During lunchtime at Westfield Century City, the property's new dining terrace is packed with people. From stay-at-home moms to high-powered executives, the people eating there are as varied as the food offerings, which include everything from standard food court fare like Panda Express to the distinctive Lawry's Carvery, a concept distilled from the white-table restaurant Lawry's The Prime Rib.
With a maître d', a mix of indoor and outdoor seating, and real dishes, glassware and cutlery, the dining terrace at the 810,000-square-foot regional center in Los Angeles replaces an older, more traditional food court. It is modeled after the dining experience at Westfield's Bondi Junction, a 1.1-million-square-foot center in Sydney.
Beyond Century City, Westfield is bringing dining terraces to Westfield Topanga in Canoga Park, Calif., and Westfield Montgomery in Bethesda, Md. However, the company is not replacing all its food courts with dining terraces — San Francisco Center features both a dining terrace and a traditional food court, although it too has been upgraded.
Although Westfield declined to disclose sales numbers for its dining terraces, Catharine Dickey, executive vice president of communications, says “good operators” are posting higher volumes than those in more conventional food courts.
Most mall owners are trying to make food court dining more appealing to prevent the loss of sales and also bring in new customers. Shoppers have too many other dining choices — both inside and outside the mall — to patronize a food court offering bad food delivered in an even worse atmosphere. They can choose fast-casual restaurants like Panera and Chipotle, which are often located on mall “ring roads,” or sit-down restaurants that are attached to the exteriors of regional malls.
“There's increased competition for the dollar that traditionally had been spent in the food court,” says Steven Warsaw, president of Urban Retail Properties' leasing division. “An old food court full of the same old tenants doesn't have the appeal of the newer, fresher alternatives so everyone is upgrading the food and the atmosphere.”
Experts estimate that a food court renovation can have a dramatic impact on sales and productivity, generating sales increases of 30 percent to 50 percent. Consumers now spend almost half their annual food budget in restaurants, according to the National Restaurant Association. For 2007, mall food sales were up 1.5 percent and food tenants generated an average of $533 per square foot in sales, according to ICSC. That growth was weak compared to the 3.4 percent growth posted in 2006 and the 3 percent increase seen in 2005. Last year, food courts performed better than other restaurants in regional malls, generating sales growth of 2.2 percent and sales per square foot of $745, according to ICSC. In comparison, restaurants posted only a 1.4 percent sales gain and sales per square foot of $466.
However, 2007's food numbers indicated a rather significant shift from previous years. In 2006, for example, food court sales lagged behind restaurant sales by 3.1 percentage points, and in 2005, restaurants also outperformed food courts, generating growth of more than 4 percent compared to just 2 percent for food courts.
Experts say the shift is likely related to the weakening economy. During recessions, people tend to eat out less or choose less expensive food options, says John Bemis, executive vice president and director of leasing at the Chicago-based Jones Lang LaSalle. That bodes well for food courts, especially those that have adapted to consumers' more sophisticated tastes. In fact, he says, food court sales in Jones Lang LaSalle's mall portfolio, which consists of 56 properties totaling nearly 40 million square feet, were up 4 percent in January 2008.
Right-sizing the food court
From the type of food to atmosphere, mall food courts are evolving from sterile, uninviting spaces that resemble middle-school cafeterias to relaxing places where almost everyone can feel comfortable and find something to please their palate.
A fresh, well-utilized food court translates into more than just food sales. Bemis says shoppers will spend an average of 45 minutes more in the mall if they have “viable food options.”
But in their original incarnation, food courts were all about functionality. In the 1960s and 1970s, mall developers and owners usually stuck them in poor locations like the third floor or a wing with little or no foot traffic. Contrary to popular belief, the rationale behind these under-traveled sites didn't originate as a ploy to make shoppers walk past in-line shops to get to the food. Food courts were used to fill areas in malls that were undesirable to other retailers, and they were usually cold and unattractive places with plastic or metal tables and chairs that didn't encourage shoppers to linger.
By the 1980s, developers and owners realized that food courts could play a key role in the success of a property by forcing shoppers to pass by in-line stores in order to access the mall food court. “The added traffic was kind of like ‘a gift with purchase,’” Bemis says.
The success of early food courts encouraged developers and owners to enlarge food courts and add outdoor entrances in an effort to attract non-shoppers to the food court as well. By the mid-1980s, food courts often had as many as 18 food vendors.
But supersizing the food court was a costly mistake for many owners. Instead of focusing on complementary uses, many owners duplicated food concepts — leasing space to two hamburger tenants, for example — and created a competitive environment within the food court that jeopardized vendor productivity and cannibalized sales.
“The food court is no different than other retail categories — if you have five jewelry stores all selling the same thing at the same price, they're not all going to be successful,” Warsaw points out.
Today, developers and owners are more strategic with their food courts, choosing fewer tenants and creating a mix of food choices. At Cherry Hill Mall in Cherry Hill, N.J., for example, PREIT has reduced the number of tenants in the food court from 18 to seven. The REIT is actively working to upgrade its food offerings and is seeking more unique food vendors to provide items like smoothies and sushi, says Joseph Coradino, president of PREIT Services LLC and PREIT-Rubin Inc.
Upgrading food offerings
Finding the right mix of food vendors is a challenge, not only in terms of the variety of cuisine but also varying price points. “A center's demographics will dictate the types of food in the food courts,” says Randy Brant, senior vice president of real estate for Santa Monica, Calif.-based Macerich Co.
For example, Macerich is replacing its traditional food court with an upscale “food hall” for its Santa Monica Place property in Southern California. Santa Monica Place has a very upscale demographic with an average household income in excess of $100,000, Brant notes. Similar to Westfield's dining terrace, Macerich's food hall will offer a mix of indoor and outdoor seating, including a covered patio and an ocean-view terrace that can seat close to 700 people, according to Eduardo Cespedes, an associate vice president with Venice, Calif.-based Jerde Partnership, which designed the food hall.
Creating inviting spaces
Price points aside, all mall owners should try to create comfortable, attractive food courts that provide good experiences for all customers. “The physical presentation of food can have a dramatic bottomline impact on food sales,” says Richard Foy, founding partner of Communications Arts Inc., the Boulder, Colo.-based firm that designed the newly renovated food court in CoolSprings Galleria in Nashville.
Built in the 1970s, CBL & Associates Properties' 1.2-million-square-foot enclosed mall had a conventional food court with hard surfaces and fast food — a cold, noisy place that wasn't conducive for eating or socializing. The Chattanooga, Tenn.-based REIT turned the multilevel food court into a single-level one and hired Foy and his team to make it feel more like a restaurant. Using the lush and green Tennessee landscape as inspiration, Foy's design team transformed the CoolSprings Galleria food court into a comfortable, relaxing environment. The team fashioned sound-absorbing acoustic panels to mimic a canopy of trees, added large lanterns and upgraded all the furniture to wood and upholstery patterned with tree branches and leaves.”
CoolSprings Galleria is one of about 10 food court renovations CBL has completed in the past few years. “In our consumer surveys, people asked for a food court, even if it was small one,” says Michael Lebovitz, senior vice president & chief development officer of CBL & Associates. Lebovitz says additions, as well as the food court renovations, are more customer-service-driven than revenue-driven. But, he acknowledges that renovated food courts provide much more foot traffic and increased sales volumes.