With spending on eating out expected to continue growing over the next 10 years, and consumers' desire to enhance a shopping trip with social and leisure experiences, a compelling food and beverage (F&B) offer is now critical to the success of any retail scheme.
The increasing presence of F&B options in shopping centres – often accounting for more than 20% of units in new and redeveloped schemes in more mature markets – is being driven by rapid global growth in consumer spending on eating out, according to a new report
from Cushman & Wakefield.
All four global regions examined in the report are forecast to experience growth in F&B expenditure. Based on data from Oxford Economics, consumer spending is forecast to nearly double in the Middle East and Africa ($182.5 billion to $363.5 billion) and more than double in Asia Pacific ($1,052 billion to $2,296 billion). As such, F&B spend is forecast to grow at an annual average of 7.4% up to 2026 in both regions.
As spending increases, customer expectation does too. Once-ubiquitous food courts, made up of common seating areas surrounded by fast food outlets, are a dying breed. While mainstream brands – with ability to pay higher rents – still dominate, landlords are recognising the importance of diversity and other concepts, such as the food hall, have evolved, while there is also a move towards creating different zones within shopping centres.
Globally, food and beverage are playing an increasingly important role in the reason people visit shopping centres...
Lauren Hartzenberg 22 May 2017
Food and edutainment
However, Cushman & Wakefield believes there is latent demand for more non-mainstream international food hall marketplace concepts, which combine restaurants with food and beverage counters and bakeries, along with the sale of cooking-related products and even cookery schools to add ‘edutainment’. Currently, only a handful of international players offer such a format and there is scope for more high-quality operators to emerge and enter new markets.
Nomzamo Radebe, CEO of JHI, part of Cushman & Wakefield Excellerate, notes, “South Africa has the most developed F&B market in Africa, with international brands continuing to make inroads into the country. International brands are providing increased competition for domestic operators. A rising population of young people in Africa and the Middle East is attracting more international food and beverage brands. Growth in sales in the F&B sector of 5.6% is expected between 2017 and 2020 in South Africa.
“The tie-in between shopping and eating is stronger than ever and can be seen in the significant growth of F&B outlets in shopping centres in recent years. This is a trend that looks set to continue. We are seeing a growing number of shopping centre owners viewing F&B as a key differentiating component for the success of their retail centres, and investing in creating more exciting F&B offerings for customers. This responds to consumers’ growing interest in food culture while also adding to the experience and entertainment people today want from their visit to a shopping centre.”
Africa and Middle East breakdown
• The rising population of young people is attracting more international brands.
• Diversification away from oil dependency towards other sectors, such as tourism, will support strong F&B growth over the medium to longer term.
• South Africa has the most developed F&B market in Africa, with international brands continuing to make inroads into the country.
• Operators such as Starbucks and Krispy Kreme are providing increased competition for domestic operators.
• Saudi Arabia is expected to see the strongest growth in sales in the F&B sector between 2017-20, with average annual growth of 8.8%. More modest growth of 5.6% is expected in South Africa and the UAE.