You may remember coming to the mall for a slice of pizza or some Auntie Anne's pretzels. Maybe some fast food, but the modern mall has so many dining options that go beyond just the food court. Two lychee martinis. No problem, ladies.

What we've seen in the last few years is almost a complete reimagining, like a true renaissance for the mall sector. Yelp data shows that restaurants have emerged as the new anchor for mall visits, with 2024 seeing a 7% increase in

more mall dining businesses compared to 2019. We have one location outside the mall. Imagine, from 12 restaurants, one is outside of the mall. So, call it our forte—shopping centers. We found that increases the probabilities of

succeeding. There are now, I would say, three critical drivers that are going to get folks to your mall: having the hot store, having the hot restaurant, and having the hot experience. So having the right food is so important.

So why have restaurants become such a focus for malls, and what's in it for them? Would you like regular water, bottled, or sparkling? Bottled, still. No problem. Over the course of the past decade, the narrative

surrounding American shopping malls was bleak, and 2020 seemed to be the nail in the coffin. But that's not the case right now. Malls have adapted to the modern consumer, and high-end malls are thriving.

The modern mall industry is typically thought of as different classes: A, B, C, or D, depending on their price per square foot. The sector thriving right now is the top-tier, Class A malls. These properties have highly sought-after

retailers like an Apple Store or high-end designer clothing brands, plus an elevated dining experience. I'm walking through The Avenue, a luxury shopping section of the American Dream Mall in New Jersey. And just past the Gucci and the Ferrari sits a

new luxury dining option called Isola Bella. It's a champagne and caviar bar right in the middle of the mall. The owners of Isola Bella own two other restaurants in the mall. The mall provides the venue—something which is

unparalleled if you try to compare it with something away from the center. It provides the capital for marketing, it provides the number of visitors, and then the rest is up to us restaurant operators—we either capture and create that relationship or not.

Today, a Class A mall might dedicate between 15 and 20% of its space to food and beverage and entertainment.  Thirty years ago, 5% was considered high. JLL, a real estate firm, found that across all types

of shopping centers between 2019 and 2022, the percentage of square footage devoted to dining increased by about half a percent. That's more than 40 million additional square feet of restaurants. However, within malls, the real change has come from

The variety and types of operators. We have an expectation of what a mall looks like from having been to malls, and now we're like, well, why are things changing? And they're not changing because there was magic of headwinds or tailwinds.

They're changing because mall owners very correctly looked at the landscape, said retail is changing, and if retail is changing, we need to change, too. Yelp found that 17 of the top 25 brands driving consumers to malls are restaurants.

Folks have more ways to shop than ever. There are untold millions of places where you can buy almost anything online, so in order to woo them out of their homes, it's not just what you sell, it's really

about the entire environment and experience you can create. Food halls with elevated offerings have become a trend in high-end malls as well. Eataly is one of the best known and now has ten locations across the US.

We've seen launches of Eataly spike visits to malls across the country when we have that launch, and then concepts that they launch, whether it be promotions, workshops, tastings, drive significant spikes in visits.

It's even more than just being a good complement. In some cases, they're somewhat of an anchor, like they're driving urgency and visits by their own right and, as a result, bringing so much value to the wider

mall. While these varied dining options drive traffic to malls, shopping centers have become more of an appealing place for restaurant operators. So you're seeing retail concepts that have sort of thumbed their nose at malls today are saying, you know

what? This is a good option. This is probably the best option I'm going to have. If I'm going to try to expand my footprint in this market, I need to start looking at malls because the locations I like are already occupied.

I don't want to buy a piece of dirt, build it from the ground up, and the cost of that is too high. Traffic to suburban malls is back above pre-pandemic levels. Where in the cities, in the city centers, foot

traffic has not returned. So what we're seeing more and more of is these chefs closing locations downtown and opening locations in the suburbs. And a lot of times they're opening them in malls. Vacancies at Class A malls have been generally lower

than at Class B and C malls. Recently, that discrepancy has been wider than ever. Any restaurant and any other business is about numbers. How many people are passing through your door? A trip to a shopping center or the entertainment center is such

it will captivate more people than any venue on the street. The more time you spend at a mall, the more money you will spend at a mall. If folks start to get hungry, they start to get tired, and they start to get "hangry," and they're going

to leave. Retailers love food at malls because it keeps dwell times higher and it keeps people shopping longer. And for you, sir? Just two Pinot Noirs. Okay, two Pinot Noirs. Pinot Noir. Experts agree that creating a

comprehensive experience for visitors should be at the forefront for mall operators. This helps explain why top-tier malls have found success with embracing less traditional dining concepts, like a champagne bar. And what essentially every mall owner is looking to do

is say, which retail concepts fit really well within this wider mix, to speak to a specific audience within that given area. And so we've seen things like Tortazo, which is a high-end Mexican chef concept, launch a location

within a Macy's and actually drive more visits to the Macy's over time. So it's not just within the mall. In some cases, it's within retail spaces themselves. Entertainment is another anchor. Those entertainment options also have dining options in

them, whether it be a theater or an upscale bowling concept. So there's a lot of blurring of the lines between food and beverage and entertainment. And not every mall-goer is looking for a fine-dining experience. Every restaurant and every setting of the restaurant

has a certain appeal to a certain group of the socioeconomic pyramid. The Mozzarella Bar appeals to a certain part of the pyramid. Carpaccio and Isola Bella will appeal to another part of the pyramid.

Even though we're seeing more of this elevated dining at the mall. Mall operators are smart, and they have food options for every price level, so they might not have a food court anymore, but at the food hall and at different kiosks, there will still be

a burger and fries that'll be relatively inexpensive. So most folks who are shopping will kind of be attracted to whatever price point appeals to them. The area where a mall is situated influences its dining concepts. Proximity to a residential neighborhood or an office

building or a gym can all influence the type of operators that choose to be there. I don't think the amount of dining is ever going to be 80% of a mall, right? But I think it's always going to be a segment of it.

I think the types of tenants, which tenants succeed, that's going to change, and there's going to be a constant element of optimization within that, as there should be. It's worth it though, right?

Why Restaurants Have Become So Important To Shopping Malls

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Why Restaurants Have Become So Important To Shopping Malls

Why Restaurants Have Become So Important To Shopping Malls

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