Food & Beverage Tomorrow: A hands-on approach to an operator search in hospitality and mixed-use environments
Many owners are seeking reputable operators to create destination-worthy experiences
June 15, 2023 3 Minute Read
As our Streetsense Hospitality consultants travel the world conducting market surveys, developing concepts and visiting clients, we are struck by the amount of “for lease” signs and dormant restaurant and retail spaces. The market’s slow return to a new normal is prompting operators, who lost their spaces due to any number of Covid-induced reasons, and property owners, who lost valuable tenants, to plan their next moves. So, what’s the best way to ensure that both landlords and operators achieve long-term success?
For many owners, seeking an experienced, established and reputable operator is the best path forward. Successful operators are now more willing than ever to expand beyond the independent brick-and-mortar lease to take advantage of reduced start-up costs, a built-in customer base and the often-established infrastructure of a mixed-use or hotel restaurant space. Even with this growing interest, how does an owner or developer decide who is the ideal fit and how to not only reach them, but also sell their vision for the property?
Even before the pandemic, the evolution of the hotel restaurant was already the subject of industry-wide discussions, imploring real estate developers and owners to treat their food and beverage programs and venues as essential elements to their portfolios. Lifestyle brands and boutique hotel operators have continued to evolve the potential of hotel restaurants by following the lead of such luminaries as Ian Schrager and, more recently, Andrew Zobler (The Ace, Nomad, et al.). Larger, more prominent multi-property brands began to view their food and beverage venues as a major driver of revenue, a positioning tool, a facilitator for occupancy and even a driver of room rate, while achieving true destination dining status.
In turn, residential and mixed-use property developers also began to take notice of how attracting compelling concepts and known chefs could serve as key amenities for both residents and corporate occupants, giving them an advantage in the race to fill their properties with more desirable tenants. As hotels and mixed-use developments continue to gain traction as a viable, and often preferred, method of expansion for today’s most talented and creative food and beverage operators, finding the right partner to help maximize these assets requires a strategic and focused approach.
Market assessments & personal research to inform the operator search
Both identifying a successful concept and finding the ideal operating partnership share the same initial methodology to inform search parameters: a comprehensive and exhaustive market survey. Although no two markets are the same, the market survey should always contain an in-depth dive into the local—and sometimes regional—competitive food and beverage landscape.
By personally experiencing all relevant hotel, mixed-use and independent restaurants and bars in each market, the best search requires a robust understanding of the operators and their level of overall quality and conceptual focus to ascertain over-representation and absences in the market. Also crucial to the market survey is a deep dive into visitor demographics, travel statistics and core audience profiles to solidify the food and beverage positioning of the venues in scope, stand out amongst the competitive set and create destination status amongst the target audience in the market.
By leveraging an experienced and savvy internal team of knowledgeable industry experts who live and breathe food and beverage, as well as the opinions of a robust list of trusted local tastemakers, industry contacts and food and beverage journalists, skilled consultants can deliver unique insights that will determine the right operators to approach. This boots-on-the-ground approach is the only true way to ascertain what is needed in the marketplace, which also provides invaluable information on what and who may be entering the market. This approach minimizes surprises once the final decisions are made by ownership.
Operator outreach & building trust through shared goals
Once the conceptual gaps and opportunities in the marketplace are identified, operator outreach begins with an equal mix of creativity, salesmanship and two goals in mind: to champion the needs of the ownership group and the operator and to set the partnership up for success. This starts by matching the creative abilities and goals of the potential operator to the overall financial and conceptual goals of the ownership team and property.
Although there is no “right” way to conduct this outreach, a clear and comprehensive knowledge of the potential candidate’s philosophy, conceptual focus and operational structure and abilities is crucial. When choosing a team to conduct the search, it is key that the members possess experience in all aspects of food and beverage operations to determine the appropriate candidate and to help them feel at ease with the partnership from a purely logistical angle. Starting with a shared knowledge of precise requirements needed to execute a concept cannot be underestimated. This sets expectations and parameters, thereby creating trust that will carry through the entire process.
Creative problem solving vs. direct conceptual match
The most successful searches always have one thing in common: the group conducting the search is comprised of seasoned operators and conceptual minds who are able to see the big picture. Often, properties, kitchens and bars are designed and constructed before an outside operator is even considered. In the event that there is already an outside operator in mind, development occurs several years ahead of opening, which can create issues with competing concepts on both the independent and hotel side that may have entered the market during construction of the property.
Laurel Brasserie & Bar, Grand America Hotel Dining
This is where the knowledge of the potential partner’s business is paramount. By determining the flexibility of the operator’s goals and conceptual focus early in the process, there are more possibilities for creative solutions that can help to eventually secure the deal. For example, does the operator have a full-service Mediterranean concept that may be adapted to a smaller space to deliver a small-plate mezze menu? Does the operator have a world-class beverage team that could execute a stellar wine and cocktail program in an under-utilized space that is ideal for a bar? Does the chef have a background in Southern Italian cuisine and has been working on a new concept, even though she is currently known for her award-winning, French-leaning menus?
Many of today’s most successful concepts have been developed by creatively exhausting all possibilities with both ownership and operator. By always considering the market survey findings in tandem with the operator and ownership’s goals, innovation can thrive, thus delivering something truly unique and special to the market.
Local capture & realizing food and beverage potential
It’s no secret that the lifestyle and boutique hotel (and to a lesser, but as important extent, mixed-use) movement has theoretically created not just neighborhood hubs, but neighborhoods themselves. In turn, food and beverage venues within these properties have had to elevate their execution to become true destinations and not simply adequate places to conveniently dine. With this profound change in perception, these venues have thrust themselves into the competitive mix that includes independent restaurants and bars and must therefore create immediate buzz and cache to attract local guests.
When deciding whether to seek out a big-name chef or operator, the in-person, comprehensive research aspect of the market survey will also help determine whether a local, national or international search is the best path to creating a successful concept. New Orleans is a vastly more nuanced market than New York City or Los Angeles in terms of acceptance of outside operators and chefs. The tastes of Miami residents may require more international influence than those in Dallas or Denver. Exploding post-pandemic developers in Austin or Nashville may be feeling some blowback from residents who feel alienated by the incessant change and growth.
In the current and future food and beverage climate, maximizing the ownership’s asset can only be realized by appealing to and attracting the type of local who views dining out as their preferred source of entertainment. By appealing to their sensibilities and delivering a product that is inherently local—even if executed by a talented chef or beverage director from out-of-town—ownership can help establish their property as a thriving and invaluable asset to their city.
While no two operator searches are the same, getting a head start with a real estate professional can greatly increase an owner’s ability to find the appropriate partner. Eliminating the infrastructure, space and equipment headaches that come with finding the right fit can save everyone time and money. The CBRE and Streetsense team is uniquely positioned to deliver both the right space and identify the ideal operating partner to maximize food and beverage assets. Our Hospitality team brings together strategy, design and operational know-how to create one-of-a-kind guest experiences around the globe.
For more information on operator searches and other hospitality consulting services, reach out to Ed Viita, Managing Director at Streetsense, Hospitality via email or call +1 646 420 1047.
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