How Food and Beverage is changing the shape of the retail sector

Although e-commerce continues to impact brick-and-mortar outlets in the retail sector, F&B is one sector which continues to provide value and excitement in a traditional physical environment and is of key importance to the Middle East’s growing leisure and entertainment landscape.

One global trend that will play a key role in the F&B sector is technology, and the incorporation of data and automation. Not only can digital solutions control rising costs and limit consumer price hikes by streamlining operations, but they can also be used to enhance the customer experience through quicker delivery and the ability to more readily customise orders.

CBRE examines expected changes that will impact fundamental operations and real estate strategies of the global restaurant industry.

Our key predictions:

1. The growth of the restaurant category has fueled many new exciting concepts, cuisines and expansions. However, competition is fierce and if too many competing restaurants open, sales growth may erode.

2. While third-party delivery will dominate, restaurants will invest in the physical and technological infrastructure required for a direct-delivery platform to control the brand experience, build upon loyalty programs and collect consumer data.

3. Delivery-only restaurants, known as virtual restaurants or ghost kitchens, will become a primary growth vehicle of restaurant delivery platforms, as consumers increasingly become comfortable ordering meals online.

4. Restaurant operators will continue investing heavily in consumer facing and back-of house technology to help control rising costs through automation and to improve customer experience.

5. Rapid growth in fast casual dining will continue among traditional concepts as well as regional and specialty startups entering the market due to lower barriers to entry.

6. Fast food continues to evolve to meet consumer demand for healthy food options, technological conveniences and modern designs. Providing healthier menu options and redesigning portfolios to connect with consumers and communities are imperative to recapture lost market share.

7. As operators open new smaller prototypes with technologically enhanced services, more expansion opportunities will arise. Eatertainment venues are revitalising urban main streets and shopping centers in select markets by drawing traffic and consumers seeking high-quality service, diverse entertainment and unique dining experiences.

8. Diverse food halls will expand further into suburban markets but must be executed and operated correctly to be successful to create a social, community and culinary draw that epitomises successful placemaking.

The F&B sector is of key importance to the Middle East’s growing leisure and entertainment landscape and has a unique ability to positively influence brick-and-mortar retail locations. As the demand for quicker delivery and even fresher produce continues, the logistics and warehousing sectors are also expected to experience a positive spillover effect, with greater requirements for space related to food production and storage.