Foodcourt Store

Standalone Store

Type

A Foodcourt store in a Shopping Mall is part of a group of smaller food premises grouped together with a common dining area provided by the Malls.

A Standalone store is a self-contained store in its own building or part of a complex, containing its own dining area, and may be around other food operators or by itself.

Market

Being inside a Mall the trading hours are restricted to a general 9am to 5.30pm with one or two late nights, and the market segment addressed is largely only the lunch-time market.

Because a Standalone store can trade any hours, all of the breakfast, lunch and dinner markets are accessible, and the after-hours dinner market is the largest of these markets.

Competition

In a Foodcourt store the immediate competition are the other food retailers in the Foodcourt

A Standalone store normally will have less food offerings in its location, and becomes more of a  destination with competition dependant on what other food offerings are available around that location.

Size

A Foodcourt store does not have dining area and only consists of a shop front and rear preparation area, and the size of the store is typically between 35 and 45 square metres.

In a Standalone store the store also needs to contain a dining area, and the size of these stores are usually best suited to be around 100 square metres, although they can also be done in either smaller or larger configurations depending on location and lease terms.

Rentals

Rentals in Shopping Malls are usually considerably higher than the traditional strip-shopping or stand-alone store due to the facilities and captured market nature of Shopping Malls, and can be anywhere between $1,000 to $3,000 per square metre.

Rental in a Standalone store is much lower than a Foodcourt store in a Mall, and is more in line with normal retail road-front rentals usually between $300 and $400 per square metre.

Rent Reviews

Similarly, rent reviews in Malls are normally conducted every year to around 2% to 6% annually. Most Malls also have a market review clause every 2 or 3 years and is based on the equivalent per square metre rental of the retailer who is paying the most rental.

In a Standalone store there is usually only a market review every 2 or 3 years, and this is based on what other retailers around the area are paying. In general is only a minimal increase and much lower than a Foodcourt store.

General Operating Expenses

Fairly comparable but usually a little higher in Malls due to the nature of the large Malls incurring more common costs.

If part of a shopping complex, the Opex is usually associated with Body Corporate costs. If the store is completely by itself the Opex will only be rates,  maintenance, and insurance.

Foodcourt Operating Expenses

This is the operating expenses for servicing the Foodcourt in a Mall, and is only shared between the Foodcourt tenants. This is usually quite high at around 4 to 5 times the General Operating Expenses depending on the number of operators in the Foodcourt.

None of these expenses are incurred in a Standalone store as you service your own internal dining area.

Mall Marketing

A percentage of the rental and is paid to a common marketing fund for the Mall to advertise and is usually 6% of the rental.

No marketing is payable in a Standalone store, but greater emphasis should be given to advertising in the form of direct marketing instead.

Local Authority Rates

Generally quite higher in Foodcourt stores due to the much higher property values generated by the higher rentals.

Is directly calculated on the property’s valuation.

Lease Term

In a Foodcourt store this is normally only around 6 years with no rights of renewal, which is suitable for the Mall circumstances that can change significantly within that period.

A Standalone store will have a much longer lease term that usually includes rights of renewals, and provides more opportunity to grow the sales over a longer period of time than otherwise available in a Foodcourt.

Advertising

In a Foodcourt a specific marketing fee is payable to the Mall to conduct the advertising of the Mall. Since they are already advertising to attract people to the Mall there is little need to advertise direct to customers to come to the store. Advertising will therefore take the form of in-store marketing with promotions and visual merchandising to help attract customers and market share over the other competition in the Foodcourt.

In a standalone store the opposite will apply where a greater advertising spend will be necessary in the form of direct marketing to advertise direct to the customer to build awareness of the stores location and presence of mind.

Customer Traffic

A Mall has a captured market owing to its critical mass, and the Foodcourt will take a share of this market depending on its size, location in the Mall, offer, and other key physical attributes, and enjoys a relatively high level of customer traffic throughout the year. The market share of each store will be solely dependant on the brand, the offer and the strength of the operator. A Mall’s foot traffic is relatively static due to limiting influences such as the demographics of the location, car-parking, etc., and in general remains at a fairly constant level throughout the term of the lease.

For a Standalone store virtually the opposite applies where there may initially be a lower customer traffic due to the non-awareness of the new Standalone store and the customer traffic and awareness must be built up over a period of time through combinations of exposure and time, consistent high standards of quality and service, advertising and word of mouth.

Turnover Potential

Turnover always has a direct and proportional relationship to the customer traffic and the same circumstances will apply as detailed above. A Foodcourt store turnover will typically stay at a fairly constant level throughout the term of the lease.

A Standalone store will require turnover to be built from a starting point over a much longer period of time, and through direct marketing and good strong consistent management of the store, build the loyalty and customer traffic so that the turnover potentially surpasses a Mall and without the physical constraints that a Mall has continues to build to a higher point than can ever be achieved in a Foodcourt.

Permitted Use

A Foodcourt store is limited to a specific product category use due to the other retailers in the Foodcourt, and this is the advantage of Foodcourts in that they have a range of different products and no other retailer is doing the same as anyone else.

A Standalone store generally has much looser restrictions of use enabling other vertical products categories to also be sold.

General Potential

Generally a Foodcourt store has an immediate but constant level of sales throughout the term of the lease with little or no growth, and has higher occupancy costs to pay for its captured market.

A Standalone store has no captured market and much lower occupancy costs, but sales must be built from a basic starting point, and should be expected to show constant growth over the term of the lease under strong and consistent management.