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Embracing Restaurant Delivery through Real Estate

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Real Estate Considerations for Now and in the Future

There are many names for this fast-growing trend in commercial and industrial real estate. Whether you refer to it as a ghost kitchen, cloud kitchen, satellite kitchen, shared kitchen, or virtual kitchen, the idea remains the same.  This model provides an off-premise location for represented restaurant brands and their chefs a place to prepare food, without the expense and maintenance of a brick and mortar location.

Due to rapidly changing consumer habits, and recent advances in technology this delivery-only model is experiencing monumental growth. Statistics on food delivery point to the opportunities that exist for commercial real-estate:

  • Over half of US consumers order delivery at least once a week; more than 20% of Generation Z gets delivery at least three times a week.
  • Meal delivery is growing 300% faster than dine-in over the last 5 years.
  • Ongoing growth: A market research firm recently estimated that delivery-only restaurants could be a $1 trillion business by 2030.

What are the Benefits for Real-Estate Owners and Ghost Kitchen Operators?

  • Low overhead costs. Your cost of real-estate will be much lower than a traditional restaurant location. And, no need to invest in an in-person dining experience.
  • Faster opening times -renting/buying space in existing facilities dramatically increases your speed-to-market.
  • Additional revenue streams – established brands can generate additional revenue by renting out a third-party ghost kitchen or by launching a delivery-only spin-off from their primary concept.
  • Flexibility – Ghost kitchens are easily adaptable as the market or customer preferences change.
  • Efficient ghost kitchens can accommodate a variety of cuisines and restaurant brands with the necessary corresponding equipment.

Ready to Dive in?

Here are 4 things to consider when looking at potential sites:

  1. Site selection is the most important aspect to consider. Potential sites can include closed restaurants and retail/big box stores, former culinary schools, warehouses and dated industrial space in markets all over the country. Warehouses and light industrial use space just outside dense urban centers often meet the need for delivery personnel parking, affordable rent, and satisfy the purchasing demand of nearby residents.
  2. Site selection must consider delivery driver parking in addition to shift worker parking. Locate where the driver waiting areas will be, and where you can place outdoor screens for drivers to monitor order times. Ask yourself if you can add a drive thru for an even more seamless driver pick-up.
  3. Interior space planning for the site must identify the most efficient layout for plumbing, electrical, HVAC, and other elements of the kitchen to allow various tenants to work and thrive side-by-side in a fast-paced environment.
  4. Remember the key to profitability is effective design that gets your food out the door and into the customer’s hands as fast as possible.

What Else Do You need to Know?

  • Because this concept is still new, zoning and approval processes are often not clear-cut, and vary depending on the municipality you are working in. Regulators may be unfamiliar with the concept, and requirements may be inconsistent from location to location and inspector to inspector.
  • Food production is largely regulated at the local level by the health department. This means the local Health Department is likely to be involved with your permitting.
  • Hire a professional firm (i.e. JL Architects) to secure the necessary building and operating approvals and design the best use for your location.

For years Americans have used third-party providers to place billions of dollars in food delivery orders. With the rise of ghost kitchens to compliment this trend, restaurants are capitalizing on this low-cost, low-risk way to maintain brand awareness, expand product availability, and endure the pandemic’s recent effect on the industry.

Will Commercial Building Repurposing be the Answer to Today’s Housing Crisis?

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The year 2020 certainly turned the world upside down.  The pandemic has had a dramatic impact on our way of life and certain aspects may never be the same.  When it comes to changes in real estate, we have watched malls and retail centers struggle due to the acceleration of changing shopping and dining habits. We see the impact of the pandemic remote and hybrid working model on office leasing, and wonder what will come of all this possible empty space? According to an article written by the New York Times, experts estimate that over 170 million square feet of office space is expected to be freed up in this year alone, and over 7,000 retail locations will be available. Nearly one in four hotels nationwide face possible foreclosure.  With the pressure of the pandemic, growing e-commerce, and changing work/lifestyles far fewer commercial entities are looking to take on new leases.  We don’t know for sure what trends will stick from the pandemic, but we do know there is still a great need for housing, especially affordable housing. As a result, architects have begun to look at how repurposing commercial space can contribute to both housing and a livable, sustainable community.

Traditional American malls often make prime locations for housing developments as they tend to be in convenient, transit-accessible areas.  A single vacant mall can be repurposed into several housing units mixed in with stores, restaurants, recreational facilities, and community gathering spots giving residents amenities and a sense of community.  To create this community a mall may be knocked down and the property redeveloped, or in the case of the Arcade Providence in Rhode Island be repurposed into a mixed-use property.  When it was built over 190 years ago, the Rhode Island mall had boutiques on all three floors. Now those shops have been transformed into 48 micro apartments on the 2nd and 3rd floors and hosts a mix of businesses, including restaurants, retail shops, and a hair salon on the 1st floor.

Hotel closures can also be especially valuable for residential development, as individual units come “prepackaged”. The fact that almost a quarter of all US hotel properties are facing foreclosure signals that the market could be flooded with easy opportunities for housing projects. Opportunities for repurposed housing also includes commercial offices, outdated industrial space, and decommissioned churches to name a few. These spaces usually exist within an already established community and offer a sustainable path forward for interesting time-honored design and construction.

