The American retro style casual dining brand Ed’s Easy Diner has hit tough times. The operator, which specialises in all-American fare complete with burgers, hot dogs, milkshakes and matching 1950s style Jukeboxes, saw 26 of its units placed in administration in 2016. Giraffe Concepts, itself owned by Boparan Holdings, acquired the remaining 33 units in October 2016 in a bid to save the brand that opened its first unit in Soho 25 years ago. Whilst the new owners are committed to investing in this well-known brand to turn the corner, it is worth sparing some thoughts on why the downturn in fortunes might have happened.
The administrators took a fairly ‘broad brush’ approach when closing units, which meant that the lowest revenue generators were closed, and rightly so. Invariably, the closed units were found in less well-established F&B pitches with a significantly smaller footfall than the ones that were spared. Does this mean that casual dining units located in less established places with lower footfall are doomed to fail? We at FSP do not think so.
Yes, locations that have higher footfall can attract greater sales but the level of competition in these locations is usually exponentially higher than in locations with fewer people. In other words, the average number of potential customers per F&B unit is often lower in high footfall locations. This suggests that there are other factors that determine the success, or the lack of, of an F&B operation and I am exploring some of them here:
- Critical Mass of F&B and Leisure
Too much competition and the weakest fail – too little competition and no one survives. That is the typical story within the world of commercial F&B. Having enough ‘Critical Mass’ by way of competition and F&B trade supporting elements such as a cinema, bowling alley, bars and clubs will guarantee that the area draws people to it during evenings and throughout the week, including the weekend. Therefore, landlords would be well-advised to gain an in-depth understanding of the nature and depth of demand and existing competition to assess the likely financial performance of both existing and potential future F&B operators.
Closely related to the Critical Mass thesis is the significance of ‘Out of Hours’ access to the unit. It is important to remember that, on average, 60-70% of casual dining restaurant sales are generated during dinner service period. F&B units located within schemes that are not able to trade late into the evening are therefore always on the back foot when compared to siblings with greater accessibility. FSP understands that Ed’s Easy Diner introduced a new ventilation system that allowed them to take units without direct external access. What was no doubt viewed as an opportunity to add operational flexibility might have actually turned against the operator in terms of sales growth.
- The Importance of the Overall Experience
Getting the order right and delivering it in time is not enough to satisfy the needs of an F&B customer. There are a number of other areas that impact and make a big difference to the overall experience and yet so often these get overlooked. Are staff professional in both appearance and demeanour? Are the units well-lit, clean and tidy and in good repair? Is the general environment befitting of somewhere where you are encouraged to relax and spend leisure time and can the visitors find what they are looking for without getting unnecessarily frustrated by the process?
Ensuring that these ‘easy-wins’ are in place is part and parcel of any self-respecting location that wants to attract the experience driven consumer to it. To that end, landlords play a key role in ensuring that the operators pull their weight in this regard.
In conclusion, it is important that landlords understand what the monetary opportunity in terms of F&B sales is and what both the current and prospective F&B operators are up against. Both landlords and operators should not be discouraged by the seemingly small footfall location. If done well and if the other success determinants are favourably aligned, the less well frequented small location might in fact be a blessing in disguise.
FSP provides comprehensive market studies on F&B competition and, based on these, provides evidence-based Trading Gap analyses that monetise the size of the F&B trading opportunity. Please get in touch with me via email at Harri@fspretail.com for further details.