Introducing CRE MBA—self-paced online courses taught by industry experts for CRE professionals.

More Consumers Are Dining Out Again, And That’s Great For Restaurants

The fast-moving restaurant industry is seeing renewed demand thanks to changing consumer preferences reshaping retail spaces.
  • Restaurants, once viewed as risky, now thrive in CRE with growing dining-out trends.
  • A post-pandemic shift towards more frequent dining out is reshaping retail, with record-high restaurant sales.
  • Despite rising costs, growth remains positive, driven by changing trends and evolving consumer demands.
Key Takeaways

Rising restaurant leasing activity is transforming the U.S. retail landscape as more consumers choose to dine out, according to WSJ.

Eating Out in Droves

Restaurants are no longer viewed as risky tenants but instead as lucrative opportunities in CRE. Americans are also spending more on dining out, thanks to evolving consumer lifestyles and a revitalized ‘foodie’ culture nationwide.

Post-pandemic restaurant leasing has bolstered the entire retail sector, surprising industry analysts and contributing significantly to the sector’s recovery. Food services accounted for more than 19% of all retail leases last year, the highest percentage for any retail sector since at least 2007.

Changing Consumer Habits

A notable shift towards dining away from home is evident as households allocate more of their food budgets to restaurants. Higher restaurant sales, driven by various factors like higher income and changing demographics, reflect a growing preference for dining out over home-cooked meals.

According to the U.S. Agriculture Department’s Economic Research Service, last year, the typical household allocated almost 53% of its food budget to dining out, marking an all-time high and reflecting a 10 percentage point increase since 2003.

Even amidst economic challenges like inflation and rising costs, the overall outlook for the restaurant industry remains positive, with continued consumer spending and a resilient growth trajectory.

Why It Matters

Landlords have also embraced restaurants as valuable tenants due to their ability to drive foot traffic and enhance neighboring businesses. Creditworthy chains and data supporting the positive impact of food establishments have resulted in more landlord interest in lucrative restaurant leases.

Restaurant sales have reached unprecedented levels, with projections indicating they will surpass $1.1T in 2024—5.4% more than last year, as reported by the National Restaurant Association.

RECENT NEWSLETTERS
View All
Ares to Buy GCP For $5.2B, Becoming Top 3 Industrial Player
October 11, 2024
READ MORE
KKR Bets on Travel With Strategic Acquisition of The Parking Spot
October 10, 2024
READ MORE
NYC CRE Market Rebounds as Investor Confidence Fuels 63% Spike in Sales
October 9, 2024
READ MORE
Industrial Construction Nosedives as Vacancy Rates Surge
October 8, 2024
READ MORE

podcast

No CAP by CRE Daily

No Cap by CRE Daily is a weekly podcast offering an unfiltered look into commercial real estate’s biggest trends and influential figures.

Join 65k+
  • operators
  • developers
  • brokers
  • owners
  • landlords
  • investors
  • lenders

who start their day with CRE Daily.

The latest news and trends in commercial real estate delivered to your inbox. Get smarter about what matters in just 5-minutes or less.