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The great American food court revolution

Yahoo Finance
Yahoo Finance

Editor's Note: The following post was written by special contributor Brian Sozzi, CEO of Belus Capital Advisors

The Great American binge-eating concept known as the food court is an icon of malls across the country. Its origins are rumored to be rooted on the second floor of a Paramus, New Jersey mall in 1974. The food court has always been the place to take a rest during a marathon charge card spree at hundreds of mall-based retailers.

For anyone in their 40's, the food court likely brings back fond memories of listening to ‘80s music on a Sony Walkman and grabbing a greasy slice of Sbarro pizza in a crowd of 15 acne-filled friends. It’s where the school gossip was spread before the existence of Facebook (FB), Twitter (TWTR), Instagram, and Snapchat.

Today's youth are more likely to hang out in their bedrooms on a smartphone than a mall food court. Changes in how people consume goods and services through mobile devices, specifically those teens, are forcing mall owners including Simon Property (SPG), Macerich (MAC), and Vornado (VNO) to find new ways to get warm bodies into their sprawling concrete shrines to unnecessary consumption.

Malls are being remodeled to develop a sense of curiosity on the part of the community, drawing them in during the week. Naturally, the malls of the future are infused with technology from WiFi to the capability of retail stores to send promotions straight to mobile phones as an individual walks by the location. Luxury brands are opening in outdoor centers, while the likes of H&M and Forever 21 digest space formally occupied by the companies they are destroying, like Abercrombie & Fitch (ANF) and American Eagle Outfitters (AEO). Food courts, re-branded food halls, have been forced to re-imagine themselves as destinations all their own.

On average, 7% of shoppers actually visit a mall solely for food. That suggests a meaningful opportunity for share gain on the part of malls with improved food options, décor, and marketing.

A food court brings in about $700 in sales per square foot compared with $250-$450 per square foot for an apparel retailer. The latter will continue to be squeezed from increasing online/mobile consumption and the resulting discounts offered by retailers to lure in traffic.

Feed the masses and feed your bottom line. It's as simple as that.

Here are just some of the ways the food courts you knew as a kid are being re-imagined:

  1. Cushioned bench seating and communal tables replace rows of unemotional hard top tables and cold-looking seats. Food court owners want you staying as if it were an Olive Garden. Mall owners want that, too.
  2. More food courts will sell alcohol. Nothing like gobbling down an artisanal sandwich in the food court along with five beers, then having the urge to shop with reckless abandon.
  3. Lighting is softer, and the paint is neutral in the designated common area. Mall owners are trying to re-create one’s home eating environment while also making it a premium dining experience that could net food court owners higher average checks .
  4. Menu boards are closer to the consumer, have a rustic feel, and are easier to read. The signs lure in traffic from mall arteries as they are less mentally overwhelming than a supercharged McDonald’s (MCD ) red, white, and yellow menu board.
  5. There will be a shared dish washing section. Gone are the planet-killing Styrofoam plates, sporks, and other plastic utensils. Hello real silverware.
  6. The food court facades are varied, very integrated with the brand’s food and social mission. Old school food courts had cookie-cutter designs as mall owners viewed the space as an afterthought to the apparel tenets.
  7. Many of the new food courts opening are either chef-inspired or have someone at the helm with some degree of culinary expertise. At the food court of the future, it’s not only order takers running the ship, chefs must be involved as to keep the menu seasonally relevant.

Then there is the one of a kind Hudson Eats in New York City’s World Financial Center that we visited. Hudson Eats has 14 casual eateries, seats close to 600 people, offers 4,000 square feet in kitchen space to food court operators, and has five new sit down establishments opening in March 2015. Oddly enough, the new food destinations precede a host of high-end shop openings in the upcoming months, including Hermes, Zegna, Michael Kors, and J. Crew. Talk about reverse engineering the standard shopping experience.

Next stop for food courts as I see it: food trucks being wheeled into former Sears (SHLD) and JC Penney (JCP) locations, giving the local community a true sense of something fresh and unique.

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