The Rise of Casual Dining

Casual Dining, San Francisco, Bay Area, Trump Era, Consumer Focus, Restaurant Business Online, Commercial Street

Casual Dining, San Francisco, Bay Area, Trump Era, Consumer Focus, Restaurant Business Online, Commercial Street

By Carol Ann Flint

Casual Dining, San Francisco, Bay Area, Trump Era, Consumer Focus, Restaurant Business Online, Commercial Street
Flint
[dropcap]M[dropcap]aybe tablecloths, complex cutlery, and headwaiters will make a comeback in the Trump era. After all, there are occasions that merit serene and perfect service, discreetly spaced seating, and elevated table manners.

For now, though, fine dining in hushed reverence has largely been replaced with casual, lighthearted meals that place an emphasis on food instead of service. Chefs want to cook for children and friends and family, not just for one type of staid kind of clientele. Now cultural heroes who meet their public in food trucks, pop-ups, and mid-range restaurants, they have taken over from maître d’s as stewards of the dining experience.

Since traditional full-service restaurants come with a much higher overhead—in both real estate and in wage costs for wait staff—chefs are testing out smaller, more casual concepts that cost less to open and operate while satisfying new consumer realities. Consumer focus on health and fitness, a large millennial workforce, and a dense, affluent population is driving the Bay Area’s proliferation of this increasingly popular concept, bringing activity to the streets and life into buildings.

The industry has coined the phrase “fast-casual” for this style that marries quality and affordable food with quick service. Local and regional chains are delivering a multitude of food options using this model, and consumers are choosing these cheaper and quicker alternatives that focus on quality ingredients over full service. More than ever, restaurant-goers are demanding healthy ingredients and transparent kitchens, where food preparation can be directed by the customer.

Dominating the national scene in the fast-casual space, Chipotle, Chop’t, and Panera have poured into the area in recent years. Pieology Pizza, Blaze Pizza, and Yalla Mediterranean, like Chipotle, follow the build-your-own, counter-service model, a common feature of many contemporary fast-casual eateries.

Although Restaurant Business Online reports that fast-casual restaurants still make up only about 8% of the restaurant industry’s sales, the segment continues to grow by double digits.1 This market growth has meant an exploding supply of new fast-casual concepts all vying for the most cost-effective way to deliver tasty, cheap, but high-quality food to their customers.

A notch above some of the fast-casual chains are the quiet-but-not-boring, one-off, or local micro-chain restaurants with fresh ingredients, dishes under $20, a spare aesthetic, beer and wine, and “counter service plus”—where waiters bring food and bus tables, but perhaps still don’t take orders. I like to think of this as “fast-casual-plus,” a local example being the ever-popular Tlaloc on Commercial Street in downtown San Francisco. The create-your-own-burger joint The Counter: Custom Built Burgers could also be called “fast-casual-plus,” though it’s hardly just local anymore, with locations in nine states and seven countries.

The benefit of fast-casual dining is economic for both business owners and diners. Wage increases are balanced by less service and fewer staff, while the food quality and dining experience remain high. Reduced real estate and less labor allows restaurants to spend more on ingredients and deliver a high-quality, everyday experience that is more affordable but not plebeian.

As for the effect on local commercial real estate, demand is strong for restaurant space across the region, but especially for smallish, 1,500–2,000-square-foot, second-generation restaurant spaces, which tend to be perfect for fast-casual concepts. The fast-casual boom has driven lease rates for these spaces to astronomical levels (while food and labor costs are simultaneously shaving margins for restaurateurs). Smaller spaces also command bigger rents than larger spaces occupied by apparel retailers or full-service restaurants. Former full-service spaces are being carved up to accommodate the demand.

Independents must compete for these spaces with national chains with sound financials. For landlords, it is much safer to rely on a tested national chain. While a local independent may be willing to pay more—and may elevate the real estate with its cachet and buzz—landlords must be convinced to take a chance with them. In either case, whether a tried-and-true chain or the next local superstar, it seems like it’s only the beginning for the fast-casual trend.

1 http://www.restaurantbusinessonline.com/operations/sales-finance/top-25-fastest-growing-fast-casuals#page=0

Carol Ann Flint is an investment sales broker who relocated to the Bay Area from New York City in 2015 and is insatiably curious about planning and design and how they affect life in communities.

This article will also appear in The VIEW, the quarterly publication jointly curated by the three Bay Area chapters of Commercial Real Estate Women (CREW)—CREW San Francisco, CREW East Bay, and CREW Silicon Valley. CREW is a nationwide business networking organization dedicated to the advancement of women in commercial real estate. For chapter news, events, and membership information, visit the Bay Area member organization websites at crewsf.org, creweastbay.org, and crewsv.org.

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