QSR Media Conference 2014: Property Leasing Reform - Where to from now?
"There is no cost that hasn't increased yet retail turnover has not kept its pace," said Russell Zimmerman, Executive Director, Australian Retailers Association.
Zimmerman noted that issues QSRs are facing include retail sales not growing with the way rent is increasing and huge wage growths.
Session chair Leighton Hunziker, Divisional Director - Retail Services, Savills brought up to the panel that shopping centres has increased its mix of retailers to include food, both snacks and restaurants. According to Simon Fonteyn, Managing Director, Leasing Information Services, in 2005 to 2006, 18% by area was dedicated to food. Now, in many shopping centres, particularly larger ones, the mix has gone up to 25%.
"Part of that has to do with the decline of other sectors, particularly fashion," he pointed out. "Partly, it has something to do with the Australian's love affair with dining out."
This brings about the issue of oversupply, a misalignment of supply and demand. "The market is starting to cannibalize other sectors of the market," said Fonteyn, citing the quick snack market as an example with a common situation being that several stores would operate in one centre. "They not only cannibalizing their own market, they are also starting to impact other markets in that mix."
However, he noted that the QSR market is holding up the shopping centres and that the centres are looking to increase their outdoor dining/ restaurant precincts. This is often at the expense of existing foodcourts. He predicts that growth will be sluggish in foodcourts which will put downward pressure on rents in the medium term.
Shopping Centres traditionally featured a food court and few cafes but has now evolved to offer more opportunities to restaurants, said Luke Young, Director of GPT Group. "As part of the evolution, we are seeing more mainstream quick service restaurants which is a great thing for this segment and shopping centre owners." He emphasized the increasing number of restaurants is not about plugging the fashion hole (due to the fashion market's decline the last few years).
Gerry Gerrard, General Manager - Property, Bakers Delight Holdings, Ltd concurs with Young in terms of the market evolving. "We are finding that the mix of products being sold is constantly changing. Some of the products we are selling now, we would not have sold 20 years ago, the market has significantly changed."
Meanwhile, Young noted that in negotiating the lease, shopping centres need to be careful who is allowed to sell what, mainly because one location should be able to have complimentary offerings. The reasoning behind this is to give every business the opportunity proper and pick establishments that will fit the location's consumers.
