Sit-down restaurants are seeing their best results in the Sun Belt.
There’s a good reason why retail real estate developers vie for restaurant tenants like The Cheesecake Factory and Olive Garden. Consumer demand for full-service eateries is now higher than it was before COVID took root.
Food-and-beverage category sales topped one trillion dollars in the United States in 2022, up 24% from 2019 and 14% from last year, according to a report from the global real estate services JLL.
With families entrenched in their homes, grocery store sales spiked by nearly 30% from February to March of 2020. But the tide turned at the outset of 2021 when a higher portion of consumer dollars were spent in restaurants.
By February of this year, for every $100 consumers spent on groceries, they spent $130 dining out. And while restaurant traffic was still much higher at quick-service restaurants, full-service dining establishments did better in year-over-year traffic comparisons, up by 6% over February 2022.
Table reservations have now fully returned to pre-pandemic levels, according to Open Table data accessed by JLL. January 2023 bookings were up more than 3% over 2019 levels—an indication that consumers were pivoting away from buying goods and dedicating more of their budgets to service and experience spending, according to JLL.
Good and bad results, however, were heavily dependent on location.
The eating-out recovery has been strongest in the Sun Belt, where fewer COVID restrictions were set in place and where populations and incomes are rising. In January, Miami restaurants sat 50% more diners than they did in 2019. Traffic was up in Austin by 23%, in Phoenix by 13%, and in Houston by 9%.
The numbers were far different in cities where declining office populations continue to leave many tables empty. This January, San Francisco’s restaurant traffic was 45% off the traffic numbers of that month in 2019. New York was down by 30%, Washington D.C. by 28%, and Seattle by 26%.
In markets like Miami and Austin, retail real estate landlords are offering generous incentives to top restaurants, viewing the concessions as placemaking investments, according to JLL’s food-and-beverage real estate brokers. In Miami, tenant improvement allowances could range between $100 and $200 per sq. ft. Other incentives offered to popular eateries include months of free rent or percentage rent.
Evidence of the American consumer’s increased devotion to entertainment venues, too, was compelling last year, JLL noted. Spending on accommodations was 36% higher than in 2021. Performing arts center receipts rose by 33%, and amusement parks were up by 21%.