Food catering has evolved from being an add-on to mainstream shopping complex merchandising, to an attraction in its own right, and a material contributor to the visitation experience, according to significant retail landlords.

We’re all familiar with predominant catering brands in our local shopping complexes such as Boost Juice, The Coffee Club, Gloria Jeans, Sushi Sushi, Jamaica Blue and Sumo Salad, however, the more noteworthy aspect of the Food Catering category has been the inclusion and expansion of casual dining precincts including cafes and restaurants and an ambient dining atmosphere, aimed at improving customer experience, extending time spent in the complex per visit and enhancing extended trading hours, notably between 5pm and 10pm.

When we assess food catering sales by the takeaway food and café/restaurant category, two observations emerge. First, cafes and restaurants are showing a higher rate of sales growth than the takeaway food category and secondly, café/restaurants are also performing well as their offer resonates with an increasingly health conscious consumer.

Novion, part of Federation Centres post the merger of the two groups in mid June 2015 formerly owning food catering in high-end assets such as Chadstone Shopping Centre and Melbourne’s newest premium CBD offer at Emporium Melbourne, has released recent data showing that in the five years to December 2014, food catering outperformed total specialty store moving annual turnover (MAT) growth by more than 1% per annum for comparable centres.

The recently completed Emporium Melbourne development by Novion saw the initial food precinct concept materially upsized from the original 12 operators and 550 seats concept to 20 operators and 1,200 seats at the time of the opening. A key design objective for the food precinct was to activate the upper retail floors in the project and it has been well received by Melbournians since opening.

The catered food category overall has increased its floorspace weighting from between 6-7% of Gross Lettable Area (GLA), ten years ago, to almost 10% in Australia today. In Asia, this proportion can be as high as 15%, indicating scope to increase floorspace dedicated to the category in Australia in the future.

Where appropriate, landlords are gearing up to replace underperforming specialty retailing categories such as apparel, with new elements offering food and dining and the food tenant mix will reflect the customer trading catchment demographic for each centre. Generally the stores in the food catering category have affordable occupancy costs (defined as rent as a percentage of total annual sales) which are a little higher than other specialty retailer types (excluding jewellers and apparel). Occupancy costs of 15% to 20% is a normal range for these retailers (depending on retailer and the centre type) – i.e higher for regional centres.

A new trend featuring recognised chefs in shopping centre dining precincts, such as George Calamaris’ souvlaki bar concept Jimmy Grants which has been a major drawcard at Emporium Melbourne, is emerging and looks set to being greater excitement and profitability to the sector. Another trend has seen major entry points to shopping centres further enhanced with the addition of outdoor dining and seating. Strong operators in the category include Nando’s and Grill’d.

Other food strategies include upgrading and expanding the food offer that is linked to entertainment such as cinemas or ten-pin bowling. Another concept gaining traction is the addition of casual dining/cafes adjoining fresh food retailers. This concept has been incorporated into several new developments including Westfield Miranda and Indooroopilly projects. Other landlords are working on food hall alternative concepts, such as a tea house concept, with up to eight restaurants on mezzanine and piazza levels.

With four key retail properties reporting superior sales and tenant demand such as Chadstone, Chatswood Chase Sydney, QueensPlaza and Emporium Melbourne in the Novion portfolio, there is a view that global food operators such as Eataly (Italian market stalls food hall) from New York would, as we have seen with global apparel retailers, seek a presence in the Australian market by partnering with a substantial retail landlord in the future.