F&B preferences.
The infographic is powerful in helping to see where the gaps lie – predominately in the QSR and casual dining space – but don’t lose sight of the heavy lifters still being coffee, cafes and bars as the most frequently demanded F&B.
B&P found it interesting to note that throughout Australian capital city CBD’s the percentage of residents consistently made up less than 10% of the total daily population. This is significantly different to international cities like London and New York and again highlights our unique F&B landscape and why you can’t just replicate what you see on overseas study tours, particularly around the night time economy.
Office Worker Spends Vary Wildly
B&P’s exclusive CBD customer segmentation report clearly identifies CBD office worker as the most influential F&B user group in the CBD. But a deep dive into data produced by our good friends at Urbis raised some red flags with respect to how wildly different office worker types spend when it comes to daily F&B consumption.
We’ve highlighted some of the key differences below:
Average Food Catering Spends in Australian CBDs
So if we were to polarise the profiles, the most buoyant demographic profile for CBD F&B is 18-24 male lawyers while there is much lower F&B demand from over 50’s females working at the Department of Human Services. Luckily there’s a mix of all these demographics across a CBD, but how much does location play a part in CBD F&B performance?
Comparing MATm2 Across The Core, Frame & Fringe CBD
Using the Urbis CBD location definitions, B&P has analysed sales performance per m2 and per store from our database to see what influence location has upon sales performance. The three CBD location types are:
CORE: Retail heart of the CBD accessible from most directions by majority of CBD population within 5-7 minutes.
FRAME: Main locations for office towers sitting around the perimeter of the ‘core’.
FRINGE: Beyond the main retail and commercial areas.
What B&P found was that productivity per m2 was highest in the ‘core’ where we find the smallest tenancy sizes and highest rents per m2 but the average turnovers per store were lower than in ‘the frame’ while both sales and MATm2 in The Fringe was lowest of all locations analysed.
It’s B&P’s view that these results are driven more by demographics than location. Looking at our previous section on demographics analysis it’s natural to find a stronger cluster of younger professional service workers housed in ‘frame’ locations in the CBD while more government and support services are housed in the more economical CBD Fringe commercial buildings. For the ‘core’, strong competition keeps prices down affecting MAT. The small tenancy footprints lend themselves more to coffee and fast food uses but there is a demographic need for slower F&B uses with larger footprints in the CBD to meet the needs of visitors and residents. This is where rooftops and basements become a big opportunity.
5 CBD Food Trends To Move On Quickly
Now you’ve seen the data, let’s look at how to adopt some trends and tap into the market opportunities for food in CBD assets. Our big 5 trends are:
1. Food From Sun Up To Sun Down
With frequency of eating outside the home continuing to increase, meals consumed within the CBD will continue to grow beyond just lunch.
As a nation, we most closely mirror dining out habits from the UK and US where we currently lag behind the US in the frequency of eating breakfast outside the home. The other key F&B need in our demographics infographic was the high demand for bars from all CBD user groups. So, it is this earlier and later trading period where B&P recommends paying attention to in the planning.
With bars popular among a majority of CBD users we need to reshape our thinking around tenancy mix and trading hours.
We recently profiled on our blog a great US concept where the lobby café was purposefully designed with a separate bar concept that shared the common kitchen and services, allowing an operator to seamlessly trade across a longer day and activate the CBD building common areas for an extended period.
2. Food Above &Below The Ground Floor Plane
B&P predicts competition for the provision of F&B in commercial buildings is going to become highly competitive between the landlord and the tenant.
Traditionally, the landlord has leased commercial space to tower tenants and provided retail for those tenants’ convenience at the base of the building. Any tenant controlled F&B was pretty much limited to the boardrooms of banks and professional service firms. Then we started to see a few companies provide an in-house café for employees. Then along came Google and pretty much smashed that paradigm with a whole plethora of pop up chefs, food trucks and permanent retail offers for employees housed within their commercial footprint.
B&P is seeing this desire for more control over the retail provision in many headquarter and business park retail planning strategies we provide for tenants. This highlights a new collaborative framework required between landlord, tenant and consultants to review the whole picture for the site with an aim to make sure a viable amount of F&B is planned to ensure profitable trading for all retail tenants.
In addition, the rise of slow food and casual dining, where the fitouts are larger due to the increased space and customer expectations means many bespoke operators can’t afford ground floor retail rents. This opens up the opportunity in the CBD to repurpose basement and rooftop space for F&B. Along with the coinciding rise in employee interest in health and wellbeing, ‘sky parks’ incorporating F&B, community gardens, lunchtime/pre/post work physical activities are presenting as a real opportunity for the rooftops of majorly populated CBD buildings.
3. Street Food
Asia Pacific dominates the rankings of the five global regions for frequency of eating takeaway foods from street vendors. There are 40,000 street food vendors in Bangkok alone versus our 1,500 F&B tenancies in Sydney! While we may have seen a rolling out of taco’s, hotdogs and Greek as street food ‘winners’, B&P recommends focusing on street food concepts from Malaysia, Taiwan, Vietnam, Indonesia, China, Singapore and Thailand as the fastest street food concepts to get traction in coming years.
4. Health Food
Even though we are as a nation getting increasingly unhealthy and eating less and less fresh vegetables, CBD demand for freshly prepared’ rather than ‘pre-prepared’ continues to grow. So trends such as Poke bowels, cold pressed juice, raw food and ancient grains will continue to influence tenancy mixing especially for food courts where these concepts can now exist as stand-alone rather than part of the permitted use of a mixed-use tenancy of the past.
5. Digital Convenience Innovations
A leading futurist once explained that convenience means doing as little movement as possible. With this in mind, B&P predicts a change in the way people buy F&B is coming and it’s coming soon.
We’ve all tapped our card for a purchase here or there but the notion of a cashless economy is gaining even more momentum among younger generations. Did you know 6 out of 10 millennials no longer carry any cash at all? It’s safe to assume that tapping your watch, phone, card or even RFD impregnated coffee cup is an action we all must become accustomed to.
Even the Indian ‘tiffin’ service, where lowly paid servants would collect lunches and deliver them to workplaces is being re-invented with a surge in bespoke lunch delivery startups like Lunch Lady Lou and, of course, bigger delivery players like Deliveroo and Uber Eats. Parcel lockers for fresh food delivery are also increasing in corporate and campus environments and now need to be planned into the retail strategy just like the effort put in to planning the end of trip facilities.
Needless to say, between the data and the trends, B&P seeks to be of service to landlords who want to truly know who their customers are, what the competition is, where the gaps lie and how to innovate the F&B offer to create highly leasable stores for hungry consumers. It will be great to see our capital and regional cities utilise the food boom to provide world-class F&B experiences for workers, residents and visitors alike over the coming years.
Contact us NOW if you’d like immediate assistance with the planning of your CBD asset or to book B&P to present our 45 minute CBD trends presentation at your next group meeting.