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Industry News

Restaurants rethink real estate as more consumers order in

October 30, 2018

Restaurants are shrinking as more consumers order in.

The use of food-delivery apps such as DoorDash, GrubHub, Postmates and UberEats is surging, transforming the way food chains make money. U.S. restaurant delivery sales are projected to rise by an average of 12 percent yearly over the next four years, to $76 billion, according to research firm Cowen & Co.

At Firehouse Subs, revenue has increased by 7 percent this year, mainly from orders placed online and through delivery apps, says Firehouse of America CEO Don Fox, as reported in Bloomberg. More than half of those sales are for food eaten elsewhere, according to Fox, who notes that since January, orders for pickup and delivery comprise some 60 percent of Firehouse Subs revenue.  

Firehouse is adjusting its real estate accordingly. Inside the shops, shelves on which delivery orders can be stacked have replaced tables and chairs. The company has converted 10 square feet once used for seating into a place for couriers to grab orders.

The chain had traditionally rented spaces measuring about 2,000 to 2,200 square feet. Now Fox does not consider any lease of more than 1,800 square feet. "In some cities, where people are really ordering online and rents are higher, just 1,400 square feet is enough,” he said.

Larger sit-down chains are also renegotiating leases and renovating locations to adjust to fewer in-house patrons, according to David Orkin, who runs the U.S. restaurant division of real estate advisory firm CBRE. “In many instances," he said, "chains want a whole separate area for delivery workers to come and go.”

By Brannon Boswell

Executive Editor, Commerce + Communities Today

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