Restaurants are shrinking – but that’s a good thing for the food industry!
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Restaurants are shrinking – but that’s a good thing for the food industry!

Fewer people are eating in restaurants… and that’s great for the food industry! The missing diners haven’t decided to stop patronising their favourite eateries – they’ve just decided they want their favourite dishes delivered to their door instead. Don Fox, CEO of Firehouse of America, recently told Bloomberg that he noticed the trend a few years ago: the usually busy lunchtime rush slowed right down, and his stores were relatively empty. Sales, however, were better than they’d ever been before: “I’d be thinking, ‘boy, business must be pretty bad,’” he told reporters. “But the numbers were telling me a different story.

Grubhub, a food order and delivery service market leader, has seen its share price appreciate by 16% so far this year

graph 3110 restaurant shrink

Source: Yahoo Finance

Market data firm App Annie says that the number of food delivery app downloads had risen a massive 380% over the past three years. Market leader Grubhub, as well as competitors including UberEats, DoorDash, and Postmates, have built a huge and fast-growing industry… and it’s changing the way that restaurants think about their business.

Fox describes this development as “the greatest shift we’ve seen yet,” and is “investing in where the business is going, which is off site.” In a practical sense, this means a scaling down on eating spaces – once, Fox was looking for spaces of between 2,000 and 2,200 square feet… now, he won’t consider a lease above 1,800. He’s not the only restauranteur who feels this way, with some opting to do away with tables and chairs altogether. Mark Chase, founder of Restaurant Real Estate Advisors (a consulting group that pairs restaurants with their ideal premises) says: “there is a general scaling down on seating space and scaling up on kitchen space, as people just want to eat at home, on the couch.”

Dominion holds Grubhub and Just Eat in its Global Trends Ecommerce Fund.

If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.