Prepared Meal Delivery Boom: How Home Deliveries Are Changing Dining Choices
Melina Cordero
HOUSTON – (By Dale King, Realty News Report) – A few years ago, the idea of ordering food from chains like McDonald’s, Chick-fil-A, Denny’s and Starbucks for home delivery might have sounded far-fetched. Today, those meals arrive with a tap on an app, and next year Dunkin’ Donuts plans to expand its mobile-order delivery service as well.
A significant transformation of the U.S. food-and-beverage industry—and the real estate that supports it—is documented in a new CBRE report.
Key takeaways from the CBRE analysis include:
As more Americans concentrate in metropolitan regions, the food-and-beverage sector is expanding fastest in suburban areas;
Grocery stores are expected to allocate more space to prepared foods to meet changing consumer tastes;
Millennials eat out more often than other generations, though they remain value-conscious;
At present, Baby Boomers collectively spend the most on food and beverages, while Generation X spends the most per household.
“The food-and-beverage category makes up nearly 25% of U.S. retail sales, and few other sectors have grown their presence in shopping centers as quickly as restaurants and grocery stores,” said Melina Cordero, CBRE’s global head of retail research.
“Yet this sector is equally vulnerable to sweeping demographic shifts, which will shape real estate through formats such as grocery-restaurant hybrids, more kitchen-only delivery locations and expanded delivery services.”
Other trends CBRE highlights for the mid-21st century include a stronger demand for convenient prepared foods, the rising influence of millennials on eating habits, and a surge in activity in inner-ring suburbs—now among the hottest markets for food-and-beverage real estate.
CBRE’s new report, the first installment in its multipart “Food in Demand” series, offers several forecasts for restaurants and grocery retailers and their implications for retail real estate. The study finds that the food-and-beverage sector will evolve rapidly due to demographic shifts, economic forces and automation.
Key predictions from the report:
Inner-ring neighborhoods will become even more attractive food-and-beverage destinations.
Many inner-ring suburbs are densifying. Restaurants, bars and grocery stores serve as natural anchors in mixed-use developments in these neighborhoods, functioning as meeting places for residents and local workers.
These suburbs benefit from higher suburban household spending on food and beverages while often avoiding the steep lease rates typical of central urban cores.
More single-person households will increase demand for convenient dining options.
The share of single-person U.S. households rose to 28% last year from 17% in 1969, with increases across most age groups, according to Commerce Department data. Alongside a rise in dual-income households, this trend leaves many people with less time to prepare meals.
For retail real estate, that means growing demand for fast-casual and fast-food formats, more in-store bars and restaurants within grocery stores to sell made-to-order, higher-margin items, and additional kitchen-only locations focused on delivery and carryout orders.
Spending at restaurants and grocery stores will outpace other soft-goods categories over the next five years.
The food-and-beverage category’s share of total U.S. retail sales rose to 24.3% over the past decade from 22.7% in the eight years before the recession, per Commerce Department figures. At the same time, this category faces lower e-commerce penetration than many others.
As a result, restaurants, bars and grocery stores are claiming a larger share of retail real estate. The International Council of Shopping Centers reports that mall space devoted to restaurants—excluding food courts—increased by 18% since 2007, reaching 43 million square feet.
Within a decade, millennials’ spending on food and beverages is expected to surpass that of other generations.
While millennials currently dine out more than other age groups, they tend to be cost-conscious. Today, Baby Boomers spend the most in aggregate on food and beverages, and Gen X spends the most per household.
As millennials reduce debt and their incomes rise, their spending on dining and groceries is likely to increase over the next ten years—sometimes in volume, sometimes in ticket size—while Boomers’ spending may decline as they age into retirement.
“The report highlights the importance for retailers and shopping-center owners to analyze and understand their customer base—often through location analytics—so they can tailor menus and site choices,” said David Orkin, executive vice president who leads CBRE’s restaurant practice in the Americas.
“We see consumer preferences shaping many aspects of retail real estate,” he added, including site selection, store designs that accommodate delivery and pickup or prepackaged meals, and layouts that incorporate automated ordering and self-service options.