To conclude, we find it is often less costly to repurpose a building than build from the ground up, especially in expensive markets.  It is also much more sustainable.  Nationally, new residential construction generally averages $225 to $350 a square foot, compared with $150 to $200 for an office-to-residential conversion.   With all the excess vacant commercial property coming to the market, it just makes economic sense to repurpose some of these properties into affordable housing to meet the needs of the existing community.

In 2008, we served as the architects for the above pictured project, repurposing a bank building into a ground floor Starbucks with apartments above. Give us a call to see how we can assist with your re-use project.

Coming Soon to a Restaurant Near You

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Remember when you used to spend your weekends trying new cuisine at your favorite spot in town?  Or the avant-garde dining experience that you made reservations for 12 months in advance?  Oh, the good old days!  Well, before you know it that will be the “new normal” once again.  However, not everything was bad in the name of dining during the pandemic.  Restaurants found clever techniques to keep you interested, and the good thing is some of those techniques are here to stay.

Changes in the Post Pandemic Restaurant Experience:

  1. The modern restaurant should balance convenience and socialization. Pre-pandemic, the largest growth model for the industry was off-premise consumption. Due to the pandemic, off-premise growth continued exponentially.  When the restaurant experience can neutralize again on-premise dining is sure to see a significant percentage return, but experts feel it may not reach pre-pandemic numbers.
  2. COVID-19 pivots are here to stay. Many restaurants were forced to pivot.  This involved things such as social distancing barriers, smaller menus to turn larger profit margins, digital ordering, and 3rd party delivery/curbside opportunities.  Most operators feel reduced menus and 3rd party delivery/curbside opportunities will remain for the foreseeable future.
  3. To-go drinks are a millennial must! As restaurants searched for creative ways to turn a profit during the pandemic, one tried and true opportunity was booze-to-go.  Statistics have verified millennials love ordering to-go beverages in their small town or big city, including using their various delivery options.  It was stated by millennials that they would be more apt to order from a restaurant that provided this opportunity.  Only time will tell us if the local ordinances will continue to allow this service post pandemic.
  4. Comfort is king.  With so many healthy opportunities for boxed food kits delivered to your doorstep, how are restaurants to compete? Offer comfort.  Those who are health conscious often dive into cooking, so they are aware of the nutritional value and calories that are going into their meal. But even the best cooks need some down time.  Restaurants have seen success offering the comfort food that we crave during our laying low winter weekends or staying in and watching a movie night.

In summary, dining is continually evolving and changing. Change after change, it will remain a reoccurring experience we crave.  The staff at JL Architects love this experience just as much as anyone, so much so that we have a designated project team for designing such establishments. The next time you get the opportunity to try that new place or dine where you are known on a first name basis, keep us in mind.  We would love to help those that serve you.

PS………When the pandemic comes to an end there is probably going to be an explosion of indoor and outdoor dining.  I’d suggest making your reservations now!

Environmentally Friendly Multi-Family Fights Suburban Sprawl

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In today’s environment, multifamily is one of the most active construction sectors.  Moving out of urban centers to find space and affordable housing has become even more desirable during the current age of COVID, yet it is also often associated with the negative connotations of suburban sprawl.  Our JL video above shares a recent case study of the developing ideas and approvals for a suburban multifamily site. With JL Architects’ help, what was thought to be a potential 60 apartment property turned into over 220 units. Located outside of Philadelphia, it is suburban without negatively impacting the environment and social fabric of the area.

We are proud of our teams vision, commitment and skill that will lead to a new, attractive, centrally located apartment development with great amenities and connectivity that will also be certified by a nationally recognized sustainability protocol, Green Globes or LEED.

New Household Products Respond in the Age of COVID

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Our local Delta rep from Rich Tompkins Company recently introduced our JL team to new technologies that are becoming quite popular with homeowners and multi-family developers as we continue to navigate a new, cautious way of life during a global pandemic.

Delta® offers an array of solutions for multi-family, residential, and light commercial needs.   Their Touch2O® Technology faucets are a convenient, innovative way to curb the spread of germs while washing your hands. Touch2O® Technology starts water flowing at the temperature your faucet is set to, with a simple tap anywhere on the spout or handle.  You can even use the back of your hand or your elbow to start the water flow, thus eliminating the spread of germs from your fingers.  The faucet features an LED display which provides a digital readout of the water temperature accompanied by a blue, magenta, or red background, so you know when it’s safe to reach your hands under the water flow.

Touch2O.xt ™ Technology is another smart solution for keeping the spread of germs at bay.  Simply touch it on or go hands free.  Touch20.xt ™ starts the water flow when hands get within four inches of the fixture and stops the water when hands are removed.  The high-tech sensing capabilities of Touch2O.xt™ faucets allow the flow of water to be activated anywhere around the device, unlike traditional hands-free infrared sensors which require your hands be in a particular place and are sensitive to lighting conditions and clothing and skin color.  Delta® also offers electronic soap dispensers with Touch2O.xt ™ Technology.  This completely touchless solution is the perfect response to our current COVID climate.

In addition to the Touch2O® Technology, Voice IQ ™ pairs with your connected home device to give you exactly the amount of water you need with features like metered dispensing and custom container commands.  It allows you to turn your faucet on and off using the voice commands “Ask Delta® to turn on” and “Ask Delta® to turn off”, thus eliminating the need to touch the faucet with dirty hands.

Good hygiene is more important than ever before and with new products and technologies, we can begin to adapt our everyday environments to make them safer and healthier.  JL Architects can help design your multi-family space, while incorporating products like these to meet your needs.