Retail Traffic: What changes have you seen in the mall-based restaurant sector in the past 15-20 years?
Woodruff: I think the big change that we've seen is that restaurants have moved out of the food court section. Now, several of them have the presence to be almost anchor-like in a mall. Cheesecake Factory, for example, is very attractive to landlords because it brings in a lot of traffic. Also, 10 or 15 years ago it used to be more fast-food restaurants and now there are a lot more upscale and casual dining places.
RT: What kind of leases do mall-based restaurants tend to sign?
Woodruff: The big restaurants typically sign leases that are based on a percentage of sales, so that the landlord benefits as the restaurant's sales increase and in return he helps build out the store.
RT: The casual dining sector has been struggling recently. Do you think this will become a significant problem going forward?
Woodruff: I don't think this is going to be a long-term trend. I think the issue has been the very high level of gas prices, particularly as those prices have kept increasing. But dining out became a way of life for American consumers and they would only give it up very reluctantly. Once gas prices stabilize, consumers will start going back to casual restaurants.
RT: Where do you think we'll see the most growth over the next few years? Which restaurant concepts have the most potential?
Woodruff: I guess I'd list companies like Cheesecake Factory and Panera Bread and Red Robin Gourmet Burgers — they still have a lot of growth potential in front of them, although I can't really see any smaller chains right now that I can pinpoint as the next hot concept. I think most of the growth will come in two spaces — upscale casual dining, where average checks are between $15 and $17, and the other space that should still see a lot of growth is fast casual, like Panera Bread, where the average check is $8 or $9. I think those kinds of places will experience more growth than the restaurant universe as a whole.
RT: Do you think that casual dining will eventually force fast-food joints out of shopping centers?
Woodruff: I think that fast-food places are still important, you still need that food court area where you can get something to eat quickly because the big restaurants often have one-hour waits. But the trend now is toward people choosing fast casual options such as Panera Bread or Chipotle rather than traditional fast-food places.