How COVID-19 will Impact Restaurant Real Estate

Nearly the entire world has been put on pause as a result of the COVID-19 pandemic. Industries and businesses all around the globe are giving their all to stay afloat during this difficult and constantly-shifting situation.

With stay-home orders and quarantine the new norm, everyone from big corporations to small local businesses are feeling the heat of COVID-19. But somehow, even when it seems against all odds, we’re managing to adapt.

One of the quickest industries to respond has been the restaurant scene. While restaurants are adjusting protocols each and every day in response to the pandemic’s evolution, we’re all keeping a watchful eye on the horizon.

What will the current situation mean for CRE’s retail sector moving forward? Let’s take a minute to review and analyze how COVID-19 will impact restaurant real estate.

Widespread Restaurant Disruptions

Stress is the baseline of restaurant operations today.

With everyone staying home and venturing out for essentials only, restaurants aren’t getting the business they’re used to. On top of this, sit-down meals in public areas are a no-go during this time, so eateries are closing their dining rooms to abide by social distancing regulations. As local authorities issue new ordinances, some staff members are even quitting to avoid interpersonal contact.

It’s just one hiccup after another. Thankfully, restaurants are as resilient as ever. They’re rising to the occasion and giving their all to stay in business, support their communities, and survive this unprecedented situation.

Pick-Up’s and Delivery Only

Call in’s and online ordering are how restaurants are serving their clients, where payment is taken remotely, receipts are sent via text and email, and cash payments avoided to limit contact with foreign substances. Curbside pick-up is the new baseline, and in-house delivery services or DoorDash and UberEats are keeping the momentum flowing.

Using Social Media to Connect With Customers

As restaurant services and operation details are changing daily, social media is the main way that the restaurant scene is communicating with the public.

Menu adjustments, special deals, and other breaking news are being broadcasted over social media, creating a deeper bond between customers and their local restaurants. The online presence of restaurants is a vital part of the industry’s COVID-19 response, enabling communities to stay connected.

Pantry Sales

In order to keep up with sudden changes in order volumes, many establishments are changing up their game with pantry sales.

Specialty items that these restaurants have a large stock of are being sold at affordable prices, supporting sale profits and the grocery needs of the public. This new pantry element is helping restaurants stay open, limit waste, and keep the orders coming.

CRE Takeaways

Commercial real estate’s restaurant scene is definitely seeing changes due to the COVID-19 pandemic. However, they may not be as negative as once anticipated. Thanks to the significant efforts of restaurants, it looks like many businesses may not lose all of their tenants due to COVID-19.

But we’ll probably see an adjustment of restaurants’ physical spaces. Moving forward into the post-COVID-19 society, social distancing may be held onto in commercial spaces.

Dining rooms may be smaller or tables may be reduced to space out the crowds. Food prep areas may expand, and we might even start seeing pantry areas where house-items are sold in to-go containers or at wholesale prices. Pick-up stations are likely to be expanded, too.

Expect to see new tenant demands on CRE that incorporate the lessons we’re all learning now.

1 thought on “How COVID-19 will Impact Restaurant Real Estate”

  1. As restaurants adjust and offer less seating, the question will be whether or not carry out service will make up for the the volume in loss seating. Alcohol sales will no doubt drop as fewer patrons are allowed to sit or congregate. Alcohol sales for those establishments that offer it give the restaurant a higher profit margin. In an industry that already runs lean on profit margins, giving up on gross sales will impact that bottom line. It could mean high rental rates in ordinarily prime locations for restaurants may not be sustainable.

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