As restaurants become the new anchor tenant, there’s a particular style that is taking over the city of Los Angeles. With consumers’ appetite for fast casual restaurants exploding, Connect Media caught up with Kennedy Wilson’s vice president of Brokerage, Michael Pakravan to discuss how this phenomenon is overtaking L.A.
Q. What fast casual restaurant concepts are hot right now?
A. You can’t talk about hot concepts without talking about poke. That’s still a drastically growing concept in Southern California. While leaders like Sweet Fin and Mainland continue to expand, newcomers like Hoke Poke, which is coming to DTLA in a few weeks, are bringing swift competition. Yet, there is still a lot of room for growth. There are other categories like Mediterranean (Luna Grill and Cava Grill), Acai bowls (Backyard Bowls and Bowl of Heaven), and juice concepts (Nekter) that are very hot, as well.
The trend seems to be towards a healthier style of living, and if these chains aren’t completely health-driven, it bodes well for them to offer healthy alternatives as part of their menu.
Q. How has the fast casual dining sector evolved over the past year, and how is this affecting CRE in Los Angeles?
A. On the landlord side, they are realizing more and more that restaurants are the new anchor tenants, which will drive other tenants and patrons to the project. With the proliferation of new concepts, landlords are more open to take a chance on a chef-driven concept to breed excitement within the neighborhood, rather than sticking to established franchises.
On the tenant side, social media has allowed for newcomers to reach a mass audience at a low marketing cost. The visual experience of food, or what I like to call items that are “instagrammable,” is paving the way for a generation of restaurant-goers who eat with their eyes and enjoy sharing their experience. Therefore, these fast casual restaurants are adapting their meals to cater to the culture.
In Los Angeles, there are so many mixed-use projects in its urban neighborhoods, and since the commercial aspects of these developments represents a such a small piece financially compared to the residential components, landlords realize that by having the right retail tenant, it’s treated like an amenity to attract higher rents for both office tenants and residential renters.
Q. Which demographic groups have been fueling fast casual trends, and what about this restaurant type resonates with their lifestyle?
A. It’s all about millennials these days. Successful restaurants have figured out how this demographic group thinks, and what their priorities are. The most important commodity to a millennial is time. Restaurants that can deliver a streamlined and efficient process for the consumer are going to get the attention of the millennial. Examples of this include: ordering via mobile app or website, third party delivery options such as Postmates or uberEATS, or simply being able to deliver a quality product without the typical time and cost associated with the traditional white tablecloth experience.
Another major factor is optionality. Unless you’re In-N-Out, the more options, the better. With the request for gluten-free, dairy-free, kosher, etc., offering a broad menu will attract a broad clientele.
Lastly, millennials like to believe that they live a healthy lifestyle. Companies have capitalized on this by including that story in their advertisements and marketing, i.e. locally sourced, non-GMO, etc.