As Americans continue to embrace the convenience of dining out, recent data highlights a significant trend in the food and beverage sector. According to the U.S. Census Bureau, spending on food and drinks away from home reached a staggering $95 billion in July alone—an increase of 40% since the pandemic began. This shift presents exciting opportunities for commercial real estate, especially within the quick-service restaurant (QSR) segment.
The Driving Forces Behind the Increase
While rising costs contribute to the uptick in fast food sales—evidenced by a 25% increase in the Consumer Price Index for food away from home—there remains a robust demand from consumers. Interestingly, about 15% of the spending increase reflects this heightened consumer appetite for dining out, regardless of rising menu prices.
Starbucks leads the charge in this expanding market, having opened a net of 473 new locations in 2023 alone. Since the start of 2021, the coffee giant has launched over 1,000 new locations—30% more than its closest competitor, Jersey Mike’s, which added 287 stores this year. This trend underscores the growing consumer preference for brands that offer convenience and a strong value proposition.
Conversely, Subway continues to struggle, recording the highest number of restaurant closures in 2023 with 447 net closings. Despite this setback, Subway’s performance represents an improvement over prior years, as the chain had closed over 1,000 locations in 2021. This indicates a potential shift in strategy or branding efforts that could affect their future trajectory.
The Financial Landscape
The average annual sales per location among the top 50 QSRs has increased to $1.9 million, bolstered by standout performers like Chick-fil-A, which averages an impressive $7.5 million in sales per location. This remarkable figure is particularly notable considering Chick-fil-A’s stores are closed on Sundays, showcasing the brand’s strong customer loyalty and operational efficiency.
Consumers increasingly favor QSRs for their combination of value and convenience, leading to a notable trend in retail leasing activity. QSRs accounted for nearly 20% of all retail leasing in the past year, underscoring their critical role in the commercial real estate landscape. The enhanced adoption of mobile ordering and food delivery apps has further broadened customer access, redirecting spending from home to local restaurants.
Opportunities for Commercial Real Estate
For commercial real estate firms, these insights signal a significant opportunity. As the appetite for dining out continues to grow, there is an urgent need for strategic leasing and location planning for QSRs. Landlords and developers can leverage this demand by focusing on locations that enhance visibility and accessibility, especially in urban and suburban areas where foot traffic is high.
In conclusion, the evolving landscape of dining out presents a wealth of opportunities for commercial real estate stakeholders. As consumers continue to seek value and convenience in their dining experiences, understanding the dynamics at play within the QSR sector will be essential for navigating this lucrative market. By capitalizing on these trends, commercial real estate firms can position themselves for success in a rapidly changing environment.
