As the nation’s restaurant and service industry continues to face challenges nearly one year into the pandemic, local restaurateurs are adapting their business models and shrinking their footprint to better serve COVID-minded customers.
Commercial real estate brokers are already seeing a demand for new development with drive-thrus and larger patio space, according to Tucson Realty and Trust Co. retail specialist Frank Arrotta. Other business owners are repurposing former restaurant space into fast-casual concepts focused on customer service with minimal contact, he said.
“The footprint is smaller now in those four walls, meaning there’s very little dining space inside if any,” Arrotta said. “My clients are looking to make it easier for their customers to walk in to get take-out or pull up to a drive-thru window.”
The problem with more restaurants offering drive-thru service could mean more congestion spilling onto Tucson’s busy streets, said Arrotta. To help diminish any traffic issues, businesses are constructing lengthy, curving drive-thrus on their property in place of unnecessary parking space. He said many business owners are trying to strike a balance between creating a pleasant experience for their drive-thru customers while keeping them safe.
“In every city, there’s always code requirements to regulate the stacking of cars in a drive-thru so it doesn’t block traffic. But they [businesses] don’t really look at the code anymore,” Arrotta said. “They look at what is convenient for their customer utilizing their drive-thru. More parking lots are becoming a winding car lane, like if you were to stand in line for a concert ticket.”
Josh Jacobsen, vice president of Sunland Foods and owner of two Lucky Wishbone locations, said Tucsonans should expect to see his company return to their 1953 chicken shack roots geared toward carry-out service. He points to the newest Lucky Wishbone location on the northwest side which opened last November as an example.
“The Ina location has a smaller lobby in comparison to the most recent stores built before that. For instance, my stores are up to 3,000 square feet and I think this new location is only 1,600 square feet,” Jacobsen said. “We’re probably looking at other new locations going back to a smaller footprint like we originally started with.”
Lucky Wishbone was in a unique position to pivot during the pandemic since a good majority of their business is take-out, said Jacobsen. But with rising operating costs in the restaurant industry, the chicken baron said Lucky Wishbone is looking into automation, like kiosks at their locations to help save on labor costs, while still offering superior customer service.
“Companies in all sectors, by and large, are going toward more automation,” Jacobsen said. “The concern is that if you go too far and there is not enough personal interaction, you could alienate your customers instead of making things convenient.”
When new construction isn’t an option, Arrotta said more restaurateurs are converting old restaurant space to fit their needs. Large dining areas and playground areas in fast food restaurants are going the way of the dinosaurs, said the broker. These days, restaurant owners are opting to build larger kitchens with spacious outside dining while remaining cautious about taking on too much space, said Arrotta.
“Some restaurants are looking for what we call a second-generation restaurant that has some bones intact to be able to keep their costs down and still do what they want to do,” Arrotta said. “When we do find something like that, the question becomes, ‘Am I taking on too much square footage for dining and do I need to pay that rent to have that square footage?’”
Flores Concepts president Ray Flores said the pandemic “100% factored in” to how they approached their newest culinary concept with famed baker Don Guerra, called Barrio Charro in the former Island Plate Lunch and Bakery building. But even the best-laid plans may still need to be tweaked over time to better serve customers these days, said Flores.
“We had to modify some things when we adopted and reopened that restaurant, but it was always intended to be a fast-casual place,” Flores said. “The first two weeks we got hit really hard, like 500 phone call orders, because everybody had this pent-up demand to go see something new. Admittedly, we were almost too small for such a big opening.”
While Flores said he does not plan on changing the format of his established dining restaurants like El Charro and Charro Steak, he said he plans on focusing on fast-casual concepts with more automation in the future.
“We’ll be doing more things like Barrio Charro as labor costs continue to impact the service restaurant industry,” Flores said. “We’ll be doing more fast-casual bodega settings where you can get a sandwich and maybe pick up a dozen tamales.”
Another trend emerging in 2021 is pre-fabricated restaurants in shipping containers. While shipping container businesses are not a new concept in Tucson—downtown’s MSA Annex and Fourth Avenue’s Boxyard have both been around for years and eegee’s recently announced their container concept for seven new locations—what’s different is these restaurants will be small, stand-alone businesses located in parking lots of larger big box companies or along roadsides where property is available. Many times, you wouldn’t even know it’s a shipping container, said Arrotta.
“I have one client who owns two restaurants here and he recently went to a company that designs container restaurants and got one designed,” Arrotta said. “My task in front of me is to find a place where we can plop that container that has a double drive-thru, walk-up and seating outside. I asked him about the inside seating and he said he doesn’t need it anymore.”
Arrotta said he is even seeing brokerage firms advertising properties with Planned Area Development options for their parking lots as an incentive. He said that the PAD option will probably become a new normal in the industry and to expect smaller, fast-casual, drive-thru restaurants coming to a commercial property near you soon.
“What that means is they can now go in and get a new development plan to put in a smaller restaurant on the property,” Arrotta said. “The property owners don’t get too specific about it but say, ‘Please call and let’s talk about what you have.’ So, there were some big winners last year. But, I think anybody that was able to make it through 2020 is a