The way to a shopper's purse may be through the stomach. Decades after mall developers created food courts to keep hungry shoppers from leaving, they are now counting on popular mid-priced chains to bring traffic to the mall. “They're a destination,” says Howard Davidowitz, chairman of Davidowitz & Co., a New York-based retail consultancy. “They significantly drive traffic.”
How so? The lunch and dinner crowds typically arrive when mall traffic tends to be slow. Also, long waits for tables can translate into more visits and purchases at nearby stores, further boosting the mall's gross sales, from which the operator claims a percentage.
“Right now, good restaurants are the belle of the ball,” says Nicholas Lillo, director, leasing for specialty restaurants/entertainment for Simon Property Group in Indianapolis. Developers such as Simon offer high-grossing restaurants inducements, in the form ofcredits, to lock them into valuable, long-term leases.
The prettiest belle may be The Cheesecake Factory Inc. “Attracting a Cheesecake Factory is a big,” says Randall Stone, a partner with Lippincott & Margulies, a New York-based brand consulting firm. Its medium-size, full-service restaurants — many in shopping malls — last year generated average annual sales of about $11 million, or $1,000 per sq. ft. That easily beats any of its prime competitors such as PF Chang's China Bistro and California Pizza Kitchens Inc., Davidowitz says.
The Cheesecake Factory typically spends $425 to $475 per sq. ft. to construct a new facility. Its goal: to post a 2.5-to-1 sales-to-net-cash-investment ratio or an average 50% net cash-on-cash return.